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MS-27   Dec-2009

MS-27 : WAGE AND SALARY ADMINISTRATION

1. Discuss the role of compensation. Explain the functions and responsibilities of compensation programme with suitable examples.

2. Discuss the scope and coverage of the minimum wages Act, 1948. Describe the procedure for fixation and revision of minimum wages under the Act.

3. Briefly explain any two methods of job evaluation and their merits and demerits.

4. Explain the need for payment of allowances and fringe benefits. Discuss the systems of payment of dearness allowance. Give examples of some popular fringe benifits practised by corporates.

5. Write short notes on any three of the following :

a) Downsizing

b) Pay Surveys

c) Executive compensation

d) Payment of wages Act, 1936

(e) The marginal productivity theory

6. Read the following case and answer the Questions given at the end :

A public sector consultancy organisation recruited Mr. Alok an expert in a particular field of technical specialisation with Ph.D. and other high qualifications at a senior level, one level below that of a director of the board. The company had a managing director and three functional directors on its board apart from government directors. Mr. Alok at the time of recruitment to the company was working as No. 2 in a Central Government Research Organisation. Since he failed to get selected to the No. 1 slot in that organisation for 'political reasons', according to him. He chose to join the public sector company at one grade higher than that held by him in the government.

After joining the company, Mr. Alok represented to the Management that he should be granted at least three advance increments since in the government research organisation where he had worked, he used to get extra honorarium to the extent of Rs. 50,000 per annum for undertaking outside consultancy work. The management of the company refused to grant the advance increment to him since they felt that Mr. Alok's request cannot be dealt with in violation and it will lead to similar requests from other senior managers in the company. After waiting for a few months, Mr. Alok submitted his resignation from the company. His superior, viz., the functional director concerned (Mr. Rajeev), advised the managing director that Mr. Alok was resinging because his request for higher salary has not been agreed to and that the matter needs review because it would be difficult to recruit another expert of the same calibre as Mr. Alok. The Managing director, however, accepted the resignation of Mr. Alok and ordered that the post be advertised for fresh recruitment. As the recruitment process was on, Mr. Alok on his own chose to withdraw his resignation and rejoined the company apparently on a tacit undertaking given by Mr. Rajeev that his request for higher salary would be reconsidered. The managing director reconsidered the request and approved the grant of three advance increments to Mr. Alok provided he would serve the company at least till the date of his superannuating, which was two years away. The decision was communicated to Mr. Alok.

     Mr. Alok once again felt insulted by being asked to agree to an unaceptable condition, viz., undertaking to continue in the company for two more years for the grant of additional increments to his salary. He thought he was fully justified in his case. He did not agree to the condition and after two months again submitted his resignation. Mr. Rajeev discussed the matter with the managing director. The managing director stated

that in return for the additional salary being granted to Mr. Alok which was not being given to any other senior manager of his status, he should display some commitment, to serve the company. Without such a commitment Mr. Alok might wait for an opportunity to look for greener pastures and leave the company after gaining a higher salary, vis-a-vis his other senior colleagues in the organisation. The other employees would feel that the Management can be blackmailed by the so-called experts into granting more benefits with the threat of resignation and the Management would lose its credibility. The managing director, therefore, decided to accept the resignation of Mr. Alok. But Mr. Rajeev and other functional directors of the company were not happy with the decision as

they felt that competitors of the company would gain by Mr. Alok's departure and, therefore, allowing Mr. Alok to quit would jeopardize the company's business interests.

Questions :

1.Do you agree with the Managing Director's approach to the problem ?

2. Do you think that Mr. Alok had reasons to be aggrieved or was he trying to exploit his expertise ?

3. What would be your solution to this case ?

MS-27   Dec-2010

MS-27 : WAGE AND SALARY ADMINISTRATION

Solved book Ms-27 from mehta solutions

MS-27   Dec-2011

MS-27 : WAGE AND SALARY ADMINISTRATION

1.What are the micro level considerations for evolving a compensation policy ? Explain with suitable examples.

2. Explain the purpose and applicability of the payment of Wages Act, 1936. Discuss the

deductions authorised under the Act with suitable examples.

3. Explain the concepts of Basic wage, Dearness Allowance and Fringe benefits. Discuss the need and purpose of allowances and fringe benefits to be given to the employees.

4. Explain various types of incentives. Discuss the prerequisites of an effective incentive scheme citing suitable examples.

5. Write short notes on any three of the following :

(a) Stock options

(b) Executive compensation

(c) Pay surveys

(d) The marginal productivity theory

(e) Employee's Deposit-linked Insurance scheme.

6. Read the following case and answer the Questions given at the end.

The National Manufacturing Company reached an agreement with its Union on a production incentive scheme to increase production. The company had an unprecedented

demand for its goods and the Union agreed for the incentive scheme. The management was pleased with the assurance of the Union leader to personally undertake the task of implementing the scheme. The management promised to give him a free hand if he could increase the production. The Union did increase production to almost double the original level. As a result the Union gained importance. Any problem could be sorted

out by the Union by its direct access to the chief executive. The management staff as a result became wary of its interaction with the Union. Non-members of Union were discriminated by the union. Its members could get special favours like disposal of their grievances, promotions, and so on. The incentive scheme benefitted primarily the Union members. The scheme' was inequitable as some workers got disproportionately large incentives, some low and some no incentive at all. The second feature was that as the incentive was linked to the Consumer Price Index (CPI) the distortion got further accentuated. However, when the Union tried to misuse its new found powers the management struck back one day by taking disciplinary actions against all the leaders

and the union found all of a sudden that it was without a leader.

Another Union arrived on the scene and the leader had established a rapport with the chief executive and this new Union faithfully followed the tenets of the management but as a price extracted some benefits for its members exclusively. It had a say on all aspects of the management function like recruitment, selection, transfers, job classification, and so on. In return the Union saw to it that production became its exclusive responsibility and it had a hot line with the chief executive for any problem resolution. Again the management became wary that their path should not cross the path of the Union resulting in a confrontation. As the years passed, the Union started agitating for improvement in the wage scales. Because of the incentive scheme, the company found that any improvement in the basic wage would pose greater problems and the primary question before the management was to delink the CPI from the incentive scheme. The Union refused to delink the CPI from the incentive scheme as some of its members were earning an amount equal to, if not more than, the salary as an incentive itself. At the same time workmen with no incentive and being grade barred began to lose. And this resulted in discontentment amongst the workmen. But the dilemma could not be resolved and this led to an explosive situation. A third Union emerged on the scene and this led to intense inter-Union rivalry resulting in indiscipline, loss of production, and violence within the factory premises, as a result of which the company declared a lockout.

When the plant reopened after four months, the Union in power lost its credibility and the new Union had the complete support of the workmen. In the meanwhile, the new HR Manager who joined the company during this period of strife found that a new approach to deal with the problem was very helpful. Normally in discipline and production seemed to return when a realistic approach of meeting the workmen for resolving problems and difficulties was made by HR Manager and the Plant Manager. Simultaneously contact with workmen led to the formation of committees to look after various matters relating to the canteen, working conditions, and welfare functions. The

management also withdrew at the instance of the HR Manager, charge-sheets which were in force for over two to three years. discretion by the old Union leaders was also rectified. This had an immediate effect and the workmen responded favourably and they even, admitted that there was somebody to look into the problems of the workmen. The new Union leaders was happy that the management could develop a rapport not only with the leader but even the workmen and hoped that it could expect the management to rectify the defect of not having revised the wage scales. But this was not an easy task as there were a lot of inequalities that the management wanted to set

   The Union, though agreeing with the management, would not agree for a cut in the

wages in any manner to set right the inequalities. The Union not only wanted to cling to the beneficial aspects of the incentive scheme but also insisted that the management somehow give an increase in the basic wages. The management was being drawn into a vicious circle of the incentive scheme being inequitable, but when the Union's attention was being brought to the high incentive categories it reverted to the low basic wage theme. The management remained in a quandry as regards how to convince the workmen, to win over the constituency of workmen, and make managers effective and regain supremacy in production.

Questions :

(a) Identify the problems and their causes in the case.

(b) Under the given situation, how are the problems to be remedied ?

(c) As a human resource manager, how do you deal with this case, especially then the Union is demanding a settlement ?

(d) Suggest various principles and strategies the management has to keep in mind while formulating a wage incentive scheme for the employees.

MS-26   June-2007

MS-26 : ORGANISATIONAL DYNAMICS

1. Define Role Analysis and discuss its needs and uses in an organisation. Briefly describe the process of Comprehensive Role Analysis (CRA) as a tool to define and clarify the boundaries of the focal roles.

2. Why do groups get formed ? What are the stages of group development ? Explain with suitable examples.

3-., What is Empowerment ? Describe the concept and role of Empowerment Audit in the day-to-duy functioning of an organisation, with suitable examples .

4- What is the concept and process of Organisational Learning ? Briefly discuss various mechanisms of Organisational Learning, with examples.

5. Write short notes on any three of the following

(i) The Psychological Approach to Alienation

(ii) Bases of Power

(iii) Cfoss cultural dynamics

(iv) social responsibility of an organisation

(v) Tenets of Strategic Alliances

6. Please read the case and answer the questions given at the end.

Donnelly Mirrors, a small company employing about 7'50 workers, manufactures practically all of the rear-view mirrors for all of the automobiles produced in America. Even though it is privately held corporation, it has developed a participative management style where the workers are actively and genuinely involved in the governance of the company. This may be one of the reasons why the company has been enjoying continuous success over the years.

The participative system started in 1952 and initially, the employees simply participated in cost saving efforts and they Shared those savings among themselves and with the company. The cost savings resulted from efficient use of labour, materials and machines. Emplo yees were assured that they would not lose jobs because of introduction of technologically advanced machinery or change in production methods. This resulted in reduced resistance for change on the part of employees.

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The employees became so involved in cost reduction efforts and activities that they started to volunteer various ways of improving operational efficiency including selection of equipment and machines. Various problem solving grcups were formed for various operational areas and in order to achieve efficient coordination among all the groups and activities, a linking-pin organizational structure was adopted, whereby, members of various groups make decisions relative to their own tasks and these decisions are presented to the next higher level of managernent for consideration.

There are no time clocks and even though workers get paid on a salary basis, their working times are not closely watchecl or scrutinized. There is sufficient group cohesion so 'that the workers do not take undue advantage of these relaxed rules. If a member is late or absent for a good reason, other workers in the group will cover his work. If someone misses work frequently, he becomes answerable to other group members. The group selects its own leader and together the members set their own production goals within the general framework of the objectives of the organization and are responsible for meeting such goals.

   The company has formed a committee comprised of representatives both from ernployees as well as management and the committee handles all personnel matters such as pay policies, fringe benefits and employee grievances. Since the wcrkers are represented in this committee, all decisions made by this committee are easily accepted by all, Pay scales are also recommended to the managemeht by this committee and these are consistent with the industry practices. As per pay policies, the company is guaranteed a return of 5.2%   on its investment and the balance of the profits is shared with the employees. If a 5.2% return is not achieved in a given year, the. deficit is compensated from the earning of the following year before any additional bonuses are given to the employees.

Because of its reputation for employee treatment, it attracts a large number of applicants for jobs, but because the turnover rate is very low, the company can select the best from this pool of applicants. The company is like a close-knit family and enjoys a reputation for productivity, quality and employee loyalty and dedication.

Questions

(a) Does the success of the company reflect a general statement that profit sharing and employee involvement in company affairs is highly motivating for employees ?

(b) How do you think that the group dynamics is at work in this organization ? How are the group goals integrated with the organizational goals ?

(c) Do you think there is enough group cohesiveness in this company so that the individuals would not violate group rules and norms ?