HRM Unit 4

HUMAN RESOURCES MANAGEMENT
UNIT 4
SUSTAINING EMPLOYEE INTEREST
Compensation
It is a tool used by management for a variety of purpose to further the existence of the company. It is a
remuneration that an employee receives in return for his or her contribution in theorganization. So, the
employee compensation programs are designed to attract capable employees to the organization, to
motivate them towards superior performance and to retain their services over an extended period of time.
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 offinancial 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. Salaryis 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
whereas salary is paid on monthly basis.
Objectives of Compensation Planning
The basic purpose or objective of establishing sound compensation is to establish and maintain an
equitable rewards system. The other aim is the establishment and maintenance of an equitable
compensation structure i.e. an optimal balancing of conflicting personnel interest so that the satisfaction
of employees andemployers is maximized and conflicts minimized, the compensation management is
concerned with the financial aspect of employees need, motivation and rewards.
A sound compensation structure tries to achieve these objectives:
1. To attract manpower in a competitive market.
2. To control wages and salaries and labour costs by determining rate change and frequency of
3. Increment.
4. To maintain satisfaction of employees by exhibiting that remuneration is fair adequate and
equitable.
5. To induce and improved performance, money is an effective motivator.
a) To Employees:
i. Employees are paid according to requirement of their jobs i.e. highly skilled jobs are paid more
Compensation than low skilled jobs. This eliminates inequalities.
ii. The chances of favoritism are minimized.
iii. Jobs sequence and lines of promotion are established wherever they are applicable.
ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

iv. Employee‘s moral and motivation are increased because of the sound compensation structure.
b) To Employers:
i. They can systematically plan for and control the turnover in the organization.
ii. A sound compensation structure reduces the likelihood of friction and grievance over remunerations.
iii. It enhance an employee morale and motivation because adequate and fairly administrative incentives
are basis to his wants and need.
iv. It attracts qualified employees by ensuring and adequate payment for all the jobs.
v. In dealing with a trade union, they can explain the basis of their wages programme because it is
based upon a systematic analysis of jobs and wages facts
Factors Affecting Compensation Planning
Factors determining compensation of an employee considerable amount of guess word and negotiation
are involved. But following are the certain factors which have been extracted as having an important
bearing upon the final decision:
a) Supply and Demand of Labour: Whatever the organization produces as commodity they desire
services and it must pay a price that of workers acting in concert. If more the labour is required,
such as at war time prosperity, there will be tendency to increase the compensation; whereas the
situation when anything works to decrease the supply of labour, such as restriction by a particular
labour union, there will be a tendency to increase the compensation. The reverse of each situation is likely
to result in a decrease in employee compensation, provided, labour union, ability to pay, productivity,
government do not intervene.
b) Ability to Pay: Labour Unions has often demanded an increase in compensation on the basis that the
firm is prosperous and able to pay.
c) Management’s Philosophy: Management‘s desire to maintain or improve moral, attract high calibre
employees, reduce turnover, and improve employees standard of living also affect wages, as does the
relative importance of a given position to a firm.
d) Legislation: Legislation related to plays a vital role in determining internal organization practices.
Various acts are prescribed by government of country for wage hours laws. Wage-hour laws set limits on
minimum wages to be paid and maximum hours to be worked. In India minimum wages act 1948
reflecting the wage policy for an organization and fixation of minimum rates of wages to workers in
sweated industries. In 1976 equal remuneration act was enacted which prohibits discrimination in matters
relating to remuneration on the basis of religion, region or gender.

Various Modes of Compensation

Various modes of compensation are as follows
a) Wages and Salary- Wages represent hourly rates of pay and salary refers to monthly rate of pay
irrespective of the number of hours worked. They are subject to annual increments. They differ from
employee to employee and depend upon the nature of jobs, seniority and merit.
b) Incentives- These are also known as payment by results. These are paid in addition to wages and
salaries. Incentive depends upon productivity, sales, profit or cost reduction efforts. Incentive scheme are
of two types:
1. Individual incentive schemes.
2. Group incentive schemes.
c) Fringe Benefits- These are given to employees in the form of benefits such as provident fund, gratuity,
medical care, hospitalization, accident relief, health insurance, canteen, uniform etc.
d) Non- Monetary Benefits- They include challenging job responsibilities, recognition of merit, growth
prospects, competent supervision, comfortable working condition, job sharing and flexi time. Incentives
are monetary benefits paid to workmen in lieu of their outstanding performance. Incentives vary from
individual to individual and from period to period for the same individual. They are universal and are paid
in every sector. It works as motivational force to work for their performance as incentive forms the part
total remuneration. Incentives when added to salary increase the earning thus increase the standard of
living. The advantage of incentive payment are reduced supervision, better utilization of equipment,
reduced scrap, reduced lost time, reduced absenteeism and turnover & increased output. According to
Burack & Smith, ―An incentive scheme is a plan or programme to motivate individual or group on
performance. An incentive programme is most frequently built on monitory rewards (incentive pay or
monetary bonus), but may also include a variety of non-monetary rewards or prizes.‖
Kinds of Incentives
Incentives can be classified under the following categories:
1. Individual and Organizational Incentives
2. Financial and Non-Financial Incentives
3. Positive and Negative Incentives
1) Individual and Organizational Incentives- According to L.G. Magginson, ―Individual incentives
are the extra compensation paid to an individual for all production over a specified magnitude which
stems from his exercise of more than normal skill, effort or concentration when accomplished in a
predetermined way involving standard tools, facilities and materials.‖ Individual performance is measured
to calculate incentive whereas organizational or group incentive involve cooperation among employees,
management and union and purport to accomplish broader objectives such as an organization-wide
reduction in labour, material and supply costs, strengthening of employee loyalty to company,
harmonious management and decreased turnover and absenteeism
I) Individual Incentive System is of two types:

a) Time based System- It includes Halsey Plan, Rowan Plan, Emerson Plan and Bedeaux Plan
b) Production based System- it includes Taylor‘s Differential Piece Rate System, Gantt‘s Task and
Bonus Plan.
II) Group Incentive System is of following types
a) Scalon Plan
b) Priestman‘s Plan
c) Co-Partnership Plan
d) Profit Sharing
Some important these plans of incentive wage payments are as follows:
Halsey Plan- Under this plan a standard time is fixed in advance for completing a work. Bonus is
rewarded to the worker who performs his work in less than the standard time and paid wages according to
the time wage system for the saved time.
The total earnings of the worker = wages for the actual time + bonus = 33.5% of the time saved (standard
time set on past experience) Or 50% of the time saved (standard are scientifically set)
Example: Time required to complete job (S) = 20 hours Actual Time taken (T) = 15 hours Hourly Rate of
Pay (R) = Rs 1.5 Calculate the wage of the worker.
Solution: T X R + (S-T) X R 2 15 X 1.5 + (20-15 ) X 1.5 = 22.5 + 3.75 = 26.25 Rs 2 In this equation 3.75
Rs are the incentives for saving 5 hours.
Rowan Plan – Under this method minimum wages are guaranteed given to worker at the ordinary rate for
the time taken to complete the work. Bonus is that proportion of the wages of the time taken which the
time saved bears to the standard time allowed.
Incentive = Wages for actual time for completing the work + Bonus where,
Bonus = S-T X T X R
S
Emerson Plan – Under this system, wages on the time basis are guaranteed even to those
workers whose output is below the standard. The workers who prove efficient are paid a bonus.
For the purpose of determining efficiency, either the standard output per unit of time is fixed, or
the standard time for a job is determined, and efficiency is determined on the basis of a
comparison of actual performance against the standard.
Bedeaux Plan – It provide comparable standards for all workers. The value of time saved is
divided both to the worker and his supervisor in the ratio of¾ and ¼ respectively. A supervisor
also helps a worker in saving his time so he is also given some benefit in this method. The
standard time for each job is determined in terms of minutes which are called Bedeaux points or
B‘s. each B represents one minute through time and motion study. A worker is paid time wages
upto standard B‘s or 100% performance. Bonus is paid when actual performance exceeds
standard performance in terms of B‘s.
Taylor’s Differential Piece Rate System - F.W. Taylor, founder of the scientific management
evolved this system of wage payment. Under this system, there is no guarantee of minimum
wages. Standard time and standard work is determined on the basis of time study. The main

characteristics of this system are that two rates of wage one lower and one higher are fixed.
Those who fail in attaining the standard, are paid at a lower rate and those exceeding the standard
or just attaining the standard get higher rate. Under this system, a serve penalty is imposed on the
inefficient workers because they get the wages at lower rates. The basic idea underlying in this
scheme is to induce the worker at least to attain the standard but at the same time if a worker is
relatively less efficient, he will lose much. For example, the standard is fixed at 40 units per day
and the piece rate are 40 P. and 50 P. per unit. If a worker produces 40 units or more in a day, he
will get the wages at the rate of 50 P per unit and if he produces 39 units will get the wages at 40
paise per unit for the total output.
Gantt’s Task and Bonus Plan - In this, a minimum wage is guaranteed. Minimum wage is
given to anybody, who completes the job in standard time. If the job is completed in less time,
then there is a hike in wage-rate. This hike varies between 25% to 50% of the standard rate.
Profit Sharing – It is a method of remuneration under which an employer pay his employees a
share in form of percentage from the net profits of an enterprise, in addition to regular wages at
fixed intervals of time.
2) Financial and Non-financial Incentives- Individual or group performance can be measured

in financial terms. It means that their performance is rewarded in money or cash as it has a great
impact on motivation as a symbol of accomplishment. These incentives form visible and tangible
rewards provided in recognition of accomplishment. Financial incentives include salary,
premium, reward, dividend, income on investment etc. On the other hand, non-financial
incentives are that social and psychological attraction which encourages people to do the work
efficiently and effectively. Non-financial incentive can be delegation
of responsibility, lack of fear, worker‘s participation, title or promotion, constructive attitude,
security of service, good leadership etc..
3) Positive and Negative Incentives- Positive incentives are those agreeable factors related to
work situation which prompt an individual to attain or excel the standards or objectives set for
him, where as negative incentives are those disagreeable factors in a work situation which an
individual wants to avoid and strives to accomplish the standards required on his or her part.
Positive incentive may include expected promotion, worker‘s preference, competition with
fellow workers and own ‗s record etc. Negative incentives include fear of lay off, discharge,
reduction of salary, disapproval by employer etc.
Fringe Benefits
Employees are paid several benefits in addition to wages, salary, allowances and bonus. These
benefits and services are called ‗fringe benefits‘ because these are offered by the employer as a
fringe. Employees of the organization are provided several benefits and services by the employer
to maintain and promote employee‘s favorable attitude towards the work and work environment.
It not only increases their morale
but also motivate them. These provided benefits and services forms the part of salary and are
generally refereed as fringe benefits.

According to D. Belcher, ― Fringe benefits are any wage cost not directly connected with the
employees productive effort, performance, service or sacrifice‖. According to Werther and
Davis, ―Fringe embrace a broad range of benefits and services that employees receive as part of
their total compensation, package pay or direct compensation and is based on critical job factors
and performance‖.
According to Cockman, ― Employee benefits are those benefits which are supplied by an
employer to or for the benefits of an employee and which are not in the form of wages, salaries
and time rated payments‖. These are indirect compensation as they are extended condition of
employment and are not related to performance directly.
Kinds of Fringe Benefits

The various organizations in India offer fringe benefits that may be categorized as follows:
1) Old Age and Retirement Benefits - these include provident fund schemes, pension schemes,
gratuity and medical benefits which are provided to employee after their retirement and during
old age as a sense of security about their old age.
2) Workman’s Compensation - these benefits are provided to employee if they are got ignored
or die under the working conditions and the sole responsibility is of the employer.
3) Employee Security- Regular wage and salary is given to employee that gives a feeling of
security. Other than this compensation is also given if there is lay-off or retrenchment in an
organization.
4) Payment for Time Not Worked – Under this category of benefits, a worker is provided
payment for the work that has been performed by him during holidays and also for the work
done during odd shifts. Compensatory holidays for the same number in the same month are given
if the worker has not availed weekly holidays.
5) Safety and Health – Under this benefit worker are provided conditions and requirements
regarding working condition with a view to provide safe working environment. Safety and
Health measures are also taken care of in order to protect the employees against unhealthy
working conditions and accidents.
6) Health Benefits – Employees are also provided medical services like hospital facility, clinical
Facility by the organization.
Wages And Salaries

wages" means all remuneration (whether by way of salary allowances or otherwise) expressed in
terms of money or capable of being so expressed which would if the terms of employment
express or implied were fulfilled by payable to a person employed in respect of his employment
or of work done in such employment and includes -
(a) any remuneration payable under any award or settlement between the parties or order of a
court;
(b) any remuneration to which the person employed is entitled in respect of overtime work or
holidays or any leave period;
(c) any additional remuneration payable under the terms of employment (whether called a bonus
or by any other name);
(d) any sum which by reason of the termination of employment of the person employed is
payable under any law contract or instrument which provides for the payment of such sum

whether with or without deductions but does not provide for the time within which the payment
is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under any law
for the time being in force, but does not include -
(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part
of the remuneration payable under the terms of employment or which is not payable under any
award or settlement between the parties or order of a court;
(2) the value of any house-accommodation or of the supply of light water medical attendance or
other amenity or of any service excluded from the computation of wages by a general or special
order of the State Government;
(3) any contribution paid by the employer to any pension or provident fund and the interest
which may have accrued thereon;
(4) any travelling allowance or the value of any travelling concession;
(5) any sum paid to the employed person to defray special expenses entailed on him by the
nature of his employment; or
(6) any gratuity payable on the termination of employment in cases other than those specified in
sub-clause (d).
Meaning and Definition of Wage
In the ordinary language the term wages implies 'reward' to the labourers for the services
rendered by them. It may be paid daily, weekly, fortnightly, monthly, per hour or per unit.
Services rendered by the labourer include both physical and mental services.
In the words of Benham. "Wages are a sum of money paid under contract by an employer to a
worker for services rendered."
According to ILO " Wages refer to that payment which is made by the employers to the labourer
for his services hired on the conditions of payment per hour, per day, per week or per fortnight."
Appropriate Definition: Wages refer to that reward which is received from the employer for the
services rendered by the labourer per week, per month, per fortnight or per unit It includes
allowances also.
Subsistence Wage: - The wage that can meet only bare physical needs of a worker and his family
is called subsistence wage.
Minimum Wage: - Minimum wage is the wage that is able to provide not only for bare physical
needs but also for preservation of efficiency of worker plus some measure of education, health
and other things.
Fair Wage: - Fair wages is an adjustable step that moves up according to the capacity of the
industry to pay, and the prevailing rates of wages in the area of industry.
Living Wage:- Living wage is that which workers can maintain the health and decency, a
measure of comfort and some insurance against the more important misfortune of lie.

In any even the minimum wage must be paid irrespective of the extent of profits, the financial
condition of the establishment or the availability of workmen at lower wages. The wages must be
fair, i.e. sufficiently high to provide standard family with ,food, shelter, clothing, medical care
and education of children appropriate to the workmen. A fair wage lies between the minimum
wage and the living wage which is the goal. Wages must be paid on an industry wise and region
basis having due regard to the financial capacity of the unit.
Objectives:
The main objective of wage and salary administration is to establish and maintain an equitable
wage and salary system. This is so because only a properly developed compensation system
enables an employer to attract, obtain, retain and motivate people of required calibre and
qualification in his/her organisation. These objectives can be seen in more orderly manner from
the point of view of the organisation, its individual employees and collectively. There are
outlined and discussed subsequently:
Organizational Objectives:
The compensation system should be duly aligned with the organizational need and should also be
flexible enough to modification in response to change.
Accordingly, the objectives of system should be to:
1. Enable an organisation to have the quantity and quality of staff it requires.
2. Retain the employees in the organisation.
3. Motivate employees for good performance for further improvement in performance.
4. Maintain equity and fairness in compensation for similar jobs.
5. Achieve flexibility in the system to accommodate organizational changes as and when these
take place.
6. Make the system cost-effective.
Individual Objectives:
From individual employee’s point of view, the compensation system should have the following
objectives:
1. Ensures a fair compensation.
2. Provides compensation according to employee’s worth.
3. Avoids the chances of favoritism from creeping in when wage rates are assigned.

4. Enhances employee morale and motivation.
Collective Objectives:
These objectives include:
1. Compensation in ahead of inflation.
2. Matching with market rates.
3. Increase in compensation reflecting increase in the prosperity of the company.
4. Compensation system free from management discretion.
Beach has listed the five objectives of wage and salary administration:
1. To recruit persons for a firm
2. To control pay-rolls
3. To satisfy people, reduce the incidence of turnover, grievances, and frictions.
4. To motivate people to perform better
5. To maintain a good public image.
Principles of wage and salary administration:
The main principles that govern wage and salary fixation are three:
1. External Equity
2. Internal Equity
3. Individual Worth.
1. External Equity:
This principle acknowledges that factors/variables external to organisation influence levels of

compensation in an organisation. These variables are such as demand and supply of labour, the
market rate, etc. If these variables are not kept into consideration while fixing wage and salary
levels, these may be insufficient to attract and retain employees in the organisation. The
principles of external equity ensure that jobs are fairly compensated in comparison to similar
jobs in the labour market.

2. Internal Equity:
Organisations have various jobs which are relative in value term. In other words, the values of
various jobs in an organisation are comparative. Within your own Department, pay levels of the
teachers (Professor, Reader, and Lecturer) are different as per the perceived or real differences
between the values of jobs they perform.
This relative worth of jobs is ascertained by job evaluation. Thus, an ideal compensation system
should establish and maintain appropriate differentials based on relative values of jobs. In other
words, the compensation system should ensure that more difficult jobs should be paid more.
3. Individual Worth:
According to this principle, an individual should be paid as per his/her performance. Thus, the
compensation system, as far as possible, enables the individual to be rewarded according to his
contribution to organisation.
Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison to
others doing the same/similar jobs, i.e., ‘equal pay for equal work’. In sum and substance, a
sound compensation system should encompass factors like adequacy of wages, social balance,
supply and demand, fair comparison, equal pay for equal work and work measurement.
Components of Wages And Salary Administration
While the objective of wage and salary administration, is as simple, the process is not so easy
and simple. In fact, it is a complex one, especially since the ‘fair wages’ is a relative term viewed
differently by different parties.
For example, while the employer will be concerned primarily with productivity, the employee’s
concern will be on wage rates that can offset the effects of inflation. Based on Belcher’s
classification of the compensation management, we have for the purposes of our analysis
considered two broad components of wage and salary administration.
These are:
1. Determination of Wages and Salary
2. Wages/Salary Structures
Both are now discussed one by one.
1. Determination of Wages and Salary:

The starting point of wage and salary administration is the determination of wage and salary
levels. The wage/salary of employee in the organised sector in India is determined by a variety of
factors.
These all factors are classified into four categories:
1. Wage Enactments (both Central and State Governments)
2. Prevalent Wage Rates.
3. Influence of Trade Unions.
4. Corporate Philosophy on Wages
Lantham has listed the following five factors that have a bearing on the formulation of wage/
salary levels:
1. Cost of living
2. Productivity
3. Prevailing wage rates
4. Ability to pay
5. Attraction and retention of employees.
Cost of Living:
Workers need to be paid compensation adequate to maintain an acceptable level of living. The
concepts of ‘minimum wage’ are based on the same justification. However, wage/salary fixed
once becomes inadequate to maintain the required level of living due to inflationary spirals
increasing the cost of living.
Thus, the increase in cost of living calls for fixation of compensation accordingly. In order to
offset the increased cost of living, compensation is, then, fixed by increasing dearness allowance
based on the cost of living index.
Productivity:
Productivity can be expressed as production in relation to time unit. Productivity increase

production and decreases cost. As per the principle of payment by performance productivity of
the worker is a high, wage/salary rate will be high. Conversely, it productivity of the worker is
low, wage/salary rates tend to be low. Thus, any shift in productivity has its impact on the wage
level of the worker.

Here, it is important to mention that productivity increases are not due to the worker efforts alone
It may also be due to better organisation and management, technological development etc Se
results (profits) of increased productivity available to the employer need to be distributed in a
manner acceptable to the employees, the management, and the customers. However, been any
productivity index that can measure only me productivity o a specific factor including worker
Therefore. Though theoretically sound criterion, it is operationally complicated one.
Prevailing Wage Rate:
In order to attract and retain workers in the organisation, wage/salary rates are fixed as per the
prevailing rate in the region. This is also called the ‘going wage rate’ which is the most widely
used criterion of wage/salary fixation. The prevailing wage rate is, thus, fixed based on inter-firm
wage comparisons.
This is because of several reasons. First, various government laws and judicial decisions make
the adoption of uniform wage rates Ions accept and encourage this system to ensure equal pay for
equal work across the industries regions. Third, all firms functionally related in an industry
require essentially the employees with the same or about the same skills and experience.
However, if -age/salary are not paid to the employees what are paid by the other organisations
(competitors), it will be difficult for organisation to attract and retain employees in a sufficient
quantity and quality.
Ability to Pay:
This criterion of wage/salary fixation is based on the dictum. “Cut your coat according to the size
of your cloth”. Following this, organisations do also fix wages what they can afford to pay. The
reason being an increased wage cost, better call it ‘wages beyond one’s affording capacity’
cannot enable the organisation to sustain in a competitive environment especialy in the long run
Such wage cost only pushes up unit cost, thus, cutting into the market share of the organization.
In such a case, organisations resort to cost cutting and axe may fall on wage and salary levels. It
is mainly the ability to pay criterion, organization which earns high profits pay higher wages as
compared to those whose profits are low or are incurring losses. Wage differentials between
organisations are due to the same reason, i.e. ability to pay.
Attraction and Retention of Employees:
The quantity and quality of employees an organizations needs to employ also determines the
levels of wages and salary fixed. For example, wage/salary will be fixed at a higher level if
organisation needs quality people to be employed and retained. If the availability of jobs is
scarce, the wages and salary levels will be low.
Wage levels may also be low even lower than the prevailing wage rate if the firm’s economic
situation is such that it cannot afford to pay the prevailing wage rate in the industry or region.
According to Monappa, the following factors determine the level of wage/salary in the organised
sector of the Indian industry.

Wage Influencing Variable
2. Wage/Salary Structure:
Jobs offered by an organisation vary in terms of their values. Job value is ascertained by job
evaluation. Job evaluation is a systematic method of appraising the value of each job in relation
to other jobs in an organisation.
Once all jobs are assigned values, and then these are placed in a grade, or say, a rate per job.
These grades are arranged in a hierarchical order starting with lower to higher jobs. Thus
wage/salary structure consists of the various salary grades and their different levels of single jobs
or group of jobs.
This will be clearer from the following salary/pay structure of teachers at present in a University:
Professor: Rs. 16, 40(M50-20,900-500-22,400
Reader: Rs. 12,000-420-18,300
Lecturer: Rs. 8,000-275-13,500
How to devise a salary structure? :

Like wage and salary fixation discussed earlier, there might be so many ways to devise a salary
structure.
However, the simplest way to devise a salary structure is outlined here as follows:
1. Ascertain and establish, on the basis of market rate surveys and studies of existing salary
structures, the most senior and most junior jobs to be covered by the salary structure.
2. Based on above, draw up salary grade structure ranging from the lowest, limit along with the
width of salary gaps between jobs and the size of overlap between different grades.
3. Make a job evaluation exercise.This can be done by any method of job evaluation.However,
job evaluation by means of a simple ranking scheme is preferable.
4. Procure market rate data keeping in mind that there is likely to be a range of market rates in
existence in the labour market.
5. Finally, based on the results of job evaluation and market rate surveys and studies arrange ‘ all
jobs in the grades in an hierarchical order. In fact, it is the stage where a good judgment is
required.
There are two more elements involved in a salary structure:
1, Salary Progression
2. Broad banding
A brief description of these follows:
Salary Progression:
As the term itself implies, it refers to a sequence of progress in salary. In other words, salary
progression relates to increases in salary to merit. It relates compensation/salary to performance
on a consistent and equitable manner.
The procedure of salary progression is characterised by the following key features:
(i) The salary grades are divided into defined areas or zones. An employee will pass through
these stages or zones as he/she progresses in experience. For example a Professor in a University
starts with a basic pay of Rs. 16,400 and touches Rs. 20,900 after 10 years experience and Rs.
22,400 after 13 years’ experience.
(ii) There is an incremental rate at which an employee progresses along with the salary grade. In
the above example, the incremental system consists of a rate of Rs. 450 per year during the first
10years- period and Rs. 500 per year during the last 03 years period of experience.

Broad banding:
Broad banding means a process reducing salary grades to a words broad banding means
collapsing salary grades and ranges into a few broad and wide levels or ‘bands’ each consisting
of a relatively wide range of jobs and salary levels. As mentioned earlier, in a University. For
example, all teaching jobs are reduced to three broad grades namely, Professor, Reader and
Lecture.
This broad banding of grades is more popular in industrial organisations employing huge number
of employees. For example, Toyota has broad banded it’s all jobs into just five grades or bands.
Similarly, General Electricals has been able to restructure its all jobs into three job
classifications, viz., Division I: Production Members, Division II: General. Maintenance Team
Managers; and Division III: All Tie and Dye Members
The main advantage of broad banding is that it injects greater flexibility into employee
compensation. It is especially sensible where firms flatten their hierarchies and organise around
self-managing teams.
Methods of Wage Payment
There are two basic methods of wage payment, i.e., payment by time and payment by results
(PBR). The latter one is also known as the incentive wage system.
Payment by time:
This is the age-old and most prevalent method of method the employee is paid on the basis of
time worked such as per day per week, and per month rather than output. This is the main
difference between this system and the incentive system.
The wage rate is predetermined by negotiation, by reference to local rates, or by job evaluation.
This method is useful when a worker has to do unstandardized job. This is generally the method
adopted for white collar clerical and managerial jobs.
The advantage of payment by time rate for an employee is that earnings are predictable and
steady. This breeds a sense of security by assuring employee a fixed packet. The employee also
does not need to argue with wage fixer about his/her remuneration.
However, the disadvantage of time rate is that it does not provide any motivation of a direct
incentive relating the reward to the effort.
Payment by results (PBR):

Under this method, the wage/pay of an employee is paid on the basis of the number of items an
employee’s produces in the organisation, rather than considering the job done by the employee at
a given time.
This may be through the following two systems:
1. Straight Piece-Work
2. Differential Piece-Work System
Straight Piece Work:
Under this method, wage payment is made to employees at a uniform rate per unit of production.
In other words, in this system, employee is paid a flat price (in money) for each unit or piece
completed, or paid for time allowed to compete the particular task. This method of wage
payment is more appropriate where production is of repetitive character and easily be divided
into similar units of production.
Differential Piece-Work System:
In this method, wage is paid in relation to J wages per unit of production decreases with increase
in production. But, wage rate per hour still increases of course, not in proportion to the increased
output. This method is applicable where efforts can be related to production and work is
standardised, repetitive, and measurable.
Balance Method:
This method is a combination of time wage and piece wage methods. In this method, a worker is
paid a fixed wage based on the time rate with a provision of piece wage method. How? This is
just like minimum rent with a provision of short working recoupment in case of royalty. If a
worker produces less quantity in a period, he is given wages as per time rate and excess payment
over piece rate is treated as credit.
This credit is compensated in the period when he/she produces more than time rate wages. Thus,
he is given time wage whether he produces more or less than it, i.e., time wage. This wills be
more clear from an example.
Suppose, the time wage is Rs. 500 per week and the piece wage rate is Rs. 10 per unit.
Wages under Balance Method:

This method ensures the worker the receipt of a fixed amount as wage in all cases. From workers
point of view, this method has relevance in work situation where work flow is flexible /irregular
such as docks. This method is also known as ‘debt method’. The National Commission on
Labour (NCL) has identified different methods of wage payment by employee contribution.
Methods of Wage Payment Vis-a-Vis Employee Contribution
Theory Of Wages
Some of the most important theories of wages are as follows: 1. Wages Fund Theory 2.
Subsistence Theory 3. The Surplus Value Theory of Wages 4. Residual Claimant Theory 5.
Marginal Productivity Theory 6. The Bargaining Theory of Wages 7. Behavioural Theories of
Wages.
How much and on which basis wages should be paid to the workers for services rendered by
them has been a subject matter of great concern and debate among economic thinkers for a long
time This has given birth to several wage theories, i.e. how wages are determined. Out of them,
some important theories of wages are discussed here.
1. Wages Fund Theory:
This theory was developed by Adam Smith (1723-1790). His theory was based on the basic
assumption that workers are paid wages out of a pre-determined fund of wealth. This fund, he
called, wages fund created as a result of savings. According to Adam Smith, the demand for
labour and rate of wages depend on the size of the wages fund. Accordingly, if the wages fund is
large, wages would be high and vice versa.
2. Subsistence Theory:

This theory was propounded by David Recardo (1772-1823). According to this theory, “The
labourers are paid to enable them to subsist and perpetuate the race without increase or
diminution”. This payment is also called as ‘subsistence wages’. The basic assumption of this
theory is that if workers are paid wages more than subsistence level, workers’ number will
increase and, as a result wages will come down to the subsistence level.
On the contrary, if workers are paid less than subsistence wages, the number of workers will
decrease as a result of starvation death; malnutrition, disease etc. and many would not marry.
Then, wage rates would again go up to subsistence level. Since wage rate tends to be at,
subsistence level at all cases, that is why this theory is also known as ‘Iron Law of Wages’. The
subsistence wages refers to minimum wages.
3. The Surplus Value Theory of Wages:
This theory was developed by Karl Marx (1849-1883). This theory is based on the basic assump-
tion that like other article, labour is also an article which could be purchased on payment of its
price i e wages. This payment, according to Karl Marx, is at subsistence level which is less than
in proportion to time labour takes to produce items. The surplus, according to him, goes to the
owner. Karl Marx is well known for his advocation in the favour of labour.
4. Residual Claimant Theory:
This theory owes its development to Francis A. Walker (1840-1897). According to Walker, there
are four factors of production or business activity, viz., land, labour, capital, and
entrepreneurship. He views that once all other three factors are rewarded what remains left is
paid as wages to workers. Thus, according to this theory, worker is the residual claimant.
5. Marginal Productivity Theory:
This theory was propounded by Phillips Henry Wick-steed (England) and John Bates Clark of
U.S.A. According to this theory, wages is determined based on the production contributed by the
last worker, i.e. marginal worker. His/her production is called ‘marginal production’.
6. The Bargaining Theory of Wages:
John Davidson was the propounder of this theory. According to this theory, the fixation of wages
depends on the bargaining power of workers/trade unions and of employers. If workers are
stronger in bargaining process, then wages tends to be high. In case, employer plays a stronger
role, then wages tends to be low.
7. Behavioural Theories of Wages:
Based on research studies and action programmes conducted, some behavioural scientists have
also developed theories of wages. Their theories are based on elements like employee’s

acceptance to a wage level, the prevalent internal wage structure, employee’s consideration on
money or’ wages and salaries as motivators.
REWARD:
Reward Management is concerned with the formulation and implementation of strategies and
Policies that aim to reward people fairly, equitably and consistently in accordance with their
value to the organization
Objectives of Reward Management

1. Recruit & retain
2. Motivate employees
3. Internal & external equity
4. Strengthen psychological contract
5. Financially sustainable
6. Comply with legislation
7. Efficiently administered
Basic Types of Reward

Extrinsic rewards
– satisfy basic needs: survival, security
– Pay, conditions, treatment
Intrinsic rewards
– satisfy higher needs: esteem, development
Rewards by Individual, Team, Organization
Individual: base pay, incentives, benefits
– rewards attendance, performance, competence
Team
– team bonus, rewards group cooperation
Organization
– Profit-sharing, shares, gain-sharing
Role of Compensation and Reward in Organization:
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.
Land, Labor, Capital and Organization are four major factors of production.
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. similarly Capitalist expects
Interest and Organizers i.e Entrepreneur expects profits. The labour expects wages from the
process.
It is evident that other factors are in-human factors and as such 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.

Advantages of Fair Compensation System:

Therefore a fair compensation system is a must for every business organization. The fair
compensation system will help in the following:
1) If an ideal compensation system is designed, it will have positive impact on the
efficiency and results produced by workmen.
2) Such system will encourage the normal worker to perform better and achieve the
standards fixed.
3) This system will encourage the process of job evaluation. It will also help in setting up
an ideal job evaluation, which will have transparency, and the standards fixing would
be more realistic and achievable.
4) Such a system would be well defined and uniform. It will be apply to all the levels of
the organization as a general system.
5) The system would be simple and flexible so that every worker/recipient would be able
to compute his own compensation receivable.
6) Such system would be easy to implement, so that it would not penalize the workers for
the reasons beyond their control and would not result in exploitation of workers.
7) It will raise the morale, efficiency and cooperation among the workers. It, being just
and fair would provide satisfaction to the workers.
8) Such system would help management in complying with the various labor acts.
9) Such system would also bring about amicable settlement of disputes between the
workmen union and management.
10) The system would embody itself the principle of equal work equal wages.
Encouragement for those who perform better and opportunities for those who wish to
excel.
Types of rewards
Rewards serve many purposes in organisations. They serve to build a better employment deal,
hold on to good employees and to reduce turnover.
The principal goal is to increase people's willingness to work in one‘s company, to enhance their
productivity. Most people assimilate "rewards", with salary raise or bonuses, but this is only one
kind of reward, Extrinsic reward. Studies proves that salespeople prefer pay raises because they
feel frustrated by their inability to obtain other rewards,but this behavior can be modified by
applying a complete reward strategy.
There are two kinds of rewards:
Extrinsic rewards: concrete rewards that employee receive.
Bonuses: Usually annually, Bonuses motivates the employee to put in all

endeavours and efforts during the year to achieve more than a satisfactory appraisal
that increases the chance of earning several salaries as lump sum. The scheme of
bonuses varies within organizations; some organizations ensure fixed bonuses
which eliminate the element of asymmetric information, conversely, other

organizations deal with bonuses in terms of performance which is subjective and

may develop some sort of bias which may discourage employees and create setback.
Therefore, managers must be extra cautious and unbiased.
Salary raise: Is achieved after hard work and effort of employees, attaining and
acquiring new skills or academic certificates and as appreciation for employees duty
(yearly increments) in an organization. This type of reward is beneficial for the
reason that it motivates employees in developing their skills and competence which
is also an investment for the organization due to increased productivity and
performance. This type of reward offers long-term ssatisfaction to employees.
Nevertheless, managers must also be fair and equal with employees serving the
organization and eliminate the possibility of adverse selection where some
employees can be treated superior or inferior to others.
Gifts: Are considered short-term. Mainly presented as a token of appreciation for an

achievement or obtaining an organizations desired goal. Any employee would
appreciate a tangible matter that boosts their self-esteem for the reason of
recognition and appreciation from the management. This type of reward basically
provides a clear vision of the employee‘s correct path and motivates employee into
stabilising or increasing their efforts to achieve higher returns and attainments.
Promotion: Quite similar to the former type of reward. Promotions tend to effect the
long-term satisfaction of employees. This can be done by elevating the employee to
a higher stage and offering a title with increased accountability and responsibility
due to employee efforts, behaviour and period serving a specific organization. This
type of reward is vital for the main reason of redundancy and routine. The employee
is motivated in this type of reward to contribute all his efforts in order to gain
managements trust and acquire their delegation and responsibility. The issue
revolved around promotion is adverse selection and managers must be fair and
reasonable in promoting their employees.
Other kinds of tangible rewards
Intrinsic rewards: tend to give personal satisfaction to individual Information /

feedback: Also a significant type of reward that successful and effective managers
never neglect. This type of rewards offers guidance to employees whether positive
(remain on track) or negative (guidance to the correct path). This also creates a bond
and adds value to the relationship of managers and employees.
Recognition: Recognition: Is recognizing an employee‘s performance by verbal

appreciation. This type of reward may take the presence of being formal for
example meeting or informal such as a ―pat on the back‖ to boost employees selfesteem
and happiness which will result into additional contributing efforts.
Trust/empowerment: in any society or organization, trust is a vital aspect between

living individuals in order to add value to any relationship. This form of reliance is
essential in order to complete tasks successfully. Also, takes place in empowerment
when managers delegate tasks to employees. This adds importance to an employee

where his decisions and actions are reflected. Therefore, this reward may benefit
organizations for the idea of two minds better than one.
Intrinsic rewards makes the employee feel better in the organization, while Extrinsic rewards
focus on the performance and activities of the employee in order to attain a certain outcome. The
principal difficulty is to find a balance between employees' performance (extrinsic) and
happiness (intrinsic).
The reward also needs to be according to the employee‘s personality. For instance, a sports fan
will be really happy to get some tickets for the next big match. However a mother who passes all
her time with her children, may not use them and therefore they will be wasted.
When rewarding one, the manager needs to choose if he wants to rewards an Individual, a Team
or a whole Organization. One will choose the reward scope in harmony with the work that has
been achieved.
Individual
o Base pay, incentives, benefits
o Rewards attendance, performance, competence
Team: team bonus, rewards group cooperation
Organization: profit-sharing, shares, gain-sharing
Motivation:
Concept of Motivation:
The term motivation is derived from the word ‘motive”. The word ‘motive’ as a noun means an
objective, as a verb this word means moving into action. Therefore, motives are forces which
induce people to act in a way, so as to ensure the fulfillment of a particular human need at a time.
Behind every human action there is a motive. Therefore, management must provide motives to
people to make them work for the organization.
Motivation may be defined as a planned managerial process, which stimulates people to work to
the best of their capabilities, by providing them with motives, which are based on their
unfulfilled needs.
“Motivation means a process of stimulating people to action to accomplish desired goods.” —

William G. Scott
“Motivation is the process of attempting to influence others to do your will through the
possibility of gain or reward.” — Flippo
Motivation is, in fact, pressing the right button to get the desired human behaviour.
Motivation is no doubt an essential ingredient of any Organisation. It is the psychological

technique which really executes the plans and policies through the efforts of others.

Following are the outstanding Features of the concept of motivation:
1. Motivation is a personal and internal feeling:
Motivation is a psychological phenomenon which generates within an individual.
2. Motivation is need based:
If there are no needs of an individual, the process ofmotivation fails. It is a behavioural concept
that directs human behaviour towards certain goals.
3. Motivation is a continuous process:
Because human wants are unlimited, therefore motivation is an ongoing process.
4. Motivation may be positive or negative:
A positive motivation promotes incentives to people while a negative motivation threatens the
enforcement of disincentives.
5. Motivation is a planned process:
People differ in their approach, to respond to the process of motivation; as no two individuals
could be motivated in an exactly similar manner. Accordingly, motivation is a psychological
concept and a complex process.
6. Motivation is different from job satisfaction:
An employee has a need or urge for promotion to a higher position. If this need is strong, the
employee will fix his goal and find alternatives to reach the goal. The might have two
alternatives, namely, (i) hard work and (ii) enhancement of qualification (e.g., getting MBA) and
hard work.
The Process of Motivation
He might choose the second alternative and succeed in getting promotion (goal achievement)
thus, his need for promotion would be satisfied and he would start again for the satisfaction of a
new need.
Significance/Importance of Motivation:
Motivation is an integral part of the process of direction.
While directing his subordinate, a manager must create and sustain in them the desire to work for
the specified objectives:
1. High Efficiency:
A good motivational system releases the immense untapped reservoirs of physical and mental
capabilities. A number of studies have shown that motivation plays a crucial role in determining
the level of performance. “Poorly motivated people can nullify the soundest organisation.” said
Allen.
By satisfying human needs motivation helps in increasing productivity. Better utilisation of

resources lowers cost of operations. Motivation is always goal directed. Therefore, higher the
level of motivation, greater is the degree of goal accomplishment.
2. Better Image:
A firm that provides opportunities for financial and personal advancement has a better image in
the employment market. People prefer to work for an enterprise because of opportunity for
development, and sympathetic outlook. This helps in attracting qualified personnel and
simplifies the staffing function.
3. Facilitates Change:
Effective motivation helps to overcome resistance to change and negative attitude on the part of
employees like restriction of output. Satisfied workers take interest in new organisational goals
and are more receptive to changes that management wants to introduce in order to improve
efficiency of operations.
4. Human Relations:
Effective motivation creates job satisfaction which results in cordial relations between employer
and employees. Industrial disputes, labour absenteeism and turnover are reduced with
consequent benefits. Motivation helps to solve the central problem of management, i.e., effective
use of human resources. Without motivation the workers may not put their best efforts and may
seek satisfaction of their needs outside the organisation.
The success of any organisation depends upon the optimum utilisation of resources. The
utilisation of physical resources depends upon the ability to work and the willingness to work of
the employees. In practice, ability is not the problem but necessary will to work is lacking.
Motivation is the main tool for building such a will. It is for this reason that Rensis Likert said,
“Motivation is the core of management.” It is the key to management in action.

Importance of Motivation
Rensis Likert, while pointing out the importance of motivation, has called it the ‘core of
management’. Similarly, Allen while stressing the need and importance of motivation has
observed that ‘poorly motivated people can nullify the soundest organisation.’ The importance of
motivation is brought out by the following facts:
(1) Improves Performance Level:
The ability to do work and willingness to do work both affect the efficiency of a person. The
ability to do work is obtained with the help of education and training and willingness to do work
is obtained with the help of motivation.
Willingness is more important in comparison to ability. For example, a person is highly educated
and he is recruited on this very basis. But it is not essential that he will do outstanding work.
motivation in business
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He shall have to be motivated to do good work. This is possible only through motivation.
Therefore, motivation improves efficiency. The efficiency of a person is reflected through
increase in productivity and decrease in costs.
(2) Helps to Change Negative or Indifferent Attitudes of Employees:
Some employees of an organisation have a negative attitude. They always think that doing more
work will not bring any credit. A manager uses various techniques to change this attitude.
For example, if the financial situation of such an employee is weak, he gives him a raise in his
remuneration and if his financial condition is satisfactory he motivates him by praising his work.
(3) Reduction in Employee Turnover:
The reputation of an organisation is affected by the employee turnover. This creates a lot of
problems for the managers. A lot of time and money go waste in repeatedly recruiting employees
and giving them education and training.
Only motivation can save an organisation from such wastage. Motivated people work for a
longer time in the organisation and there is a decline in the rate of turnover.
(4) Helps to Reduce Absenteeism in the Organisation:

In some of the organisations, the rate of absenteeism is high. There are many causes for this-poor
work conditions, poor relations with colleagues and superiors, no recognition in the organisation,
insufficient reward, etc. A manager removes all such deficiencies and motivates the employees.
Motivated employees do not remain absent from work as the workplace becomes a source of joy
for them.
(5) Reduction in Resistance to Change:
New changes continue taking place in the organisation. Normally workers are not prepared to
accept any changes in their normal routine. Whereas it becomes essential to bring in some
changes because of the demands of time.
Employees can be made to accept such changes easily with the help of motivation. Motivated
people accept these changes enthusiastically and improve their work performance.
Theories Of Motivation
1) Maslow’s need-hierarchy theory divides human needs into five distinct categories

Physiological needs are the basic needs of human beings, which are essential to sustain or
survive. Such needs include food, water, air, clothing, shelter, etc. From the organizational point
of view such needs are met through salary and basic working conditions.
Safety needs ensure a protection from the economic and physical environments. People expect
some reasonableness in their perceived environment, which minimizes the degree of uncertainty.
Job security, degree of continuity, order, structure, and predictability are precisely the nature of
such needs.
Organizations fulfil such needs of their employees by ensuring a protective work environment.
The need for a sense of belonging and love arises after the satisfaction of the earlier two lower
order needs. This is also known as social needs. People in this need level, develop a strong sense
of affiliation and get concerned with love, affection, a sense of belonging, acceptance, and
friendship. Organizations meet such needs by providing the appropriate work culture to help
employees identify themselves with their organizations.
At the self-esteem need level, employees look for satisfaction of their esteem or egoistic needs.
Esteem needs pertain to self-respect and respect or esteem from others. Self-respect is ensured by
achieving competence, confidence, personal strength, adequacy, achievement, independence, and
freedom.
While respect from others comes from prestige, recognition, acceptance, attention, status,
reputation and appreciation. To fulfil such needs of the employees, organizations provide
challenging work assignments, performance feedbacks, performance recognition, a participative
work culture, empowerment, participation in decision making, etc.
At the self-actualization need stage employees desire to become what they are capable of
becoming. They want to create something of their own using their talent, capacities, and
potentialities. Organizations try to fulfil such needs of their employees by nurturing an
environment that fosters creativity and growth.
2) Herzberg’s Motivation Hygiene Theory
Frederick Herzberg (1959), extending the work of Maslow, developed the content theory of
motivation. His study is based on responses of 200 accountants and engineers, drawn from
eleven industries in the Pittsburgh area.
Using critical-incident methods, he asked the samples to respond on two aspects as follows:
(i) When did they feel particularly good about their job?
(ii) When did they feel exceptionally bad about their job?
Herzberg found that the samples described different types of conditions for good and bad
feelings. Factors responsible for job satisfaction are quite different from the factors they perceive
as contributors to job dissatisfaction. Their reported good feelings were found to be associated

with job experiences and job content. While their reported bad feelings were found to be
associated with the peripheral aspects of job, that is, job context. Since his study was based on a
two-factor hypothesis, we call his theory the two-factor theory.
As his study established that the opposite of satisfaction is not dissatisfaction and removing
dissatisfying elements from a job does not necessarily make the job satisfying, he has classified
the factors into two categories:
(i) Motivation factors
(ii) Hygiene or maintenance factors
Herzberg mentioned six motivation factors, which are as follows:
(i) Recognition
(ii) Advancement
(iii) Responsibility
(iv) Achievement
(v) Possibility of growth
(vi) Job content or work itself
The presence of these factors in the job creates a motivating environment but its absence does
not cause dissatisfaction.
Similarly, Herzberg mentioned ten hygiene or maintenance factors, which are as follows:
(i) Company policy and administration
(ii) Technical supervision
(iii) Interpersonal relations with subordinates
(iv) Salary
(v) Job security
(vi) Personal life
(vii) Working conditions
(viii) Status

(ix) Interpersonal relations with supervisors
(x) Interpersonal relations with peers
These factors are context factors. Their existence just creates an environment for doing work.
But factors by themselves cannot motivate people to work. In Herzberg’s words, their absence
can dissatisfy people but their presence, per se, cannot satisfy people.
The crux of the two-factor theory of motivation therefore, is that managers should cater to both
satisfiers and dissatisfies. The mere improvement of hygiene factors cannot guarantee a
motivating environment. In Figure 11.7 we have presented the essence of Herzberg theory, using
a diagram.
Critical Evaluation of Herzberg’s Theory:
Herzberg’s theory is the first of its kind based on field research. While Maslow’s work was
based on clinical observations (laboratory-based findings), Herzberg did his study to understand
motivation in the work environment. Secondly, Herzberg’s study recommends actions for
managers to improve motivation in the work environment.
His emphasis on content factors shifts our focus from the traditional money motivator’s concept,
which was earlier viewed as the most potent factors for work motivation. Thirdly, Herzberg has
also contributed to the alternative approach to motivation by job enrichment. Finally, Herzberg
had double dimensionalized the needs, instead of its absolute categorization into five distinct
levels, as was done by Maslow.
Despite all the above listed merits, Herzberg’s theory has also been subjected to the following
criticisms:
(i) It is limited by its methodology. When things go well people tend to take credit for
themselves. Contrarily, they attribute failures to the external environment.
(ii) Herzberg’s theory is also method bound. We cannot get similar results if we use other
methods. The critical-incidents method, by its very nature, may cause people only to recall the
recent incidents or experiences. But experiences are always subject to change. Moreover, while
narrating a critical incident, respondents get wide flexibility to give vent to their opinions rather
than the realities. Thus, survey findings become opinion-laden.
(iii) Herzberg’s model talks more about job satisfaction than about job motivation.
(iv) The theory ignores situational variables, as it is not backed by adequate research in different
work environments.
(v) Even though the theory assumes a relationship between job satisfaction and productivity, the
methodology applied by Herzberg limits its focus only on job satisfaction and not on
productivity.
3) Mcgregor’s Theory X and Theory Y:
Douglas Mcgregor introduced these two theories i.e., Theory X and Theory Y, based on two
distinct views of human beings. He proposed, at opposite extremes, two pairs of assumptions
about human beings which he thought were implied by the actions of the managers. Theory X
deals with one extreme, based on one set of assumptions and Theory Y, deals with another
extreme based on another set of assumptions. These theories are not based on any research, but
according to McGregor, these are intuitive deductions.
Theory X:
This theory is based on the traditional approach to human behaviour.
The assumptions generally, held by the managers in this theory are:
1. The average human beings inherently dislike work and will try to avoid it, whenever possible.
2. As the employees are lazy, they must be controlled, coerced, threatened with punishment to
achieve goals, to which they are indifferent.
3. Average employees will try to avoid responsibility and seek formal directions whenever
possible, because they have relatively little ambition.

4. Most workers place security above all other factors associated with work. These assumptions
about human nature are negative in their approach. Managers who advocate these views feel that
extreme control is most appropriate for dealing with irresponsible and immature employees. This
is an autocratic style of leadership based on the traditional theory of what workers are like and
what management must do to motivate them. Workers have to be persuaded and pushed into
performance.
Theory Y:
This approach assumes that management by direction and control is a questionable method for
motivating such people whose physiological and social needs have been satisfied and whose
social; esteem and self actualization needs are becoming more important. For such people,
Theory Y. seems to be applicable, which is the contrast of Theory X.
This theory makes the following assumptions about people:
1. The average human being does not inherently dislike work. He can view work as natural or
enjoyable as rest or play.
2. Employees will exercise self direction and self control in the attainment of the objectives to
which they are committed.
3. Given proper working conditions, average person can learn to accept and even to seek
responsibility.
4. Commitment to objectives is a function of the rewards associated with their achievement.
5. All the people are capable of making innovative and creative decisions and the decision
making is not the sole province of the people in management positions.
This theory has assumed a new approach in management. It emphasizes on co-operation between
management and employees. The individual and organizational goals do not conflict in this
approach. This theory places greater emphasis on satisfaction of high level needs of the
employees. McGregor himself holds that the assumptions of theory Y are more valid than
Theory X. Thus, delegation of authority, job enlargement, management by objectives and
participative management techniques are great motivators for the employee.
Applicability of Theory X and Theory Y:
Theory X and the Theory Y represent two extremes. No person can belong to these two extreme
situations. Each person possesses the traits of Theory X and Theory Y, though the degrees may
be different under different situations. Though, no generalizations can be made, still it appears
that theory X is more applicable to unskilled and uneducated lower class workers who work for
the satisfaction of their physiological needs only.

Theory Y appears to be applicable to the educated, skilled and professional employees who
understand their responsibilities and do not need any direction and control. However, there can
be exceptions. A lower level employee may be more responsible and mature than a well qualified
high level employee. Still these theories are very important tools in understanding the behaviour
of human beings and in designing the motivational schemes. The management should use a
combination of both the theories to motivate different employees.
4) Vroom’s Expectancy Theory:
Victor Vroom made an important contribution to the understanding of the concept of motivation
and the decision processes that people use to determine how much effort they will expend on
their jobs. Criticizing Herzberg’s two factors theory, he said that a person’s motivation towards
an action at any time would be determined by an individual’s perception that a certain type of
action would lead to a specific outcome and his personal preference for this outcome. This model
is based on the belief that motivation is determined by the nature of the reward people expect to
get as a result of their job performance. Because man is a rational human being he will try to
maximize the perceived value of such rewards.
People will be highly motivated if they are made to believe that if they behave in a particular
way, they will receive a certain type of outcome according to their personal preference. There are
three variable’s in Vroom’s model given in the form of an equation. Since the model is a
multiplier, all the three variables must have high positive value to imply motivated performance
choices. If any of the variable is zero, the probability of motivated performance tends to be zero.
Motivation = Valence X Expectancy X Instrumentality
All these three variables are explained as follows:
1. Valence:
Valence means the attraction (or repulsion) of an outcome to the individual. Whenever an
individual has preference for a reward valence is the strength of that preference. The valence is
something subjective and varies from person to person. Valence is deemed to be positive for an
individual if he prefers attaining the outcome to not attaining it. Valence is zero, if the individual
is indifferent towards the outcome and the valence will be negative if the individual prefers not
attaining the outcome to attaining it.
In simple words we can say that the worker must value the reward as desired and satisfactory. It
is not the actual value of the reward, but the perceived value of the reward in the mind of the
worker which is important. For example, a person who is more interested in getting recognition
for the hard work, will not have any valence for cash reward.
2. Expectancy:
Expectancy is also referred to as the Effort- Performance Probability. It refers to the extent to
which the person believes his efforts will lead to the first level outcome i.e., completion of the

task. Expectancy is the probability that a particular action will lead to the outcome, it is the
perception in the mind of the individual of the likelihood that a particular action or behaviour
will lead to a certain outcome. Since it is an association between effort, and performance, its
value can range between 0 and 1. If the individual feels that the probability of achieving an
outcome is zero, he will not even try. On the other hand, if probability is higher, he will put more
efforts to achieve the desired outcome.
3. Instrumentality (Performance-Reward Probability):
Instrumentality refers to the probabilities attached by the individual to each possible

performance-outcome alternative just as the individual previously assigned probabilities to
various levels of effort leading to different levels of performance (expectancy). In simple words,
instrumentality refers to the belief and expectation of a person that his performance will lead to a
particular desired reward. For example, if an individual wants a promotion and feels that superior
performance is very important in receiving the promotion.
Superior performance is the first level outcome and the promotion is the second level outcome.
Superior performance (First level outcome) will be instrumental in obtaining the desired
promotion (Second level outcome). The value of instrumentality also varies between 0 to 1 as it
is also the probability of achieving the desired outcome.
As the relationship suggests, (Motivation = V x E x I) motivational force will be highest when all
the three factors are high and the force will be reduced when any one or more of valence,
expectancy or instrumentality approaches zero. Vroom’s model can also be depicted graphically
as given in the figure. The management must recognize and determine the situation as it exists
and take steps to improve up on these factors for modification of behaviour, so that highest value
can be achieved individually.
Management for example, can deal with the different situations in the following way:

Evaluation of the Expectancy Model:
Vroom’s theory has become very popular and it has provided an alternative to content theories,
which according to him, were inadequate explanations of the complex process of work
motivation.
The plus points of this theory are:
(i) The expectancy model is highly useful in understanding organisational behaviour. It can
improve the relationship between the individual and the organisational goals. This model
explains how individual’s goals influence his efforts and like need-based models reveal that
individual behaviour is goal oriented.
(ii) The expectancy theory is a cognitive theory, which values human dignity. Individuals are
considered rational human beings who can anticipate their future on the basis of their beliefs and
expectations.
(iii) This theory helps the managers in looking beyond what Maslow and Herzberg implied.
According to him motivation does not mean satisfying the unsatisfied needs. The managers must

make it possible for an employee to see that effort can result in appropriate need satisfying
rewards. This level of expectations will improve the motivation to work.
Despite these plus points, there are some drawbacks of Vroom’s expectancy model as given
below:
(i) Vroom’s theory is difficult to research and apply in practice. This is evident by the fact that
there have been a very few research studies designed specifically to test Vroom’s theory.
(ii) This theory assumes man to be a rational human being who makes all the decisions
consciously. But there are numerous instances where decisions are taken with no conscious
thought. This is particularly true for routine jobs.
(iii) Although, it is an important theory of motivation but it is quite complex. Many managers, in
actual organizational situations, do not have the time or sources to use a complex system on the
job. To conclude, we can say that from the theoretical point of view, this model is a step in the
right direction, but from practical point of view, it does not help the manager in solving the
complex motivational problem.
Job evaluation
Job evaluation is closely related to reward management. It is important to understand and
identify ajob's order of importance. Job evaluation is the process which job's are systematically
assessed toone another within an organization in order to define the worth and value of the job,
to ensure theprinciple of equal pay for equal work. In the United Kingdom, it is now illegal to
discriminateworker's pay levels and benefits, employment terms and conditions and promotion
opportunities
Job Evaluation is one method that can be adopted by companies in order to make sure that
discrimination is eliminated and that the work performed is rewarded with fair pay scales. This
system carries crucial importance for managers to decide which rewards should be handed out by
what amount and to whom. Job evaluation provides the basis for grading, pay structure, grading
jobs in the structure and managing job and pay relativities.
It has been said that fairness and objectivity are the core principals using an assessment of the
nature and size of the job each is employed to carry out.
There also many different methods of job evaluation which can be used, but the three simplest
methods are ranking, classification and factor comparison. However, there are more complex
variations of methods such as the point method which uses scales to measure job factors. This
method does not rank employees against one another but looks at the job as a whole. A
disadvantage of these methods of job evaluation are that they are very static and it would be very
difficult to perform a job evaluation quickly if it was needed.
An advisory company named ACAS stated that there were five main reasons why employers
look at performing a job evaluation. These include: When deciding on a pay scale: Making sure
that the current system is fair and equal for employees, Deciding on benefits such as
bonuses,Comparing pay against other companies and reviewing all jobs after a major company

pay change . Employees need to feel that they are being paid a fair wage compared to the same
job with the competition. If this is true it may help reduce staff turnover which is very beneficial
for employers as it reduces the cost of hiring new staff.
Research regarding job evaluation has mainly been conducted using qualitative data collection
methods such as interviews, large scale surveys and basic experimental methods. Therefore,
there is a large gap for research on job evaluation collecting quantitative data for a more
statistical analysis. A comparison between public and private sectors and the methods of job
evaluation is another area that should be considered for further research.
CAREER MANAGEMENT:
Career development is an organized approach used to match employee goals with the business
needs of the agency in support of workforce development initiatives. The purpose of career
development is to:
1. Enhance each employee‘s current job performance.
2. Enable individuals to take advantage of future job opportunities.
3. Fulfil agencies‘goals for a dynamic and effective workforce.
Career development involves managing your career either within or between organizations. It
also includes learning new skills, and making improvements to help you in your career. Career
development is an ongoing, lifelong process to help you learn and achieve more in your career.
Whether you are looking at making a career change, or moving up within a company, planning
your own career development will help you succeed. By creating a personal career development
plan, you can set goals and objectives for your own personal career growth. Don‘t make the
mistake of leaving your career development future in the
hands of your employer, hoping that you will get the next promotion or pay raise. This
misconception can lead to job dissatisfaction and resentment. Career planning is a lifelong
process, which includes choosing
an occupation, getting a job, growing in our job, possibly changing careers, and eventually
retiring. The Career Planning Site offers coverage of all these areas. This article will focus on
career choice and the process one goes through in selecting an occupation. This may happen
once in our lifetimes, but it is more likely to happen several times as we first define and then
redefine ourselves and our goals.
Managers are responsible for linking the organization‘s needs to employee career goals, and can
assist employees in the career planning process. Human Resources is responsible for designing
career paths and employee development programs that help employees reach their goals. Each
employee is responsible for planning and managing his/her career.
Objective
Career Management is the combination of structured planning and the active management choice
of one‘s own professional career. The outcome of successful career management should include
personal fulfillment, work/life balance, goal achievement and financial assurance.
The word career refers to all types of employment ranging from semi-skilled through skilled, and
semi professional to professional. The term career has often been restricted to suggest an
employment commitment to a single trade skill, profession or business firm for the entire
working life of a person. In recent years, however, career now refers to changes or modifications
in employment during the foreseeable future.

There are many definitions by management scholars of the stages in the managerial process. The
following
Classification system with minor variations is widely used:
1. Development of overall goals and objectives,
2. Development of a strategy (a general means to accomplish the selected goals/objectives),
3. Development of the specific means (policies, rules, procedures and activities) to implement
the strategy, and
4. Systematic evaluation of the progress toward the achievement of the selected goals/objectives
to modify the strategy, if necessary.
The career management process begins with setting goals/objectives. A relatively specific
goal/objective must be formulated. This task may be quite difficult when the individual lacks
knowledge of career opportunities and/or is not fully aware of their talents and abilities.
However, the entire career management process is based on the establishment of defined
goals/objectives whether specific or general in nature. Utilizing career assessments may be a
critical step in identifying opportunities and career paths that most resonate with someone.
Career assessments can range from quick and informal like those on CareerBuilder or may be
more in depth like those such as Myers-Briggs and Career Leader supported assessments found
on My Path. Regardless of the ones you use, you will need to evaluate them. Most assessments
found today for free (although good) do not offer an in-depth evaluation.
The time horizon for the achievement of the selected goals or objectives - short term, medium
term or long term - will have a major influence on their formulation.
1. Short term goals (one or two years) are usually specific and limited in scope. Short term goals
are easier to formulate. Make sure they are achievable and relate to your longer term career
goals.
2. Intermediate goals (3 to 20 years) tend to be less specific and more open ended than short term
goals. Both intermediate and long term goals are more difficult to formulate than short term
goals because there are so many unknowns about the future.
3. Long term goals (more than 100 years), of course, are the most fluid of all. Lack of life
experience and knowledge about potential opportunities and pitfalls make the formulation of
long term goals/ objectives very difficult. Long range goals/objectives, however, may be easily
modified as additional information is received without a great loss of career efforts because of
experience/knowledge transfer from one career to another.
4. Making career choices and decisions – the traditional focus of careers interventions. The
changed nature of work means that individuals may now have to revisit this process more
frequently now and in the future, more than in the past.
5. Managing the organizational career – concerns the career management tasks of individuals
within the workplace, such as decision-making, life-stage transitions, dealing with stress etc.
6. Managing ‗boundary less‘ careers – refers to skills needed by workers whose employment is
beyond the boundaries of a single organization, a work style common among, for example,
artists and designers.

7. Taking control of one‘s personal development – as employers take less responsibility,

employees need to take control of their own development in order to maintain and enhance their
employability. Career development, as both a field of study and a practical form of training for
workers, is primarily concerned with producing better employees and maximizing employee
potential. Career development programs can help the unemployed find jobs or provide workers
with the skills and tools they need to advance within a government agency, corporation or
organization.
Self-Awareness- One of the major objectives of any career development program is a

heightened sense of self-awareness for participants. Employees should be able to identify their
strengths and weaknesses, in order to apply their skills more effectively. Understanding
shortcomings is also useful in teaching employees where to focus efforts toward improvements.
Self-awareness is also related to understanding the difference between real and perceived career
advancement limitations. By examining available opportunities and making an honest
assessment of an employee‘s skills, career development seeks to give every employee a realistic
outlook on the future.
Flexibility- Career development also sets enhanced flexibility as a goal. Employees work in a
changing world and adaptation is an essential skill. This may mean abandoning practices that
have worked in the past, or devoting time to education and new training. Employees who find
themselves unable to adapt in a changing workplace may suffer from decreased productivity or
be unable to compete with workers whose skills are more flexible and easier to apply across a
range of tasks.
Education- Education is among the more straightforward objectives of career development.

Such programs attempt to give employees, or prospective employees, access to information
about job opportunities and options for skills training. Following up with such employees is an
important objective as well, since this gives those who work in career development a way
ofmeasuring the program‘s effectiveness.
Sensitivity to Diversity- Many career development programs make sensitivity to diversity in the
Workplace a top priority. With ever-increasing globalization, workers are frequently put into
contact with members of different backgrounds and cultures. Understanding the value of diverse
work habits and viewpoints can prevent this from becoming a point of confusion or
misunderstanding. At the same time, educating workers about the customs and concerns of
others can help prevent social problems or embarrassment in a diverse workplace.
Process Career development and the career planning process include a number of specific steps
that help toidentify personal skills and attributes. Finding out how those skills can be utilized in
the job market isaccomplished by researching a number of career fields that are of interest to you
and then by gainingexperience in those fields and/or speaking to people currently working in the
field. Participating in some form of experiential education will help you to identify if the field is
the right choice for you.
The Career Management Process

Step #1: Self-Assessment

Evaluating who you are as a person. This involves taking a personal inventory of who you are
and identifying your individual values, interests, skills, and personal qualities. What makes you
tick as a person? You will look at those personal attributes under a microscope and come up with
key qualities you can identify and use in your search for the perfect career. Career assessments
may be required to promote a better understanding of personal attributes and skills. Contact your
Career Services Office at your college to discuss if a career assessment may be right for you.
Self-Assessment Reality Check Goal Setting Action Planning
Step #2: Research (Career Exploration)

Obtain an insider‘s perspective about the career field you are considering. Conduct Informational
Interviews in person, phone, or by email. Professionals enjoy sharing their expertise with people
interested in the field. Perform informational interviews with alumni from your college to gain
their perspective of the field and to listen to what they have to say. This strategy provides
firsthand knowledge from someone currently working in the field and gives you an opportunity
to ask about their experiences as well as potential jobs and what one might expect if just entering
the field. Gain experience through internships or by job shadowing for one to several days to see
what a typical work day entails and to gain perspective of what the environment is like and the
typical job responsibilities of someone working in the field. Research what types ofjobs are
available in your area of interest by checking out Majors to Career Converter, The Occupational
Outlook Handbook and The Career Guide to Industries. The Occupational Outlook Handbook
offers a wealth of information for those currently just entering the job market and for those
anticipating making a career change.
Step #3: Decision-Making

Once you‘ve made a thorough self-assessment and have done some research of career options,
it‘s timeto make a decision. This can be difficult since there may still be many unknowns and a
fear ofmaking the
wrong choice. One thing for sure is that although we can do all the necessary steps to making an
informed decision, there is no absolute certainty that we are unquestioninglymaking the right
decision. This uncertainty is easier for some people than others but a key point to remember is
that you can always learn from any job you have and take those skills and apply them at your
next job.
Step#4: Search (Taking Action)

Look for prospective jobs and/or employers, send out cover letters and resumes, and begin
networking with people in the field. Keep in mind that cover letters and resumes are designed to
make a favorable impression on employers (if done properly) and the interview process is what
will ultimately land you the job. In other words, make sure your cover letter and resume
highlight your skills and strengths based on the employer‘s needs and that you are fully prepared
to knock their socks off at the interview. Take time to research the employer‘s website prior to
the interview, and be prepared to ask thoughtful questions based on your research.
Step #5: Acceptance

According to the Bureau of Labor Statistics, 64.1% of people change jobs between 5 and 14
timesin their lifetime. Consequently, learning the skills above will increase your chances of
gaining meaningfuland satisfactory work as well as help you to avoid many of the stresses that
occur with changing jobs. Byrecognizing that change is good (even advantageous), changing
jobs can be viewed as a positive experienceand need not be as anxiety provoking as it may
initially seem. You will continue the process of self-assessment,research, decision-making, and
job searching in order to make effective and fulfilling career
changes throughout your lifetime.The impact of career development/ succession planning
programmes can be seen through the productivityindicator, engagement surveys and reduction in
attrition rate. It is in fact a win-win situation for all.
Mentoring is advising, teaching, counseling and role modeling. Formal mentoring matches
a senior or more experienced person—the mentor—to a junior or less experienced person
—the mentee.
Mentors focus on a mentee’s achievements, success in school and preparation for the
workforce through a one-to-one relationship that is non-threatening and non-judgmental
to both parties.
It is a relationship that changes over time as each grows, learns, and gains experiences in
the relationship.”
Types of Mentoring
• Peer Mentoring
– Mentor/mentee—similar ages
– Mentor experience > mentee experience
• Group Mentoring
– Multiple mentees
• Professional Mentoring
– Major difference in life experience
Foundations of Mentoring
Attributes —The mentor will demonstrate
1. Strong performances and continuous improvement on each performance that they mentor
2. Ability to grow the performance abilities of mentees
3. Professional behavior and attitudes
4. Commitment to improving the enriched learning environment project—both the team and the
overall environment
• Clearly defined educational goals
– Measurable elements of engineering performance
• Clearly defined expectations

– For the professors

– For the mentors
– For the mentees
• Mentor Training
– Mentoring is a learned performance (not an innate skill)
HOW TO SELECT PROMISING MENTORS
Effective mentors share a number of characteristics. The profile sketched below is based on a
synthesis of observations described by many mentors and authors. While any single mentor may
not possess all of the characteristics, effective mentors have many of these qualities:
Knowledge of Their Field
 They are considered by peers to be experts in the field.
 They set high standards for themselves.
 They enjoy and are enthusiastic about their field.
 They continue to update their background in the field.
Demonstrated Skills in Their Field

 Their work demonstrates superior achievement.
 They use a variety of techniques and skills to achieve their goals.
Earned Respect of Colleagues

 They listen to and communicate effectively with others.
 They exhibit a good feeling about their own accomplishments and about the profession.
 They recognize excellence in others and encourage it.
 They are committed to supporting and interacting with their colleagues.
 They are able to role-play others and understand their views.
 They enjoy intellectual engagement and like to help others.
 They are sensitive to the needs of others and generally recognize when others require support,
direct assistance or independence.
 They exercise good judgment in decisions concerning themselves and the welfare of others.
Some Characteristics of a Good Mentor

 Approachable and welcoming
 Shares information and experiences openly
 Good communication skills
 Trustworthy
 Provides accurate and appropriate feedback
 Technical expertise
 Motivating, encouraging, positive and empowering
 Allocates appropriate time to mentoring

 Sensitive to the needs of the coach/official
Mentoring Process
1) Needs Assessment: In the need assessment stage the HR department in
consultation with line managers should reach for finding out Whether mentoring
is the right solution in their organizational context, if it so, then who requires
mentoring, how many people require this facility, should it be career mentoring or
psycho-social mentoring are there enough seniors eligible and willing to takeup
mentoring work and whether such seniors need training.
2) Program Design – Once the needs are assessed, the HR department in
consultation with line functionaries and if necessary, by availing services of
outside design the program. The basic objective of program design is to conduct
the mentoring program in a systematic and time- bound manner.
3) Training: Once the prospective participants are identified and program is
designed then the identified participants should be trained in mentoring approach.
The training may involve initially a couple of lectures by experts to convey the
meaning and significance of mentoring.
4) Pairing: After training the participants, the HR department in consultation with
line functionaries, may either decide who should mentor whom or allow the
participants to choose the mentor/protégé of their own choice.
5) Facilitation: Facilitation essentially involves cooperation and support from the
HR department and reporting officers/supervisors in conducting the mentoring
activities.
6) Evaluation: Anything that is not measured cannot be improved and HRD
programs are not an exception to this principle. Evaluation refers to measuring the
effectiveness of mentoring program. Evaluation helps the organization to
understand the effectiveness of the program as against the cost involved.
MENTOR- PROTÉGÉ RELATIONSHIP
Developing Mentor-protégé relationship:

―The relationship between an experienced employer and a junior employee in which the
experienced person helps the junior person with effective socialization by sharing information
gained through experience with the organization.
Requirements for effective mentor-protégé relationship:

1. The status & characteristics of the mentor:
Mentors should be seniors in status, experience, age, skills, knowledge.
2. Protégé: Junior employees should have the zeal to learn from their senior
employees regarding their career, social and psychological aspect.
3. The relationship: It is based on mutual dependence & mutual trust.
4. The activities:
 Developing the potentials of the protégé.

 Improving protégés performance

 Interlinking formal learning & practices
 Guide, support, providing feedback
5. Developing higher skills:

It should encourage their juniors towards high task performance by reducing
weakness & strength of the protégés.
6. Response of the protégé:

Proteges should learn carefully regarding career opportunities, personal goals.
Qualities of Successful Mentor – Protégé Relationships
1) Mentor Qualities
a) Strong interpersonal skills
b) Technical competence / expertise
c) Knowledge of organization and profession.
d) Status / prestige within the organization and profession.
e) Willingness to be responsible for someone else’s growth and development.
f) Ability to share credit
g) Patience.
2) Protégé Qualities
a) Self – perceived growth needs
b) A record of seeking accepting challenging assignments
c) Receptivity to feedback and coaching
d) Willingness to assume responsibility for own a growth and development
e) Ability to perform in more than one skill area.
3) Relationship Qualities:
a) Voluntary
b) Mutual benefits perceived and derived from the relationship
c) No conflicts of interest/ competition between mentor and protégé
d) Not confined to merely professional or business interests.
Development of Mentor – Protégé Relationship
1) Creation of a safe Environment – Mentors should provide an environment where

protégé can feel free to be honest. The key to such an environment is to openly
acknowledge their individual struggles.
2) Listen Without Judgement – While sharing of mentor’s own experience is vital to
the mentoring relationship, He must also learn when to set his thoughts aside and
focus on what his protégé has to say. The mentor should learn to listen without an
agenda by resisting the temptation to make a point, he should teach a lesson, or offer
some caution.
3) Focus on Learning : Mentor can gain knowledge from protégé and the mentoring
experience by brining a learning attitude to the relationship. He should let his protégé
know that he may not have all the answers and that both can learn from each other.

4) Agreeing on Objectives not Approaches: A true mentoring mind-set focuses on the

learning objective. not the process. The role of a mentor is to open-up possibilities for
his protégé, not to provide proven techniques for a given list of problems.
5) Appreciation of Differences: Mentor and protégé have entered the relationship with
different experiences and different points of view. The mentor should recognize those
differences while respecting their common needs and objectives.
Benefits of Mentoring
1) Benefits for the Mentee :
a) Improved self-confidence and self-esteem,
b) Increased motivation
c) Broadening horizons and experiences
d) Raised achievements and aspirations.
2) Benefits for the Mentor :
a) Immense satisfaction from helping another person grow
b) Development of interpersonal and communication skills
c) Increased self-awareness
3) Benefits for Organisations :
a) Development of staff skills
b) Instilling a feel good factor in staff
c) Positive publicity
d) Shared learning
Barriers to Mentoring
1) Contextual Problems: These problems arise due to organizational barriers and
relate to issue of clarity of purpose to the degree of support provided by the
organization for the program and the mentor – protégé relationship.
2) Interpersonal Problems: The reactions of people who are not included in the
mentor – protégé relationships may result in interpersonal problems with
mentoring programs.
3) Procedural Problems: These problems relate to the manner in which the
implementation of the program is managed.

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HUMAN RESOURCES MANAGEMENT

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Various Modes of Compensation

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

2) Financial and Non-financial Incentives- Individual or group performance can be measured

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Kinds of Fringe Benefits

Wages And Salaries

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Meaning and Definition of Wage

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Accordingly, the objectives of system should be to:

1. Enable an organisation to have the quantity and quality of staff it requires.

2. Retain the employees in the organisation.

3. Motivate employees for good performance for further improvement in performance.

4. Maintain equity and fairness in compensation for similar jobs.

6. Make the system cost-effective.

1. Ensures a fair compensation.

2. Provides compensation according to employee’s worth.

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

4. Enhances employee morale and motivation.

These objectives include:

1. Compensation in ahead of inflation.

2. Matching with market rates.

3. Increase in compensation reflecting increase in the prosperity of the company.

4. Compensation system free from management discretion.

1. To recruit persons for a firm

3. To satisfy people, reduce the incidence of turnover, grievances, and frictions.

4. To motivate people to perform better

5. To maintain a good public image.

Principles of wage and salary administration:

This principle acknowledges that factors/variables external to organisation influence levels of

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Components of Wages And Salary Administration

1. Determination of Wages and Salary

Both are now discussed one by one.

1. Determination of Wages and Salary:

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

These all factors are classified into four categories:

1. Wage Enactments (both Central and State Governments)

2. Prevalent Wage Rates.

3. Influence of Trade Unions.

4. Corporate Philosophy on Wages

3. Prevailing wage rates

5. Attraction and retention of employees.

Productivity can be expressed as production in relation to time unit. Productivity increase

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Prevailing Wage Rate:

Attraction and Retention of Employees:

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Wage Influencing Variable

Professor: Rs. 16, 40(M50-20,900-500-22,400

Reader: Rs. 12,000-420-18,300

Lecturer: Rs. 8,000-275-13,500

How to devise a salary structure? :

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

There are two more elements involved in a salary structure:

A brief description of these follows:

The procedure of salary progression is characterised by the following key features:

ST. JOSEPH’S INSTITUTE OF TECHNOLOGY

Methods of Wage Payment

Payment by results (PBR):