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Sunday, October 29, 2017

Human Resource Management Solved Question Papers: November' 2013

2013 (November)
Commerce (General/Speciality)
Course: 301
Full Marks: 80
Time: 3 Hours

1. Write True or False:                    1x8=8
(a) The prime objective of Human Resource Planning is to secure maximum prosperity and happiness of employer as well as employee.                      False     
(b) A good human resource development practice motivates the organisational members to do an outstanding work.                    True
(c) Job Evaluation begins with job analysis.                           True
(d) Job analysis is an informal process of gathering information about a job or an organisation.   False
(e) Competent employees will remain competent always.                           False
(f) Employee selection is the process of attracting capable applicants for employment.       False, recruitment
(g) There is no difference between career planning and career counseling.          False
(h) Compensation management is a continuous process.                              True

2. Distinguish between:                               4x4=16
(a) Human resource management and personnel management
Ans: Difference Between Personnel Management And Human Resource Management

Human resource management is the new version of personnel management. There is no any watertight difference between human resource management and personnel management. However, there are some differences in the following matters.
1. Personnel management is a traditional approach of managing people in the organization. Human resource management is a modern approach of managing people and their strengths in the organization.
2. Personnel management focuses on personnel administration, employee welfare and labor relation. Human resource management focuses on acquisition, development, motivation and maintenance of human resources in the organization.
3. Personnel management assumes people as a input for achieving desired output. Human resource management assumes people as an important and valuable resource for achieving desired output.
4. Under personnel management, personnel function is undertaken for employee's satisfaction. Under human resource management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is done on the basis of division of labor. Under human resource management, job design function is done on the basis of group work/team work.

(b) Recruitment and Selection
Ans: 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.

(c) Internal and External sources of recruitment
Ans: Difference between internal and external sources of recruitment
Bases of Difference
Internal Sources
External Sources
Recruitment is form within the organization.
It is the recruitment from outside employees.
It is generally based on seniority cum merit.
It is strictly based on merit and qualifications.
Time involved
It is less time consuming.
It is a time consuming exercise.
It is a cheap source of recruitment.
It is an expensive source of recruitment. It involves time, expense and resources.
No reference of the employees is needed since all his records are available with the concern.
Since enterprise does not know about person, references about previous work, conduct and character are needed.
There is a limited choice from among the present employees.
There is a wide choice from a large number of applicants.

(d) Career counselling and career management

3. (a) Discuss the importance of human resource management functions in the management of a large manufacturing enterprise.                                         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.
(b) Discuss the evolution and development of Human Resource Management in India.
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.
hrm evolution
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) Describe in detail the various problems in designing Human Resource Planning.                  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.
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.
6. Unproductive activity: Another disadvantage of human resource planning is that the time and effort used in retraining employees could have been used by the employees to offer services or produce more goods. In the short run, human resource planning can sometimes be unproductive. This however, is not the case in the long run.
(b) Discuss the points you have to consider in preparing a Human Resource plan for a large business organisation.
Ans: Points to be considered in preparing a human resource plan:
HRP is influenced by several factors. The most important of the factors that affect HRP are (1) type and strategy of organization (2) organizational growth cycles and planning (3) environmental uncertainties (4) time horizons (5) type and quality of forecasting information (4) nature of jobs being filled and (5) off loading the work.
1. Type and Strategy of the Organization: Type of the organization determines the production processes involve, number and type of staff needed and the supervisory and managerial personnel required. HR need is also defined by the strategic plan of organization. If the organization has a plan for organic growth then organization need to hire additional employees. On the other hand If the organization is going for mergers and acquisition, then organization need to plan for layoffs, as mergers can create, duplicate or overlap positions that can be handled more efficiently with fewer employees. Organization first decides whether to be reactive or proactive in HRP. Organizations either carefully anticipate the needs and systematically plan to fill the need in advance (proactive) or can simply react to the needs as they arise (reactive). Likewise, the organization must determine the width of the HR plan.
Organization can choose a narrow focus by planning in only one or two HR areas like recruitment and selection or can have a broad perspective by planning in all areas including training and remuneration.
2. Organizational Growth Cycles and Planning: All organizations pass through different stages of growth from the day of its inception. The stage of growth in which an organization is determines the nature and extends of HRP. Small organizations in the earlier stages of growth may not have well defined personnel planning. But as the organization enters the growth stage they feel the need to plan its human resource. At this stage organization gives emphasis upon employee development. But as the organization reaches the mature stage it experience less flexibility and variability resulting in low growth rate. HR planning becomes more formalized and less flexible and less innovative and problem like retirement and possible retrenchment dominate planning.
During the declining stage of the organization HRP takes a different focus like planning to do the layoff, retrenchment and retirement. In declining situation planning always becomes reactive in nature towards the financial and sales distress faced by the company.
3. Environmental Uncertainties: Political, social and economic changes affect all organizations and the fluctuations that are happening in these environments affect organizations drastically. Personnel planners deal with such environmental uncertainties by carefully formulating recruitment, selection, training and development policies and programmes. The balance in the organization is achieved through careful succession planning, promotion channels, layoffs, flexi time, job sharing, retirement, VRS and other personnel related arrangements.
4. Time Horizons: HR plans can be short term or long term. Short term plans spans from six months to\ one year, while long term plans spread over three to twenty years. The extent of time period depends upon the degree of uncertainty that is prevailing in an organizations environment. Greater the uncertainty, shorter the plan time horizon and vice versa.
5. Type and Quality of information: The information used to forecast personnel needs originates from a multitude of sources. The forecast depends to a large extent upon the type of information and the quality of data that is available to personnel planners. The quality and accuracy of information depend upon the clarity with which the organizational decision makers have defined their strategy, structure, budgets, production schedule and so on.
6. Nature of Jobs Being Filled: Personnel planners need to be really careful with respect to the nature of the jobs being filled in the organization. Employees belonging to lower level who need very limited skills can be recruited hastily but, while hiring employees for higher posts, selection and recruitment need to be carried out with high discretion. Organization need to anticipate vacancies far in advance as possible, to provide sufficient time to recruit suitable candidate.
7. Outsourcing: Several organizations outsource part of their work to outside parties in the form of subcontract. Outsourcing is a regular feature both in the public sector as well as in the private sector companies. Many of the organizations have surplus labour and hence instead of hiring more people they go for outsourcing. Outsourcing is usually done for non critical activities. Outsourcing of non- critical activities through subcontracting determines HRP.
5. (a) Discuss the problems usually faced by an organisation in recruitment process.                      11
(b) What do you understand by selection process? Discuss the various steps involved in it.
Ans: Meaning of Selection: Human resource selection is the process of choosing qualified individuals who are available to fill positions in an organization. In the ideal personnel situation, selection involves choosing the best applicant to fill a position. Selection is the process of choosing people by obtaining and assessing information about the applicants with a view to matching these with the job requirements. It involves a careful screening and testing of candidates who have put in their applications for any job in the enterprise. It is the process of choosing the most suitable persons out of all the applicants. The purpose of selection is to pick up the right person for every job.
It can be conceptualised in terms of either choosing the fit candidates, or rejecting the unfit candidates, or a combination of both. Selection involves both because it picks up the fits and rejects the unfits. In fact, in Indian context, there are more candidates who are rejected than those who are selected in most of the selection processes. Therefore, sometimes, it is called a negative process in contrast to positive programme of recruitment.
According to Dale Yoder, “Selection is the process in which candidates for employment are divided into two classes-those who are to be offered employment and those who are not”.
According to Thomas Stone, “Selection is the process of differentiating between applicants in order to identify (and hire) those with a greater likelihood of success in a job”.
In the words of Michael Jucius, “The selection procedure is the system of functions and devices adopted in a given company for the purpose of ascertaining whether or not candidates possess the qualifications called for by a specific job or for progression through a series of jobs.”
According to Keith Davis, “Selection is the process by which an organisation chooses from a list of screened applicants, the person or persons who best meet the selection criteria for the position available.”
Thus, the selection process is a tool in the hands of management to differentiate between the qualified and unqualified applicants by applying various techniques such as interviews, tests etc. The cost incurred in recruiting and selecting any new employee is expensive.
 Steps in Selection Process:
Selection is a process of choosing right person for the right job. The selection process consists of a series of steps or techniques as follows:
1)         Job Analysis: The first step in selection process is analyzing the job. Job analysis consists of two parts :
a)      Job Description, and
b)      Job Specification.
Proper job analysis helps to advertise the job properly. Accordingly, the right candidates may apply for the job, thus saving a lot of time and effort of the selectors.
2)         Advertising the Job: The next step is to advertise the job. The job can be advertised through various media. The right details about the job and the candidate must be given in the advertisement.
3)         Initial Screening: The initial screening can be done of the applications and of the applicant. Usually, a junior executive does the screening work. At this stage, the executive may check on the general personality, age, qualifications, family background of the candidate. The candidate may also be informed of salary, working conditions, etc.
4)         Application Blank: It is a prescribed form of the company which helps to obtain information about candidate in respect of social, biographic, academic, work experience, references, etc. The application blank helps to –
a)      It provides input for the interview.
b)      It provides basis to reject candidates if they do not meet eligibility criteria, such as experience, qualifications, etc.
5)         Tests: Various tests are conducted to judge the ability and efficiency of the candidates. The type of tests depends upon the nature of job. An important advantage of testing is that it can be administered to a large group of candidates at a time and saves time and cost. The various tests are: (a) Personality test, (b) Intelligence test,   (c) Performance test, (d) Stress test, etc.
6)         Interview: It is face to face exchange of views, ideas and opinions between the candidate and interviewer(s). There are various types of interviews such as:  (a) Panel Interview, (b) Individual Interview, (c) Group Interview, (d) Stress Interview, (e) Exit Interview.

7)         Reference Check: A candidate may be asked to provide references from those who are willing to supply or confirm about the applicant’s past life, character and experience. Reference check helps to know the personal character and family background of the candidate. It also helps to guard against possible false information supplied by candidate.
8)         Medical Check : Medical examination of the candidates is undertaken before they join the firm in order to:
a)      Find out whether the candidate is physically fit to carry out duties and responsibilities effectively,
b)      Ensure the health and safety of other employees,
c)       Find out whether the candidate is sensitive to certain work place such as in a chemical factory.
9)         Final Interview: Before making a job offer, the candidates may be subjected to one more oral interview to find out their interest in the job and their expectations. At this stage, salary and other perks may be negotiated.
10)      Job Offer: This is the most crucial and final step in selection process. A wrong selection of a candidate may make the company to suffer for a good number of years and the loss is incalculable. Company should make a very important decision to offer right job to the right person.
6. (a) Explain the various methods of training.                   11
Ans: Various Methods for Training
Methods of training operating personnel/factory workers
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.”
There are different methods of training for operating personnel (factory workers). Training these workers becomes important because they handle equipment worth crores of rupees.
1. On the job training method: In this method workers who have to be trained are taken to the factory, divided into groups and one superior is allotted to every group. This superior or supervisor first demonstrates how the equipment must be handled, and then the worker is asked to repeat whatever he has observed in the presence of the supervisor. This method makes it easy for the employee to learn the details about specific equipment. Once the worker studies the first equipment thoroughly the supervisor moves on to the next equipment and so on.
2. Apprenticeship training: In this method both theory and practical session are conducted. The employee is paid a stipend until he completes training. The theory sessions give theoretical information about the plant layout, the different machines, their parts and safety measures etc. The practical sessions give practical training in handling the equipment. The apprentice may or may not be continued on the job after training.
3. Vestibule training: In this method of training an atmosphere which is very similar to the real job atmosphere is created. The surroundings, equipment, noise level will be similar to the real situation. When an employee is trained under such conditions he gets an idea about what the real job situation will be like. Similarly when he actually starts doing the job he will not feel out of place. This method is used to train pilots and astronauts. In some places graphics are also used to create the artificial surroundings. This method involves heavy investment.
4. Job rotation: In this method the person is transferred from one equipment to the other for a fixed amount of time until he is comfortable with all the equipments. At the end of the training the employee becomes comfortable with all the equipment. He is then assigned a specific task.
5. Classroom method: In this method the training is given in the classroom. Video, clippings, slides, charts, diagrams and artificial modules etc are used to give training.
Methods of training for managers/methods of managerial development/executive development:
A) On the job method: On the job method refers to training given to personnel inside the company. There are different methods of on the job training.
1. 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.
2. Planned progression: In this method juniors are assigned a certain job of their senior in addition to their own job. The method allows the employee to slowly learn the job of his senior so that when he is promoted to his senior job it becomes very easy for him to adjust to the new situation. It also provides a chance to learn higher level jobs.
3. Coaching and counseling: Coaching refers to actually teaching a job to a junior. The senior person who is the coach actually teaches his junior regarding how the work must be handled and how decisions must be taken, the different techniques that can be used on the job, how to handle pressure. There is active participation from the senior.
Counseling refers to advising the junior employee as and when he faces problems. The counselor superior plays an advisory role and does not actively teach employees.
4. Under study: In this method of training a junior is deputed to work under a senior. He takes orders from the senior, observes the senior, attends meetings with him, learns about decision making and handling of day to day problems. The method is used when the senior is on the verge of retirement and the job will be taken over by the junior.
5. Junior board: In this method a group of junior level managers are identified and they work together in a group called junior board. They function just like the board of directors. They identify certain problem, they have to study the problem and provide suggestions. This method improves team work and decision making ability. It gives an idea about the intensity of problem faced by the company. Only promising and capable junior level managers are selected for this method.
B) Off the job training method: Off the job training refers to method of training given outside the company. The different methods adopted here are
1. Classroom method: The classroom method is used when a group of managers have to be trained in theoretical aspects. The training involves using lectures, audio visuals, case study, role play method, group discussions etc. The method is interactive and provides very good results.
2. Simulation: Simulation involves creating atmosphere which is very similar to the original work environment. The method helps to train manager handling stress, taking immediate decisions, handling pressure on the jobs etc. An actual feel of the real job environment is given here.
3. Business games: This method involves providing a market situation to the trainee manager and asking him to provide solutions. If there are many people to be trained they can be divided into groups and each group becomes a separate team and play against each other.
4. Committee: A committee refers to a group of people who are officially appointed to look into a problem and provide solution. Trainee managers are put in the committee to identify how they study a problem and what they learn from it.
5. Conference: Conferences are conducted by various companies to have elaborate discussions on specific topics. The company which organizes the conference invites trainee manager and calls for experts in different fields to give presentation or lecture. The trainee manager can ask their doubts to these experts and understand how problems can be solved on the job.
6. Readings: This method involves encouraging the trainee manager to increase his reading related to his subject and then ask him to make a presentation on what he has learned. Information can be collected by trainee manager from books, magazines and internet etc.
7. In basket training: In this method the training is given to the manager to handle files coming in and to finish his work and take decisions within a specified time limit. The trainee manager is taught how to prioritize his work, the activities which are important for his job and how to take decisions within limited time limit.
(b) What do you mean by “Executive Development”? Discuss its importance in a developing country like India.
Ans: Management or Executive development
All those persons who have authority over others and are responsible for their activities & for the operations of an enterprise are managers. Any activity designed to improve the performance of existing managers to provide for a planned growth of managers to meet future requirements is management development.
According to Flippo “executive development includes the process by which managers and executives acquire not only skills and competency in their present job but also capabilities for future managerial tasks of increasing difficulty and scope.” 
In simple words, Executive development or management development is a systematic process of learning and growth by which managerial personnel gain and apply knowledge, skills, attitudes and insights to manage the work in their organization effectively and efficiently.
Importance of Executive Development
Executive development is more future oriented. It is more concerned with education than is employee training. In today’s competitive environment, an organization has to be concerned about the development of supervisors, middle level managers and top-level executive. Executive development is important for the following reasons: -
1)      Technological changes: Now a days the technology is getting change very rapidly. Many advanced and automatic machines have been bringing in present organization. So the managers should have high-quality working knowledge of the use of modern technological machines and equipment. It can be possible by developing the managers for the use of new opened machines. It enables managers to face problems related to technology and institution.
2)      Increase in size of organizations: The size of the organizations is increasing day by day. With the increase in size the complexity is also increasing. So the executives or managers need to be developed to deal with the troubles of the bulky and complex organizations.
3)      Lack of trained managers: There is scarcity of the trained managers and it is quite difficult to recruit the experienced and qualified managers. As a result it is very important to develop the brilliant employees by a disciplined development process.
4)      Social and cultural changes: The social and cultural environment is getting changed rapidly. The managers must have brought up to date the knowledge of the sociology-cultural background to understand the people intentions and actions towards us. Executives need training and education to understand and adjust to changes in socio-economic changes.

5)      Better relation with labours: Given the knowledge era, labour management relations are becoming increasingly complex. In such situation, managers not only need job skills but also behavioural skills in union negotiations, collective bargaining, grievance redressal, etc. These skills are learned through training and development programmes.
6)      Training and development of professional managers: With the recognition that managers are made not born, there has been noticeable shift from owner managed to professionally managed enterprises, even in family business houses like Tata. That is also indicated by the lavish expenditure incurred on executive training by most of the enterprises these days.
As regards the importance of management development, the renowned behavioural scientist Peter Drucker opines that, “an institution that cannot produce its own managers will die. From an overall point of view, the ability of an institution to produce managers is more important than its ability to produce goods efficiently and cheaply”. In short, the importance of executive/ management development in an organisation can best be put as: anything minus management development in an organisation mounts to nothing. 

7. (a) Write an explanatory note on “Compensation Management”.                      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.
Essentials of an ideal Compensation Management System
Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the labour expects wages from the process.
Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:
1)      An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.
2)      It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable.
3)      Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.
4)      The system should be simple and flexible so that every employee would be able to compute his own compensation receivable.
5)      It should be easy to implement, should not result in exploitation of workers.
6)      It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.
7)      Such system would help management in complying with the various labor acts.
8)      Such system should also solve disputes between the employee union and management.
9)      The system should follow the management principle of equal pay.
10)   It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.
11)   Sound Compensation/Reward System brings peace in the relationship of employer and employees.
12)   It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.
13)   The system provides growth and advancement opportunities to the deserving employees.
14)   The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.
15)   The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.
16)   The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.
17)   The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.
Objectives 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.
(b) Discuss the financial and non-financial incentives in motivating employees.                              6+6=12
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.