Semester ii unit4[1]

1. SEMESTER II
LESSON PLAN 4- MBA / 203
UNIT IV- MANPOWER TRAINING & DEVELOPMENT
Ref: 1. HR Planning by HK Bhattacharyya Ch7, Ch10
2. HR Mgt by Decenzo / Robbins Ch8
3. Personnel / HR Mgt by Decenzo / Robbins Ch10, Ch14
4. MS-2, Block3, Unit9, Unit11
5. MS-2, Block2, Unit 6
6. Suggested Readings Amravati University- syllabus for MBA 203
UNIT OBJECTIVES
1. MANPOWER TRAINING AND DEVELOPMENT.
2. PERFORMANCE APPRAISAL. *
3. POTENTIAL EVALUATION.
4. *JOB EVALUATION.
5. WAGE DETERMINATION.*
LEARNING OBJECTIVES
1. INTRO.
2. DEFINING TRAINING AND DEVELOPMENT.
3. NEED FOR AND BENEFITS OF TRAINING.
4. METHODS OF DETERMING TRAINING NEEDS.
5. TRAINING OBJECTIVES.
6. FORMULATION OF TRAINING POLICY.
7. PRINCIPLE OF AN EFFECTIVE TRAINING PROGRAM.
8. TRAINING METHODS.
9. PRINCIPLES.
10. MANAGEMENT DEVELOPMENT.
11. OBJECTIVE OF MANAGEMENT DEVELOPMENT.
12. TECHNIQUES OF MANAGEMENT DEVELOPMENT.
13. WHAT IS PERFORMANCE APPRAISAL?
14. JOB PERFORMANCE & PERFORMANCE MEASUREMENT.
15. VALIDITY & RELIABILITY OF PERFORMANCE APPRAISAL.
16. METHODS OF PERFORMANCE APPRAISAL.
17. MAKING PA MORE EFFECTIVE.
18. THE MEANING OF JOB DISCRIPTION, JOB ANALYSIS & JOB EVALUATION.
19. FACTORS AFFECTING JOB VALUES.
20. METHODS OF JOB EVALUATION.
21. ESTABLING PAY STRUCTURE.
22. INCENTIVE COMPENSATION PLAN.
23. EXECUTIVE COMPENSATION.
24. CONCLUSION.
25. REVIEW QUESTIONS.
26. CASE STUDY.
INTRO.
1. We have seen how a newly ‘inducted’ employee is introduced to his fellow workers,
his supervisor, the work of his dept, its relations to other dept and its place in the
whole org to the org objective, philosophy, practices & so on. The new employee
then has to learn to work most efficiently & effectively. This is through a well-thought
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2. out & planned training program. Training is required at every stage when a person is
moved from one assignment to another of a different nature.
DEFINING TRAINING & DEVELOPMENT
2. Training & Development program are necessary in any org for improving the quality
of work of employees at all levels, particularly in a world of fast changing technology,
changing values & environment.
3. The purpose of both is similar.
4. The main difference is in respect to the level of employees for whom these are meant
for and the content & techniques employed.
5. “Training.” Training is a short-term process utilizing a systematic and org
process by which a non-managerial person acquires technical knowledge and
skills for a definite purpose.” It refers to instructions. It is designed primarily
for non-managers. It is for short duration for a specific job-related purpose.
6. DEVELOPMENT. Development is a long-term education process utilizing a
systematic and org process by which managerial persons, get conceptual and
theoretical knowledge. In other words it refers not to technical knowledge or skills in
operation but to philosophical & theoretical concepts. It involves broader education &
its purpose is long-term development.
7. BENEFITS OF TRAINING. A well planned & executed training program should result
in the following benefits:-
a) Reduction in Wastage & spoilage.
b) Improvement in method of work.
c) Reduction in learning time.
d) Reduction in supervising burden.
e) Reduction in machine breakage & maintenance costs.
f) Reduction in accident rate.
g) Improvement in quality of products.
h) Improvement in production rate.
i) Improvement in morale & reduction in grievances.
j) Improvement in efficiency & production.
k) Reduction in manpower obsolescence.
l) Enabling the org to provide increased financial incentives, opportunity for
internal promotion & raising of pay rates.
m) Personal growth,
n) Wider awareness among participants enlarged skill.
8. METHODS OF DETERMINIG TRAINING NEEDS.
Total need can be determined by analyzing the sit in r/o of each skill & each member of
work force. This to determine training needs one would have to analyse the following :-
a) Job Requirement.
b) Employees present job skills.
c) Training Needs.
This can be does in the following ways:-
a) Analysis of an activity.
b) Analysis of Problems.
c) Analysis of Behavior.
d) Analysis of an Org.
e) Appraisal of Performance.
f) Brainstorming.
g) Buzzing.
h) Card Sorting.
i) Committee.
j) Comparison.
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3. k) Confidence.
l) Consultants.
m) Counseling.
n) In-basket.
o) Incident Pattern.
p) Informal Talks.
q) Interviews
r) Observations
s) Problem Clinic.
t) Research.
u) Role-playing.
v) Self-Analysis.
w) Skill-Inventory.
x) Slip Writing.
y) Studies.
z) Survey.
aa) Tests.
bb) Task Force.
cc) Questionnaires.
dd) Workshop.
9. TRAINING OBJECTIVES
a) To prepare employees for the job meant for them while in first appointment on
training, or on promotion & impart to them the required skill and knowledge.
b) To assist the employees to function more effectively in their present position
by exposing them to the latest concepts, information techniques & developing
the skills that would be required in their particular jobs.
c) To build a second line of competent officers and prepare them to occupy
more responsible positions.
10. PRINCIPLE OF EFFECTIVE TRAINING PROGRAM.
a) The objectives & scope of a training plan should be defined before its development is
begun in order to provide a basis for common agreement & cooperative action.
b) The techniques and processes of a training program should be related directly to the
needs & objectives of the org.
c) To be effective the training must use tested principle of learning.
d) Training should be conducted in the actual job environment to the maximum possible
extent.
9. TRAINING METHODS. Training for different categories of employees:-
a) Unskilled Worker.
b) Semi-skilled Worker.
c) Skilled Worker.
d) Salesmen.
e) Supervisory Staff.
10. All training methods can be broadly classified into TWO:-
a) On the job training.
b) Off the job training.
11. ON THE JOB TRAINING. An employee is placed in a new job and is told how it is to be
performed. It aims at developing skills and habits consistent with the existing practices of an
org and by orienting him to his immediate problems. Coaching & instructions is done by
skilled workers, supervisors, special training instructors. A variety of training aids &
techniques are used.
b) VESTIBULE TRAINING OR TRAINING CENTRE TRAINING. It involves class-room
training imparted with the help of equipment and machines identified to those in use at the
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4. place of work. Theoretical training is given in the classroom & practical conducted on the
production line. It is often used to train clerks, Bank tellers, inspectors, machine operators,
typists etc.
c) Simulation. It is an extension of vestibule training. The trainee works on ‘closely
duplicated real job conditions.’ This is essential when on-the-job practice is expensive, might
result in serious injury, a costly error, Destruction of properly e.g. Pilots Training.
d) Demo & Exercise. Here the trainer describes and Demonstrates how to do a certain
work. He performs the activity himself going through a step by step explanation of the ‘why’,
‘how’ ‘what’ he is doing.
e) Apprenticeship. A major part of training is spent on the on-the job productive work. Each
apprentice is given a program of assignments according to a predetermined schedule which
provides for efficient training in trade skills appropriate for- crafts-trades & technical areas.
12. OFF-THE-JOB OR CLASS ROOM METHODS. Training on the job is not a part of
everyday activity. Location of training may be a company class-room, educational institutions
or an association which is not a part of the company. Methods include the followings:-
a) Lectures.
b) Conference.
c) Seminars/ Team Discussion.
d) Case Discussion.
e) Role Playing.
f) Programmed Instruction.
a) Lectures. Formally organized talks by an instructor on specific topics. This method
is useful when philosophy, concepts, attitudes, theories, problems have to be
discussed.
b) Conference Method. Held as per an org plan. Mutual problems are discussed &
participants pool their ideas and experience in attempting to arrive at better methods
of dealing with these problems. Members teach & learn from each other. Conference
may include Buzz sessions which divide conference into small groups of 4-5 for
intensive discussion. This method is suitable for a group of 20-30 persons only.
c) Seminar or Team Discussion. The group learns through discussion of a paper on a
selected subject. The paper is written by one or more trainees.
d) Case Discussion. A real / Hypothetical business problem demanding solution is
presented to the group & members are trained to identify the problems present &
suggest various alternatives for tackling them analyse each one of these find out their
component suitability & decide for themselves the best solution. This method
promotes analytical thinking. Extensively used in professional school of law & Mgt &
in supervisory & executive training program in industry.
e) ROLE PLAYING. Also called ‘Role Reviewing’ or ‘Socio-Drama’ or ‘psychological
Drama’. Here trainees are given out a role to play as in a stages drama. No written
lines no rehearsals. Players quickly respond to ever changing situation.
13. MANAGMENET DEVELOPMENT. Is a systematic process of training & growth by
which managerial persons gain and supply skills, knowledge, attitudes & insights to
manage the work in their org effectively and efficiently.
14. Objectives of Management Developments.
a) Assure the org of availability of required numbers of managers with the required skills
to meet the present and anticipated future needs of the business.
b) To encourage managers to grow as person & in their capacity to handle greater
responsibility.
c) To improve the performance of managers throughout their career.
15. A Dasgupta in “Business & Mgt in India” has given objectives of development of
managerial persons for various level of mgt as under:-
a) Top Mgt.
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5. i. To improve through process and analytical ability in order to uncover and
examine problems and take decision in the best interest of the country & Org.
ii. To broaden the outlook of the executive role, position & responsibilities.
iii. To think through the problems which may confront the organization.
iv. To understand, economic, technical & institutional aspects in order to solve
business problems.
v. To acquire knowledge about problems of human relations.
(B) MIDDLE MGT.
i. To establish a clear picture of executive functions & response.
ii. To bring about an awareness of the broad aspects of mgt problems.
iii. To develop the ability to analyze problems and to take appropriate action.
iv. To develop familiarity with managerial uses of fin accounting.
v. To inculcate knowledge of human motivation & human relationships.
vi. To develop responsible leadership.
(C) MIDDLE FUNCTIONAL EXECUTIVE & SPECIALISTS.
i. To increase knowledge of business functions & operations in specific fields in
marketing, productions, finance, personnel.
ii. To increase proficiency in mgt techniques, work study, inventory control, operation
research, quality control.
iii. To simulate creative thinking.
iv. To understand the functions performed in a company.
v. To understood Human Relations problems.
vi. To develop ability to analyse the problems.
16. TECHNIQUES OF MANAGEMENT DEVELOPMENT.
a) Planned Progression.
b) Job Rotation.
c) Creation of ‘Assistant-to’ Position.
d) Under-study.
e) Coaching-Counseling.
f) Temporary Promotions.
g) Committees & Jr. Bodies of managements.
h) Syndicates.
i) Case Discussion.
j) Incident Process.
k) Role Playing.
l) Sensitivity Training.
m) Management / Business Games.
n) In-Basket exercise.
o) Transactional Analysis.
17. WHAT IS PERFORMANCE APPRAISAL?
‘Performance appraisal (PA) is the process through which an individual employee’s
behavior and accomplishments for a fixed time period are measured & evaluated.’ The
main purpose of measuring and evaluating is to assess the worth or value.
18. ‘PERFORMANCE APPRAISAL. Is systematic & objective way of judging the relative
worth of an employee in performing his task?” Performance appraisal is thus the process of
reviewing an individual’s performance and program, in a job and assessing his potential for
future improvement.
It is a systematic method of obtaining, analyzing and recording information about a person
that is needed:-
a) For the efficient Mgt of Business / Org.
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6. b) By the manager to help him to improve the jobholders performance & plan his
career.
c) By the jobholder to assist him to evaluate his own performance & develop himself.
19. PA- FROM AN ORG PERSPECTIVE. PA is led by the personnel function. PA can be
viewed as 6-step sequence as shown in Fig-1. The sequence is significant because it begins
& ends with the personnel functions & is ultimately justified by the value of PA in helping to
make several administrative decisions.
20. PA FROM A MANAGERIALS VIEW POINT. The manager shoulders the responsibility
for PA. The manager defines the demands of the employee’s position & translates these into
some expectations for the employees i.e., “I expect you to reduce absentee sum by 20%.
How the employee actually performance is observed over a fixed time-period resulting in a
evaluation form. Evaluation must be shared with a subordinate. The process ends with
recommendation from you to Higher Management for one or more administrative decisions
regarding the employee as under:-
i. Promotion.
ii. Salary Increase.
iii. Training.
iv. Any Other.
21. PROBLEM OF VALIDITY & RELIABILITY. PA is intended to evaluate the ‘Performance
& Potential’ of employees. Still they may not be valid indicator of what they are intended to
assess because of a Variety of Limitations on their use:-
a) The ‘Halo’ effect. The tendency of the evaluation to base assessments of all the
individual characteristics on the rater’s overall impression of the person being
evaluated is ‘Halo Effect’. The halo effect is the tendency to generalize from a
predetermine overall impression for the appraisal of specific traits and characteristics.
i. Bias. Appraisers Bias colors the entire appraisal base on religion, political,
social, interpersonal conflicts.
ii. Inflation of Ratings. There is a tendency to give rater higher ratings.
iii. Central Tendency. Tendency to avoid extreme ratings on both ends of scale.
iv. Strictness Error. When rater artificially assigns all or certain groups of
employee low ratings.
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7. 22. METHODS OF APPRAISAL.
a) Global Essays & Ratings.
b) Trait-rating scales.
c) Ranking Process.
d) Critical Incident Methods.
e) Behavioral based scales & BARS.
Unfortunately there are no accepted standards to determine which method of evaluation
produces best results. A range of methods & techniques are used. There are no commonly
accepted norms.
a) Global Essay & Ratings. In a typical Global Rating approach the rater is asked to
provide an overall estimate of performance without making distinction among
performance decisions. “What is your overall evaluation of this individual’s
performance for the past year”?
b) TRAIT-RATING-SCALES. Usually comprise a list of personality-traits. You as a rater
will be required to indicate in a numerical scale the degree to which the individuals
being appraised possesses these traits. The trait rating approach is multidimensional
is usually conducted to generate a limited number of traits appearing in the PA form.
However since they lack specific job-related definitions, trade rating scales are
extremely vulnerable to errors such as halo, strictness, central tendency & that
severally affect the validity & reliability of the ratings.
c) Ranking Process. Top 1%, Top3%, Top5%, Bottom 30%, marginal & unsatisfactory.
d) Critical Incident Methods. You must document the positive & negative behavior
events that have occurred during a given performance period. You can revise
performance as services of +Ve and –Ve behavior related to a job. This approach
requires a great deal of inference on your part as a rater to determine which incident
are critical to the job performance.
e) Behaviorally based scales & BARS. Behaviorally Anchored Rating Scales (BARS)
are description of various degrees of behavior with regard to a specific performance
dimension. The behavior specifically defines and provides you the anchors for the
rating scales. Although these scales represents job relevant dimensions of
performances, they still page problems for you in determining which actually
observed behavior match with specifically anchored performance scales. Despite
this, BARS are a significant improvement, since they require less inference on your
part as a rater than traditional trait-rating approach.
f) Objective & Goal-setting Procedure. There focus on outcomes. An employee is
assessed on the basis of what he produces as a result of job-performance. Goals
and standard are set evaluation is based on whether the goal has been met in
relation to predetermined standards.
23.MAKING PA MORE EFFECTIVE. If PA is to be more successful, they should:-
a) Based on performance standards.
b) Result in a face-to-face performance review and
c) Based upon multiple assignments
a)Results Oriented Scheme. These embody the principle developed by DMC
Gregory & the MBO philosophy based on Peter Drucker’s writings. Should be
shifted from appraisal to analysis MC Gregor suggested that the emphasis.
Should be shifted from appraisal to analysis. This implies a more +Ve approach.
The subordinate is no longer being examined by the supervisor to determine the
formers weakness but the subordinate is analyzing himself-his weakness,
strategies and potentials. He becomes an active not passive agent. The aim is to
relate assessments to a review of performance against specific training and
standard of performance agreed jointly by the supervisor & subordinate.
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8. Merits:-
i. Subordinates make his own evaluation.
ii. Once job a manager is shifted from criticizing the subordinate to
helping him improve his performance.
iii. It is consistent with the belief that people work better when they
have definite I jobs they must meet in specified period.
PERFORMANCE REVIEWS. Meaningful exercise in appraisal of potential the purpose of
Performance Review if they are to achieve their prime purpose of helping people to improve
and develop. Unless carefully & sensitively handled, your subordinates become more
dissatisfied after your counseling than they were before.
i. POTENTIAL REVIEWS. A meaningful exercise in appraisal should include a review
and appraisal potential. The review of potential is concerned with forecasting the
direction in which the subordinate’s career can & should go and the rate at which he
is expected to develop. The assessment of potential requires an analysis of existing
skills, qualities and how they can be developed to the mutual advantage of the
company and the employee. There is also an important counseling aspect to the
review of potential which consists of discussion with the individual about his
aspirations and how these can be best matched to the future, increase for him.
These discussions are a vital part of the procedure because they can provide you
with information about your employee’s feelings on the subject which may have a
direct impact or plans for development.
24. USING MULTIPLE APPRAISALS. To reduce the problem of validity & Reliability, it may
be more useful to use multiple ratings than single evaluation. While the rating of one
supervisor may not be valid, the overall patterns of several ratings do provide an indication
of overall performance and potential for development.
25. PEER. Ratings, self-ratings and subordinate ratings are various attempts that have been
made recently to improve the PA systems.
JOB DESCRIPTION, ANALYSIS & EVALUATION
26. Job Description. Job-Description is a broad statement of the purpose, duties &
responsibilities of a job or position. A job description should be based on a detailed job
analysis.
27. Job Analysis. Job analysis refers to the process of examining a job to identify its
component parts and circumstances in which it is performed. The central concern is to treat
jobs as units of org. The purpose is to gather, analyze and utilize information about jobs. Job
analysis is the foundation for job evaluation.
28. Job evaluation and Pay structure. Job evaluation is the process of establishing the
value of jobs in a job hierarchy. Job values may be determined by negotiation or fixed on the
basis of broad assumptions about market rates and internal relativities. Job evaluation is a
comparative process. Through the process of job evaluation one is able to compare jobs by
using common criteria to define the relationship of one job to another. This gives us the
basis for grading jobs and developing a pay structure one has to remember that job
evaluation is about relationship and not absolutes. Therefore job evaluation cannot be the
sole determining factor for deciding pay structures. Jobs have intrinsic value-the laborer is
worthy of his hire. What is the value in monetary terms unless we take into account a) The
pressure of Supplies & Demand b) Internal Differentials c) feelings of equity?
29. FACTOR AFFECTING JOB VALUES.
a) Market rates.
b) Negotiated Pay Scales.
c) Internal Differentials.
d) Equity.
i) Market Rates. A job is worth what the market says it is worth. You will have difficulty
in obtaining or retaining people if their pay are not kept in line with those prevailing in
the local & National labour markets from which you recruit your employees. Some
specialized jobs within the company will be governed more by internal than external
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9. comparison. Market rates provide data on differentials between jobs as well as actual
levels pay.
ii) Negotiated Pay Scale. Many pay structures are built around pay scales negotiated
either at plant / National levels. The negotiated rates will be influenced by market
rates; the relative standards of employees of unions, the economic sit, legislation &
govt anti-inflationary pay regulations. Often one pays more than the locally or
nationally negotiated minimum just to keep ahead of market rates or in response to
union pressures.
iii) Internal Relativities & Equity. Pay structures are expected to reflect differences in the
relative skill and responsibility of jobs. They should aim to achieve equity in the sense
that individuals should feel that their rewards are in balance both with their own
output in the shape of efforts, skills and contribution, and with the rewards received
by others in relation to their output.
iv) Equity is the feeling that justice & fairness are only achieved when equal pay is
received for equal work, when pay differentials can be related to finite differences in
degrees of responsibility, and when pay matches individual capacity and the level of
work carried out.
25. Job evaluation is used to create TWO Dimensions of relationships. The first is vertical
relationship within the sector of an org where the basic skill is similar. Here the order of
seniority may be obvious but the spacing of the rungs on the seniority leader needs to be
established. The second dimension is lateral relationship between jobs of a different nature.
Job evaluation is therefore basically the attempt to find a measure by which the relative
payments made to different jobs are internally consistent.
SUMMARY
An understanding of all the concepts in this unit will improve the ability to understand what
motivates men and improve our ability to manage them more effectively.
26. METHODS OF JOB EVALUATION
1. Ranking Method.
2. Classification.
3. Factor Comparison.
4. Point Method.
a) Ranking Method. Ranking Method requires a committee typically composed of both
management and employee representatives to arrange jobs in a simple work order,
from highest to lowest. 2 jobs are compared and it is judged as to which one is more
important / difficult. Then they compare another job with the first two and so on until
all the jobs have been evaluated and ranked.
Difficulties-
i. How do you rank hundreds & thousands of jobs?
ii. ii) No objectivity in standards of judging two jobs.
b) Classifications Method- Classification grade are established by identifying some
common denominator-skills, knowledge, responsibilities-with the desired goal being
the creation of a number of distinct classes or grades of jobs. Examples – shop jobs,
clerical jobs or grade of jobs, depending on the type of jobs in the org once
classifications are established, they are ranked in an overall order of importance
according to the criteria chosen and each job is placed in its appropriate
classifications. The classification method shares most of the disadvantages of the
ranking approach, plus the difficulty of writing classification description judging which
jobs go where.
c) FACTOR COMPARISON METHOD. This is a sophisticated and quantitative ranking
method. The evaluators select key jobs in the org as standards. These jobs chosen
should be well known, with establish pay rates in the community and they should
consist of a cross-section of all jobs that are being evaluated “from the lowest to the
highest paid job, from the most important to the least important and cover the full
range of requirements of each factor, as agreed upon by a committee representing
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10. workers & management. “Typically 10-25 key jobs are selected by the committee”.
What factors in the key jobs will the other jobs are compared against? These criteria
are usually mental requirements, skill requirements, physical requirements,
responsibility & working conditions. Once the key jobs are taken & criteria chosen,
committee members rank the key jobs on the criteria. In the next step, the committee
members agrees upon the base rate for each of the key jobs & then allocate this
base rate among the 5 criteria. The final step is to compare its overall judgments and
resolve any discrepancies. The system is in place when the allocations to the key
jobs are clear & understood, and high agreement has been achieved in committees
members judgments about him much of each criteria every job has.
Drawbacks-
i) Complexity.
ii) Use of same 5 criteria to assess all jobs when in fact jobs differ across
and within organization.
iii) POINT METHOD. This method breaks down chosen jobs based on
various identifiable criteria-such as skill, efforts, and responsibility and
then allocates points to each of these criteria. Depending upon the
importance of each criteria to performing the job appropriate weightage
are given points are summed, and jobs with similar points totals are
placed in similar pay grades.
Merits.
The point method offers the greatest stability of the four approaches. Jobs may change over
time but the rating scales establish under the point method stay intact. Also there is a
minimum of rating errors.
Demerits.
i. Complex.
ii. Costly & time consuming to develop. The point method is the most widely used
method.
27. Establish Pay Structure. Once the job evaluation is complete, its data become the
nucleus for the development of the org pay structure. This means establish pay rates
or ranges that are compatible with the ranks, classifications, or points arrived at
through job evaluation.
a) Wage Surveys. Most org use surveys to gather factual information on pay
practices within specific communities and among firms in their industry. This
information is used for comparison purposes. It can tell management if the
org wages are in line with those of other employees and in cases where
there is a short supply of individuals to fill certain position may be used to
actively set wage levels. Org obtain data by carrying out its own surveys &
tapping information from ‘National Bureau of labor statistics.’
b) Wage curves. When management arrives at point totals from job evaluation
and obtains survey data on what comparable org are paying for similar jobs
then a wage curve can be fitted on to the data. This example assumes usage
of the point method and plots point totals and wage data. A separate wage
curve can be constructed based on survey data & compared for
discrepancies.
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11. c) Wage structure. It is only a short step from plotting a wage curve to
developing the org wage structure. Jobs that are similar in terms of classes,
grades or points are grouped together. For example Pay Grade-1 may cover
from 0 to 100 points, Pay Grade-2 from 101 to 200 points & so on. The result
is important jobs are paid more and as individuals assume jobs of greater
importance they rise within the wage hierarchy. Each pay grade has a long
range and that the ranges overlap.
INCENTIVE COMPENSATION PLANS. Incentive pay is given in addition to
basic pay and provides additional dimension to the wage structure.
a) Individuals Incentives.
aa) Piece work plan’s
ab) Time savings bonuses.
ac) Commissions.
Individual’s incentives are widespread in practice.
d) Group Incentives. Two or more employees can be paid incentives for
combined performance example- team victories.
e) Org wide incentives. The goal of such incentive is to direct the efforts of all
employees towards achieving overall org effectiveness. This produces
rewarded for all employees based on org wide cost reduction. Example US
Scanlon plan- labor saving improvements project sharing plans.
f) EXECUTIVE COMPENSATIONS. Executive pay has several twists that
deserve attention.
Firstly, Base salaries of executive are high.
Secondly, executive operate under Bonus & stock option plans that can
dramatically increase their total compensation.
Thirdly, executive receive perquisites or special benefits.
CONCLUSION
Compensation administration is part of every org. The system must be tailored to meet the
objectives & needs of the company.
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12. SELF REVIEW QUESTIONS
Q1. State very briefly the distinguishing features of ‘Job Analysis’, Job Description, and Job
evaluation?
Q2. Describe the major step of Job descriptions?
Q3. What is compensation administration? What does it entail?
Q4. Differentiate between wage survey, wage curves & wage structures?
CASE APPLICATION
(PERK-UP)
1. Last year and in 3 of the 5 preceding years ‘Smithson Industries’ lost millions of dollars.
Although a large conglomerate, smithsion has found these losses hard to accept a sought to
freeze wage increases for its executive. However after conferring with the president of the
company the chairman of the board has decided to offer non-financial incentives. His
reasoning was that competition was head-hunting, and to make such a blatant no-increases
statement might cause the more-promising executives to leave the org. This he felt, would
be extremely determental. He believed that when times were tough, as they had been, i.e.
when excellent managers are required. Losing them now could only snowball the decline.
Accordingly, the Board of Directors has voted to provide each executive with a membership
in the local health Spa, while considered a permanent perk and in lieu of a raise this year,
the board rationalized that managing the corporation the months ahead would be extremely
stressful and that this membership would be a means of reducing the stress while enabling
the executives to become healthier. Unfortunately, however the perk was NOT enough.
Grumbling about the chain of events two executives ‘jumped ship.’ The one’s that stayed
did so because of their time invested in the companies’ pension. However they too were
upset over the boards decision.
QUESTIONS
Q1- How could this ‘Perk’ have been offered or marketed better to these executives?
Q2- What do you believe is the reason why most of the executives did not find the Perk
rewarding?
Q3- Faced with a similar dilemma, what you have done if you had been chairman of the
Board? What would you do now that the executive are upset?
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