HUMAN RESOURCE MANAGEMENT

Study Notes

Question

Hindustan Cycles Ltd. Has established a new factory at Noida (U.P.) for manufacturing
designer bicycles for specific consumer segments like sportsmen, kids, etc. Plenty of labour,
electricity, water and other infrastructure already exist at the plant site. Kishore, the Managing
Director, has appointed you as the Company Secretary-cum-vice-president (HR). Initially, four
chief engineers for plastic, mechanical, electrical and estates departments and forty engineers
are to get recruited in addition to managers, officers, supervisors, workmen and staff. They are
to be professionally managed keeping in view of legal requirements and the fast changing
economic scenario.

With the help of diagrams, briefly work out a selection and appraisal programme clearly
mentioning principles and steps involved therein.

Answer.

The selection procedures and steps vary from organization to organization due to differential
job requirements. Every organization will design a procedure that suits its requirements.
However, its main steps are as follows:

Preliminary Interview

Receiving Applications

Screening of Applications REJECTION

If found unsuitable

Employment tests

Interview

Reference Checking

Medical Examination

Final Selection
 The selection procedure mentioned above shall be adopted.

Through a logical and crucial steps system, the performance appraisal process can be idealized
as follows:

Objectives of Performance Appraisal

Establish job Expectations

Design an appraisal programme

Appraise Performance

Performance Interview

Use appraisal data for appropriate purposes

Performance appraisal is either individual-focuses or system-focused (i.e. how the system

affects performance). The traditional system is mostly subjective prone to errors of bias. But the
systems objective approach is scientific, data based and motivational in approach. W.P.
Anthony et.al. In Strategic HRM has displayed some of such difference as follows:

Parameter Traditional System

1. Guiding value Attributed to individual Attributed to system

2. Primary goal Control, documentation Development, problem

solving
3. Leadership practices Directional, evaluative
Facilitative, coaching
4. Appraisal frequency Occasional
Frequent
5. Degree of formality High
Low
6. Reward practices Individual orientation
Group orientation

The performance appraisal must be as objective and accurate as possible. It should be simple,
easily operable, lucid, easy to understand, data-based, uniform, non-variable, fair, just and
equitable.

An MBO approach, advance information of goals, job expectations, etc. to employees devising
performance appraisal in consultation with experienced and capable employees, open
communications, mutual trust, reasonably informal relationships between rater and appraised,
a well-kint performance appraisal program for entire organization, etc. are other crucial factors
to be taken care of.

Keeping in view afore-stated principles, a performance appraisal proforma shall be devised

including the following basic steps:

1. Detailed programme for checking:

(a) Quality;
(b) Quantity in cases of turnover for example;
(c) Cost effectiveness;
(d) Supervision needs;
(e) Timeliness and
(f) Inter-personal impacts,

Shall be worked out

2. Such programmes shall be put in action by appointing suitable raters and informing the
employees.
3. After performance appraisal, action shall be taken for motivation and assisting the
employees for improving performance, behavior and potential.
Question

(a) “The focus of human resources development is essentially to evaluate people to self-
actualize through a systematic process of developing their existing potentials and
creating new ones”. Comment.
(b) Discuss briefly the functions of a unman resources manager.

Answer (a)

It is recognized everywhere that human competency development is an essential precondition

of any development effort. HRD includes the activities and processes undertaken to promote
the intellectual, moral, psychological, cultural, social and economic development of the
individuals in and organization in order to help them to achieve highest human potential as a
resource for the community.

In the organizational context HRD is a process by which the employees of an organization are
helped in a contiguous and planned way to

(i) Acquire or sharpen capabilities required to perform various functions of their

present and future roles;
(ii) Develop their general capabilities as individuals and bring out inner potential for
organizational development purposes;
(iii) Develop an organizational culture which is conducive to motivation and pride of
employees, and
(iv) HRD process is facilitated by mechanisms like performance appraisals, job rotation,
training and career development.

Basically, the focus of HRD is on enabling employees to self-actualize through a systematic

process of developing their existing potentials and creation of new ones, unfolding and tapping
potential capabilities both in the present and for the future. So, any effective programme must
have (i) current strategies and (ii) future assessments. Former includes career planning
feedback, motivation systems and organizational development. We can include manpower
planning also after some time.

In this strategic exercise, tow fundamental aspects of employees work life should not be ignored
while making a plane. One is knowledge and skills aspect for which in-house data-cum-
information transfer and on the job training would suffice. But another is organizational
behavio0ur including conflict resolution, which has to be taken care of.
Again, two approaches to the issue should be highlighted. One is the working out programmers
at the micro (individual) level and the other is at the macro (organizational) lever. To achieve
the desired results, the following steps may be taken.

(a) Making the top brass aware of the HRD need and its significance.
(b) Preparing existing data dossiers of all the workers and spotting the potential areas for
promotion and growth.
(c) Working out precise job data, job requirement and specifications.
(d) Fitting employees according to their capabilities.
(e) Training programme and knowledge transfer systems be worked out.
(f) All behavioral issues are tackled scientifically.
(g) For man power planning forecasting, a separate strategy be worked out.
(h) Periodical review of the manpower situation is equally important.

It is of crucial importance that HRD program should be for middle and higher level managers
also. Training in general management, functional management, office management, finance,
time management, cost reduction and behavioral aspects are of great significance. Their
development, it should be appreciated, is a long-term educational process and managerial skill
development.

Answer (b)

Functions of a Human Resource Manager

A human resource man is a leader with high intellectual powers, a visionary and a philosopher
who provides the initiative to shape the future in terms of leading the human beings in an
organization towards more prosperous and progressive policies. The Human Resource
Manager is a member of the management. So he must perform the basic managerial junctions of
planning, organizing, directing and controlling in relation to this department.

Operative Functions: Apart from managerial functions, human resource manager performs the
important operative functions also. The operative functions are those tasks or duties which are
specifically entrusted to the personnel department under the general supervision of personnel
manager. These are concerned with employment, development, compensation, integration and
motivation of personnel of the organization.

The personnel department performs the following operative functions:

(i) Employment
The first operative function of personnel department is the employment of proper kind and
number of persons necessary to achieve the objectives of the organization. T his involves
recruitment, selection, placement, etc. of the personnel.

(ii) Development

Training and development of personnel is a follow up of the employment

function.

(iii) Compensation

This function is concerned with determination of adequate and equitable

remuneration of the employees in the organization for their contribution to be
organizational goals.

(v) Maintenance Working Conditions and Welfare)

Merely appointment and training of people is not sufficient; they must be

provided with good working conditions so that they may like their work and
work-place and maintain their efficiency. Working conditions certainly influence
the motivation and morale of the employees.

(vi) Motivation
The personnel manager helps the various departmental managers to design a
system of financial and non-financial rewards to motivate the employees.

(vii) Industrial Relations

These days, the responsibility of maintain good industrial relations is mainly
discharged by the personnel managers. The personnel managers can help in
collective bargaining, joint consultation and settlement of disputes, if they arise.

(viii) Separation
Since the first function of personnel management is to procure the employees, it
is logical that the last should be the separation ad return of that person to society.
The organization is responsible for meeting certain requirements of due process
in separation, as well as assuring that the returned person is in as good shape as
possible.

Advisory Functions: Human resource manager has specialized education and training
in managing human relations. He is an expert in his area and so can give on matters relating
to human resources of the organization He offers his advice to:
 (i) Top management in formulation and evaluation of personnel programmes, policies
and procedures. He also gives advice for achieving and maintaining good human
relations and high employee morale.
(ii) Departmental heads on matters such as manpower planning, job analysis and
design, recruitment and selection, placement, training, performance appraisal, etc.

Question

Write notes on any there of the following:

(I) Labour turnover index

(II) Career planning versus career orientation
(III) Employees’ Stock Option Scheme (ESOS)
(IV) Work-load analysis
(V) Principles of fringe benefits.

Answer (i)

Labour Turnover Index

The traditional formula for measuring wastage is the labour turnover index:
Number of leaves in a specified period(usually 1 year) x 100
Average number of employees during the same period

This method is in comm. On use because it is easy to calculate and to understand

This formula can be misleading also. The main objection to the measurement of labour turnover
in terms of the figure may be inflated by the high turnover of a relatively small proportion of
the labour force. Thus, a company employing 1,000 people might have had an annual wastage
rate of 20% meaning that 200 job had become vacant during the year. But this could have been
spread throughout the company, covering all occupations and long as well as short service
employees. Alternatively, it could have been restricted to a small sector of the labour force-only
twenty jobs might have been affected although each of these had to be filled ten times during
the year. These are totally different situation, and unless they are appreciated, inaccurate
forecasts would be taken to deal with the problem The labour wastage percentage is a suspect if
the average number of employees upon which the percentage is based ins unrepresentative of
recent needs because of considerable increases or decreases during the period in the number
employed.

Answer (ii)

Career Planning versus Career Orientation

Career planning means helping the employees to plan their career in terms of their capacities
within the context of organization’s needs. It involves designing an organization system of
career movement and growth opportunities for employees form the employment stage to the
retirement stage. Individual who can fill planned future positions are indentified and prepared
to take up these positions? It is a managerial technique for mapping out the entire career of you
employees.

The main characteristics of career planning are as follows:

(I) Career planning is a process of developing human resources

(II) It is not an end in itself but a means of managing people to obtain optimum results.
(III) It is a continuous process and not an event.
(IV) The basic aim of career planning is integration of individual and organizational
needs.

Career orientation means advancement to position caring better remuneration and higher
responsibilities for employee’s desire for employees working in organization as change is the
rule of nature. People who prefer career orientation do not stay in one position. They move
form position to position, most of the time upward but sometimes laterally also.

Answer (iii)

Employees’ Stock Option Scheme (ESOS)

The ESOS is simply a scheme through which participation of employees in the

shareholding of the company is encouraged. The employees can be allotted shares through the
preferential allotment route every financial year or they may be given shares by way of
reservation in a fresh issue. Shares are issued under ESOS directly to the employees.

The Securities and Exchange Board of India (SEBI) guidelines for Disclosure and
Investor Protection explain the ESOS is a voluntary scheme on the part of the company to
encourage employee’s participation in the company. A suitable percentage of reservation can be
made by the issue for the employees of this company. However, under the existing guideline,
5% of the new issue may be reserved for the ESOS subject in a maximum limit of 200 shares per
employee who agree to participate to the ESOS. Further, the membership of the ESOS should be
restricted only to the permanent employees of the company.

Answer (iv)

Work-load Analysis

In work-load analysis, the manpower planning expert needs to find out sales forecasts, work
schedules and thus determine the manpower required per unit of product. The sales forecast
are translated into work performance for the various departments of the enterprise. In a
manufacturing enterprise, one shall first find out the master schedule and then departmental
schedules. The departmental work-loads are converted into man-hours in terms of different
skills required. Work-loads analysis is used to determine how may plans are made concerning
the amount of work that all other departments (marketing department, purchase department,
etc.) of the organization are expected to accomplish during the coming year. It is essential to
determine to work-load in some tangible units so that they may be translated in =to man-hours
required per unit. Past experience can =, of course, be utilized for translating work-loads into
man-hours required.

To take an illustration, let us assume that the annual production budget of a company is 1,
80,000 units. The standard man-hours required to complete an unit of the product are 2 hours.
The past experience reveals that a worker on an average can contribute about 2,000 hours per
year. The work-load may be calculated as under:

(a) Annual Production Budge=1,80,000 units

(b) Standard Man-hours required per unit=2 hours
(c) Planned Man-hours for the year (a x b)=3,60,000 hrs.
(d) Annual contribution of a Worker=2,000 hours.
(e) No. of Workers required (C/D) =180.

Thus, 180 workers are needed throughout the year to meet the production target of 1, 80,000
units. But this figure cannot be relied upon fully as the actual production is influenced by many
other factors such as availability of inputs and power, breakdown of machinery, strike, lockout,
etc. Nonetheless, work-load analysis is quite suitable for short-term projections of manpower
requirement. Long-term projection can be made with the help of workforce analysis.

Answer 3(v)

Fringe benefits or supplementary compensation involves all expenditures by an employed

designed to benefit employees over and above regular base pay and direct variable
compensation related to output. The basic purposes of fringe benefits or supplementary
compensation are:

(i) to attract and maintain efficient human resources with the organization; and
 (ii) to motivate the human resources.

Principles of fringe benefits: The following principles must govern the administration of fringe
benefits:

1. Benefits and services must be provided to the employees on the basis of a genuine
interest in the protection and promotion of their well-being. The management should
not feel that the fringes are thrust upon them nor should the management feel that they
are providing the benefits as a matter of charity.
2. The benefit must satisfy a real need. Employees resist or are indifferent to any benefit,
which is not liked by them.
3. The benefit must be cost-effective.
4. The benefit should be as broad-based as possible.
5. Administration of the benefits should be preceded by sound planning
6. The wishes of employees as expressed by their union representatives and the bargaining
power of the union must be considered.
7. Employees should be educated to make use of the benefits.

Question

(a) Distinguish between ‘performance appraisal’ and ‘ job evaluation’

(b) Write a brief note on the problems encountered by an organization in human resource
planning.
(c) “Line and staff dichotomy is obsolete and artificial.” Explain

Answer (a)

Performance Appraisal v. Job Evaluation

______________________________________________________________________

Performance Appraisal Job Evaluation_________

1. Performance appraisal is concerned with normal performance of particular jobs make

the differences among employees in terms on average employees. It does not take into
of their performance. It is also termed as account the individual abilities of the hob-
merit rating as it is concerned with the holder.
comparative merit of individuals.
2. It considers the abilities and
1. Job evaluation is the analysis of the performance of individual.
various jobs to know the demand which the
3. The purpose of merit rating is to 2. It considers the requirements of various
appraise the performance of jobs in terms of descriptions and job
individual ot take decisions like specifications.
increase in pay, transfer, promotion,
3. The purpose of job evaluation is limited,
etc. It also serves as the guideline for
i.e. to determine the worth of the job on
the management to consider the
the basis of demands made by a
type of training which should be
particular job on the average worker.
imparted to the employees.
This facilitates fixation of wages for
4. Performance appraisal rates the man various jobs.
and not the job as it is concerned
with assessing of the abilities of the
individuals. As a matter of fact, it
measures the worth of different
employees to the organization. 4. Job evaluation analyses the jobs to
determine their relative worth and fix
5. Performance appraisal is used as a their wage levels that are fair and
basis of personnel policies as regards equitable.
transfer and promotion.

Answer (b)
5. Job evaluation is used to shape the wage
policy of the organization.

Answer (b)

Problems in Human Resource Planning

Human resource planning is not always successful. Some of the major stumbling blocks are
described below:

(i) Identity Crisis: Three is generally identity crisis and many managers as well as human
resource specialists do not fully understand the total human resource planning process.
There can be little doubt that unless the human resource planning specialist develops a
strong sense of purpose; they are more likely to fail.
(ii) Support of Top Management: To be effective, in the long-run, human resource planning
must have the full support of top management. The support from top management is
essential to ensure the-necessary resources, cooperation and support for the success of
human resource planning.

(iii) Size of Initial Effort: Human resource planning fails because of lack of sufficient initial
effort. To be successful, human resource planning should start slowly and expand
gradually. Development of accurate skills inventory, and preparation of replacement
chart are integral parts of manpower planning.
(iv) Coordination with other Management Functions: To be effective, human resource
planning must be’ coordinated with other management functions. Unfortunately, there
is a tendency on the part of manpower planners to become totally absorbed in their own
world keeping aloof from the other operating managers.
(v) Integration with Organizational plans: Human resource planning must be based on
organizational objectives and plans. This requires development of good communication
channels between organization planners and the human resource planners. In many
organizations, such a communication is lacking and the Human resource plans are
prepared in isolation of the fundamental organizational plan.
(vi) Involvement of Operating Managers: Human resource planning is not a function of
manpower planners only. Successful human resource planning requires a coordinated
effort on the part of personnel department and the operation managers.

Answer (c)

Line –and –staff conflict is an oft-discussed matter amongst managers and students of
management. Theoretically, line-and –staff conflict stems from the following factors.

Line officers generally perceive that they are directly related to the process of production and
the achievement of the objectives of an organization and therefore expect proper recognition
ad fair treatment. They generally consider the staff to be in the periphery of the organization
contributing their share, but only to a marginal extent. At the same time, most production and
operation oriented organizations experience this conflict, to as manifested warfare but as an
item in a catalogue of irritants through which managers normally go through in their anxiety
to meet the targets or production. It is virtually a cold war which sometimes gets expressed
through snide remarks or by adulations of delays. The warfare is intensified by the realization
that staff managers are provided better working conditions, better office accommodation and
get better treatment than line managers. Most of the time, the deep-rooted prejudice of blue-
collared workers against white-collared workers in manufacturing organizations has given
birth to the feeling that those who work on operations do not get the facilities that are
available to persons in staff organizations, who are close to the source of power.
 On the other hand, the staff organizations constantly have a sense of insecurity as they are
being told that they are performing only a marginal and peripheral role, whereas all staff
organizations in their own right feel that they are performing a significant function of the
enterprise. It is a fact that the staff organization mostly comes in contact with the chief
executive in relation to day-to-day problems, especially by virtue of the organizational
pyramidal structure where the top management concerns itself largely with managerial policy
and the staff agencies play their part in giving advice on policy-making and other such
planning matters. They are thus able to get closer to the chief executive of the organization.
The proximity and frequency of contact between the staff agency organization and the chief
executive leads to a feeling of self-importance in the former which heights the conflict. It is
necessary for everyone to realize that the work of production agencies and line managers is as
important for the functioning of an organization as is that of staff agencies.

Question

(a) “Profit maximization is pre-requisite for shareholders’ wealth maximization.” Do you

agree? Give a brief account of the advantages and disadvantages of these goals.
(b) Discuss the advantages of investing in mutual funds.
(c) Length of operation cycle is the major determinant of working capital needs of a
business firm. Explain.
(d) Write a note on ‘depository system in Pakistan (5 marks)

Answer (a)

Profit maximization versus shareholder wealth maximization

Profit maximization is basically a singly-period or, a short-term goal. It is usually interpreted to

mean the maximization of profits within a given period of time A firm may maximize its short-
term profits at the expense of its long-term profitability and still realize this goal. In contrast,
shareholder wealth maximization is a long-term goal. Shareholders are interested in future as
well as present profits. However, profit maximization can be part of a wealth maximization
strategy. Quite often two objectives can be pursued simultaneously but the maximization of
profit should never be permitted to overshadow the objectives of wealth maximization. The
following Table provides a summary of the advantages and disadvantages of these goals.

Profit Maximization versus Shareholder Wealth Maximization

Goal Objective Advantages Disadvantages

Profit Maximization Large amount of 1. Easy to calculate 1. Emphasizes the
profits profits. short term.
2. Easy to determine the 2. Ignores risk or
link between uncertainty
financial division and 3. Ignores the timing
profits of returns
4. Requires
immediate
resources

Shareholder wealth Highest market 1. Emphasizes the 1. Offers no clear

Maximization value of common long term gains relationship
stock 2. Recognizes risk between financial
or uncertainty decision and stock
3. Recognizes the price.
timing of 2. Can lead to
returns. management
4. Considers total anxiety and
return. frustration.

Answer 1(b)

Advantages of Mutual Funds

The advantages of investing in a Mutual Fund are:

1. Professional Management: Investors avail the services of experienced and skilled

professionals who are backed by a dedicated investment research team which analyses
the performance and prospects of companies and selects suitable investments to achieve
the objectives of the scheme.
2. Diversification: Mutual Funds invest in a number of companies across a broad cross-
section of industries and sectors. Investors achieve this diversification through a Mutual
Fund with far less money and risk than one can do on his own.
3. Convenient Administration: Investing in Mutual Fund reduces paper work and helps
investors to avoid many problems such as bad deliveries, delayed payments and
unnecessary follow up with brokers and companies.
4. Return Potential. Over a medium to long term, Mutual Fund has the potential to provide
a higher return as they invest in a diversified basket of selected securities.
5. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to
directly investing in the capital markets because the benefits of scale in brokerage,
custodial and other fees translate into lower costs for investors.
6. Liquidity: In open ended schemes investors can get their money back promptly at net
asset value related prices from the Mutual Fund itself. With close-ended schemes,
 investors can sell their units on a stock exchange at the prevailing market price or avail
of the facility of direct repurchase at NAV related prices which some close ended and
interval schemes offer periodically.
7. Transparency: Investors get regular information on the value of their investment in
addition to disclosure on the specific investments made by scheme, the proportion
invested in each class of assets and the fund manager’s investment strategy and outlook.

Answer1(c)

Operating cycle is the time that elapses between the cash outlay and the cash realization by
the sale of finished goods and realization of sundry debtors.

Operating cycle concept is important for management of cash and management of working
capital because the longer the operating cycle the more financial resources the company
needs. Therefore, the management has to remain cautious that the operating cycle should
not become too long.

Requirement of working capital over the operating cycle period could be guessed for short-
term, medium terms as well as long-term.

The company can work out its working capital needs for different periods through cash
budget which is key part of working capital planning. To prepare such a budget operating
cycle parameters are of great use as estimation of future sales level, time and amount of
funds flowing into business, future expenditure and costs all can be made with least
difficulty to help the main target.

Then, operating cycle help in assessing the needs of working capital accurately by
determining the relationship between debtors and sales, creditors and sales and inventory
and sales. Even requirement of extra working capital can be guessed from such estimate.

Answer 1(d)

Depository system in Pakistan

Depository Law provides the legislative framework for facilitating the dematerialization
and book entry transfer of securities in a depository.

Anybody to be eligible for providing depository services must be formed and registered as a
company under the Companies Ordinance 1984 and seek registration with SECP and obtain
a Certificate Commencement of Business from SECP on fulfillment of the prescribed
conditions.
 That investors option to join depository mode are required to enter into an agreement with
depository through a participant who acts as an agent fo depository.

The agencies such as custodians, banks, financial institutions, large corporate brokerage
firms, non-banking financial companies etc. act as participants of depositories. The
companies issuing securities are also required to enter into an agreement with the
Depository.

The depositories system in Pakistan provides for:

> A legal basis for establishment of depositories to conduct the task of maintenance
of ownership records of securities and effect changes in ownership records
through book entry;

> Dematerialization of securities in the depositories mode as well giving option to

an investor to choose between holding securities in physical mode and holding
securities in a dematerialized form in a depository;

> Making the shares, debentures and any interest thereon of a public limited
company freely transferable.

Question

(b) Explain various types of charge created over security in a loan by the bank.

Answer (b)

Banks normally accept securities for advances granted by them. The security taken
varies with the type of advances, terms of sanction, types of borrower, etc. The different types of
charge are as under:
(a) Pledge is defined by Section 172 of the Contract Act as bailment of goods to secure
payment of a debt or performance of a promise. In pledge, there is actual delivery of
goods by pledger to the pledge for securing a debt.
(b) Hypothecation refers to pledging (property) as security or collateral for a debt without
transfer of title or possession. It applies to movable goods and commodities, movable
machinery, book debts, etc.
(c) Mortgage is the transfer of interest in specific immovable property for the purpose of
securing the payment of monies advance or to be advanced by way of loan, an existing
or future debt or the performance of an engagement which may give rise to pecuniary
liability.
(d) Assignment is transfer of an existing or future right, property or a debt by one person to
another person. Actionable claims are assigned by way of security for an advance.
Examples of actionable claims are interest in insurance policies, book debts, etc.
(e) Set-Off is the right of a banker to combine two or more accounts of the same customer
and to transfer assets and liabilities form one account to another without the consent of
the customer.
(f) Lien is the right of a creditor to retain in his possession goods and securities owned by
the debtor until all the debts are discharged, but not the right to sell.

Question

(c) You are the Company Secretary of a manufacturing company. Your company is
going to appoint a consultant on a monthly salary of Rs. 60,000/ Prepare a
remuneration plan so that the company’s fringe benefit tax liability and
employee’s personal tax liabilities is reduced to minimum possible level.

Answer (c)

Remuneration Plan for the Employee

The employee should take note of the following for minimizing his personal tax
liability:

(i) House Rent Allowances: The employee would be in a position to claim

exemption from tax to the extent of the house rent reimbursed by the employer,
subject however to the limits specified under Section 10(13A) of the Act.
(ii) Dearness Allowance: Employee should prefer the dearness allowance to form
part of his basic pay under the terms of employment as it would benefit him in
computation of HRA, gratuity, pension etc. and minimize his tax incidence
thereof in respect of these.
(iii) Conveyance Allowance: The amount of such an allowance is exempt from
tax under Section 10(14) of the Act ot the extent of Rs.800 p.m., necessarily and
exclusively spent by the employee for the purposes of his employment.
(iv) Entertainment Allowance: The entertainment allowance is deductible under
Section 16(ii) of the Act (only in case of government employees), in computing
the taxable salary income of the employee. The total expenses incurred on
entertainment by the employee of the purposes of business should actually be
reimbursed to him by the employer, so as to avoid any additional liability for tax
on the employee.
(v) Travelling allowance and expenses: Section 10(5) read with Rule 2B provides for
the exemption to leave travel concession or assistance received by an individual
for himself and his family from his employer in respect of two journeys
performed in a block of two years.
(vi) Gratuity: The payment of gratuity intended to secure the retirement benefits
to the employees, due to or received by them is exempt from tax under section
10(10) of the Act, depending upon the type of employer.
(vii) Commission: Any commission payable as per the terms of employment
should be based on turnover so as to form part of salary. This will also reduce the
tax incidence in respect of HRA, commuted pension, interest credited to RPF etc.
(viii) Medical: The employee should opt for re-imbursement of expenses on
medical treatment (on free medical facility) in place of medical allowance
because such allowance is taxable whereas the reimbursement is not taxable up
to the extent of Rs.15,000. However, the employer would have to pay fringe
Benefit Tax in respect of this under Section 115WB(2)(E)
(ix) RPF: The employer’s contribution to RPF should be 10% of salary as it is
exempt up to this limit.

Question

(a) In September, 2006, Bata Pakistan Ltd. Advertised for the position of Assistant
Manager (Personnel) in the scale of Rs.12,000-Rs.18,000 plus perks. The applicants
were required to be graduates with three years experience in a similar capacity. Nine
candidates applied. M. Sneha, an MBA (Marketing), having six years experience as
Assistant Personnel Officer in well-known electronic company, impressed the
interview board as a self-motivated and hardworking person and was appointed in
the company. During the interview, the Vice-President (Personnel), however,
highlighted tough completion and general lack of work-culture amongst the
workers. The Assistant Manager (Personnel) was, thus, required to straighten up
 matters without creating problems. She, however, nurtured ambition of riding-up
the ladder as Vice-President (Personnel).

On joining, Ms. Sumbal with her soft-spoken but disciplining approach, called a
Works Committee meeting and stressed that the management wants only results, not
excuses. This surprised all. Whispered the Deputy Supervisor to his boss:
“Brother, are we going to land in jail now?” Supervisor too hush-hushed: “Appears
so-bad luck.” The Deputy Supervisor lamented: “See Videocon or Keltron or Wipro-
how well they treat their employee!” Another supervisor, Chandan suggested: But,
yaar, shouldn’t we teach the new ‘moollah’ some lessons in man-management?” The
Chief supervisor dissented: “No, no; wait and watch. After all, the company cannot
run without us.”

The meeting ended with a clarion call from the Assistant Manager (Personnel):
“From now o, work hardest day and night to earn pay or you are on war out.”

Upon these facts, answer the following questions:

(i) Which factors should have been considered for selecting a suitable
candidate as the future HR manager?
(ii) Was the interview technically sound? Suggest improvements therein, if
any.
(iii) Does Ms. Sumbal ‘s Career goals serve the company’s interests? Can any
other goal(s) be better?
(iv) In the Works Committee meeting, was the Assistant Manager (Personnel)
reflection the proper perspective of HRM function?

(b) Mention the steps involved in ‘job analysis ‘.

Answer (a) (i)

While selection a suitable HR Manager, following factors must be assessed in the

candidature:

(1) Ability and tact to deal with workforce;

(2) Ability to deal with new demands and aspirations of workers:
(3) Technological advances in environment-adjustability for that:
(4) Mental ability to understand and learn, judgment, mental vigor and
adaptability;
(5) Willingness to accept responsibility, initiative and loyalty;
(6) Ability to adjust with
 (i) Changing political and social environment;
(ii) Computerized Information Systems;
(iii) Mobility of professional;
(iv) Changes in legal environment;

(7) Competence to handle management of human relations personnel matter;

(8) Communication skills;
(9) Knowledge of labour and other laws; and
(10) Ability to deal with people who have likes and dislikes, whims and fancies,
who favour some and are prejudiced against others.

Answer 1 (a) (ii)

The interview was not technically sound. Relevant job experience required and
competence to deal with labour should have been considered. It appears no job and
company profile was supplied to the candidate. Career goals-hint is not that important
as performance-potential. This requires close assessment of candidates, knowledge and
management skills, problem solving capacities, understanding of organizational
behavior, ability to get along with people, communication, tact, etc. In particular------

(i) Personality traits, e.g., adjustability, zeal, caution, care, empathy, initiative,
decision-making etc. be carefully assessed;
(ii) Relevance of previous work experience with the job be checked.
(iii) Knowledge, management skills and behavioral assessment be made.
(iv) Tact i.e. ability to deal with trying conditions.

Answer 1 (a) (Iii)

No, overambitious and rash goals are counterproductive, As an HR Manager, personal

advancement is secondary. Caring for personnel, their development and expectations,
addressing employee problems, operational problems are priority and better goals than
over-ambitious personal goals.

Answer 1 (a) (iv)

In works committee meeting, the Assistant Manager (Personnel) was not reflecting the
proper perspective of the HRM functions. A human resource man should be tactful and
resourceful, a leader with a vision to shape the future in terms of leading the human
beings in an organization towards more prosperous and progressive working.

First, she should have studied the situation and organizational culture and the attitude
of the workforce. Today HR man in an organization function as

(i) an intellectual
 (ii) an educator
(iii) a tactful discriminator.
(iv) a personal executive
(v) a leader
(vi) a humanist and as
(vii) a visionary

Outright clarion call is counterproductive as is clear from the ‘grapevine’ during the
meeting itself. Her approach in dealing with the works committee was that of marketing
manager and not personnel manager.

Answer 1 (b)

Steps in Job Analysis

Job analysis is a very systematic, research-based study of the nature and operation of a
specific job. The data collected in the process of job-analysis is highly useful for various
purposes.

Recruitment and Selection

Job analysis provides information about the specific requirements of each job and thus
facilitates the selection of criterion and eligibility rules for prospective employees Such
criterion and parameters then form the benchmark against which each recruitment is
carried out. Selection of employees follows the same guidelines too.

Manpower Requirements

The job analysis provides details of the present and consequently of the probable future
manpower requirements in the organization. Thus, good organizations always maintain
an inventory of professional curriculum vitae, for quicker replacements in case of
vacancies in future.

Compensation Package

Job analysis provides the vital information that enables an appropriate evaluation of
each employees’ job. This then facilitates the drafting of a suitable compensation of
rewards policy. Likewise, the wages and salaries for various categories of employees are
decided based on the job-analysis data.
Performance Appraisal

Job analysis provides not only information on the standard form of the job, but also on
the actual performance of the responsible employee in the job. Thus, a critical evaluation
of each professional’s performance can be conducted, thereby allowing the individual to
know exactly what is expected of him/her/.

Training

On having known what the job entails, through job analysis, it becomes quite easy to
develop an initiation or a training programme that would best nurture the skills of the
employee to suit the job he/she has to ultimately discharge. The training schedules can
be tailor-made to the requirements of the job. Thus, the energy of several employees can
be channelized in the direction of the organizational objective through right training.

Job Assignment

Job analysis, through various implicit and explicit information, helps to ensure that the
responsibilities and duties are assigned to those people who are best suited in that
position. Thus, it ensures that right job is assigned to the right person.

Job-re-engineering

Job analysis also provides information useful for improvements of industrial

engineering designs and working methods for higher productivity.

Job analysis

Steps to be followed for job analysis; nature for job, operations involved, equipment,
materials required, attributes-mainly education, training, physical standard and relation
with other jobs. It brief, job analysis gives all facts about a job.

Question

(a) State the important principles governing the administration of “fringe benefits’.

(b) Distinguish between “training ‘and ‘development’.

 (c) What do you understand by wage and salary administration? Discuss the
principles involved in wage administration.

Answer (a)

Principles of fringe benefits: The following principles must govern the

administration of fringe benefits:

1. Benefits and services must be provided to the employees on the basis of a

genuine interest in the protection and promotion of their well-being. The
management should not feel that the fringes are thrust upon them. Nor
should the management feel that they are providing the benefits as a matter
of charity.

2. The benefit must satisfy a real need. Employees resist or are indifferent to nay
benefit, which is not liked by them.

3. The benefit must be cost-effective.

4. The benefit should be as broad-based as possible.

5. Administration of the benefits should be preceded by sound planning.

6. The wishes of employees as expressed by their union representatives and the

bargaining power of the union must be considered.

7. Employees should be educated to make use of the benefits.

Answer 2(b)

Distinction between Training and Development

Training is a systematic programme to increase the knowledge, skills, abilities and

aptitudes of employees to perform specific jobs. Training is concerned with increasing
the knowledge and understanding of the total environment.

Development is concerned with the growth of an employee in all respects. Development

programmes seek to develop skills and competence for future jobs while training
programmes are directed towards maintaining and improving job performance.
Development refers to those learning opportunities designed to help employees grow.
Development is not primarily skills-oriented. Instead, it provides general knowledge
and attitudes which will be helpful to employees in higher positions. Efforts towards
development often depend on personal drive and ambition. Development activities,
such as those supplied by management developmental programmes, are generally
voluntary.

Training deals with mechanical operations. It is short term and deals with specific job
related skills. Development lays emphasis on conceptual and philosophical concepts.

Answer 2(c)

Wage and Salary Administration

Wages and salaries represent a substantial part of total costs in most of the
organizations. Although to the economist these are variable costs, but to the
businessmen, they are becoming ever increasing costs in view of the ability of union to
win upward adjustments. Instances of general wage or salary reductions are rare and
where it is necessary to reduce labour costs, this is accomplished more and more
through technological changes resulting in increasing the productivity of workers.
Notwithstanding this, the control of wage and salary levels is of paramount importance,
even though the amount of control which can be exerted may vary among organizations
and within an organization form time to time.

The general objectives of the wage and salary administration are as follows:

1. Control of Costs;
2. Establishment of fair and equitable remuneration;
3. Utilization of wages and salaries as an incentive to greater employee
productivity;
4. Maintenance of satisfactory public relations image.

To achieve these objectives, the responsibility for wage and salary administration
usually lies with the top management (i.e. Board of Directors, in case of a company) or
the Chief Executive Officer who in turn, is expected to develop policies and procedures
which will accomplish the company’s objectives. The Personnel Mangers play an
important role in developing the wage policies and procedures. In many organizations,
the task is entrusted to Wage and Salary Committee composed of line and staff
executives.
 Principles of Wage Administration

Wage administration should be guided by the following basic considerations:

1. Wage policies should be carefully developed, having in mind the interests of (a)
management as the representative of the owner, (b) the employees, (c) the consumers,
and (d) the community.

2. Wages policies should be clearly expressed in writing to ensue uniformity and stability.

3. Wage decisions should be checked against the carefully formulated policies.

4. Management should see to it that the employees know and understand the wage
policies.

5. Wage policies should be evaluated from time to time to make certain that they are
adequate for current needs.

6. Departmental performance should be checked periodically against the standards set in

advance.

7. Job descriptions and performance rating should be checked periodically to keep them up
to date.

Question

Write notes on any three of the following:

(i) Human resources accounting

(ii) Performance appraisal
(iii) Employment tests
(iv) Determinants of morale.

Answer (i)

Human Resource Accounting (HRA)

Accounting for the human resources deals with the measurement of costs, which are
associated with recruiting, selecting, training, placing and developing the employees of
an organization. This also involves measuring the present economic value of human
resources to an organization. The basic objective under laying HRA is to facilitate the
effective and efficient management of human resources as it would provide the manager
with the information needed to acquire, develop, allocate, conserve, utilize, evaluate and
reward human resources. Besides, HRA also provides feedback to a manager of his own
performance.

Benefits of HRA: In the field of managerial decision-making, HRA would help in

making meaningful choices between various types of investment in human resources
and other assets, It would assist the manager particularly with regard to;

(a) Direct recruitment v. promotion.

(b) Transfer v. retention.
(c) Retrenchment or relieving v. retention.
(d) Utility of cost reduction programme in view of its possible impact on human
relations.
(e) Impact of budgetary control on human relations and organizational behavior.
(f) New dimension added to capital budgeting process that includes human
resource investment costs.
(g) Consideration of an adequate return on investment in human assets and also
more useful interpretation of return on capital employed.
(h) Decision on relocating factories, developing overseas subsidiaries, closing down
or streamlining existing units.

Answer 3(ii)

Performance Appraisal

Performance appraisal means systematic evaluation of the personality and performance

of each employee by his supervisor or some other person trained in the techniques of
merit rating. It employs various rating techniques for comparing individual employees
in a work group, in terms of personal qualities or deficiencies and the requirements of
their respective jobs. The comparison of performance with job requirement helps in
finding out the merit of individual employees in a work group. Rating may be done by
supervisor or an independent appraiser.

Performance appraisal has beneficial effect on both the persons doing the appraisal and
bring appraised. The appraisal brings prominently to the attention of supervisor or
executives the importance of knowing their subordinates as human resources. The
necessity of performance appraisal leads the appraiser to a thoughtful analysis of people
rated and tends to make him more alive to opportunities and responsibilities in
developing the subordinates.

There are various methods of merit rating which may be classified into

(i) Traditional Methods, and

(ii) Modern Methods
Traditional methods are very old techniques of performance appraisal. They are based
on trait-oriented appraisal. Evaluation of employees is done on the basis of standards of
personal traits or qualities such as attitudes, judgment, versatility, initiative,
dependability, leadership, loyalty, punctuality, knowledge of job, etc.

Modern methods: There are two important methods of performance appraisal which
are used by the modern concerns. The first is –Management by Objectives (MBO) which
represent result-oriented appraisal. The second is Behaviorally-Anchored Rating Scale
which is based on rating the behavior of the subordinates.

Answer 3(iii)

Employment Tests

Employment tests can effectively supplement other personnel procedures by improving

the efficiency with which job performance can be predicted. Employment tests have
become widely accepted in the selection process. However, these should be considered
simply as a step and not a replacement of the other phases of the selection process. The
real value of the tests lies in eliminating those applicant who have very little chance of
job success than in selection applicants who will definitely be successful on the jobs. It
should be remembered that when the tests are used, they should not be relied upon
completely. It is advisable to take help of other techniques i.e., to conduct an interview,
check the application form information and references and so on.

A large number of tests are used in business and Industry for the selection of personnel.
They can be classified into the following categories

(a) Intelligence Tests;

(b) Aptitude Test;
(c) Proficiency Tests;
(d) Interest Test; and
(e) Personality Test

Tests are given to the individuals on the assumption that there is a direct and important
relationship between the possession of one or more of these qualities and the
individual’s ability to do certain jobs. This relationship enables to predict the candidate’s
eventual job performance. The distribution of many characteristics of people assumes a
shape which approximates closely to a bell-shaped curve, known as normal curve. Thus,
test performance of various individuals is normally distributed. Many tests designed by
the psychologists are based on this assumption that there are less people whose test
scores will either be below average (poor) or above average (very good).
Answer 3(iv)

Determinants of Morale

Morale is the mental attitude or bearing of a person or a group as regards his confidence,
discipline and attitude towards his work, peer group, superiors and subordinates, for
the accomplishment of the individual and the organizational goals. I t represents the
level of satisfaction that a person derives from his work and work environment. Once a
person joins an organization he wants his individual needs to be satisfied through the
satisfaction of organizational goals. Various motivational theories emphasize on
different motivators to understand and satisfy the human needs. Once their individual
needs are satisfied, they develop a feeling of job satisfaction and work with greater zeal
and enthusiasm to perform the organizational activities. A high morale is a reflection of
this feeling of enthusiasm and satisfaction.

Factors Determining Morale

The following factors are generally found associated with morale:

1. Social Factors
2. Supervisory Techniques.
3. Job Satisfaction.
4. Organization and its purpose.

Moral is highly elusive and baffling phenomenon. Factors that are sometimes considered
as contributing to high morale tend to destroy it sooner or later. Thus, soft management
approach, if carried too far, may ultimately effect it in an adverse manner. A manager
attempting to raise morale of his subordinates should, therefore, bear in mind its
variability both with regard to its context and its content.

Question

Golden Chemical Manufactures (GCM), Sagar (Punjab) is an old proprietorship firm

manufacturing domestic cleaning liquid for sale in the city and cantonment areas-. You
are its Personnel Manager. It employs 31 workers with one supervisor, Manav.

Now, GCM plans to convert itself into a private limited company, modernize its
processes and plants, recruit 150 more employees, and market its product under the
brand name ‘Spick and Span’ all over Punjab in the face of three well established, but
localized, competitors. Its salad force will have to be aggressive. Highlight the likely
areas of HR problems which the company may face due to its expansion plans.
Answer

The question expects identification of problem areas on account of the change initiative
by the organization’s commercial and economic reasons. Hence the answer seeks to
classify the anticipated problems in order to provide an understanding to plan and act
for solutions and does not discuss the solutions themselves. It is widely accepted that
statement and clear understanding of the problem is half its solution.

It must be understood that any change initiative because of the latent resistance to
change is bound to create problems. In accordance with the thought it will be better to
address the problems as Human Potential (HP) rather than HR Problems.

Human potential is an ever flowing natural development through work and inter-
actions at work. When the perspectives change on account of non-realization of huge
potential within, the problems are externalized and consequently magnified.

In the given situation, the following problems are identified with the fundamental
theorem that looking at HR as HP problems, will offer a maximum conceptual solution
of HP Department to act upon. Human being is not an asset or a resource to be managed
but contains unimaginable potential to contribute to the organization in a self delighting
manner.

(i) Social factors: Addition of 150 workers will involve new people from different
strata of the society with artificial men-created divisions like caste, creed,
religion, education and other backgrounds. This will create the problem of
diversity and its management.

(ii) Political factors: A unique directional small workforce reporting to single

supervisor will mingle with a large workforce with multiple supervisors.
Behavioral problems may arise within the workers and supervisors sub-stratums
In addition, political factors of new trade union membership and new trade
union have to be tackled with.

(iii) Technological factors: With modernization new process and plant, compatibility
of the existing workforce with new technology will be a significant problem.

(iv) Psychological factors: Resistance to change creates frustrations and psychological

inhibitions.

(v) Promotional factors: Requirement of additional supervisors will create the

problem of new recruits vs. internal promotions. This will require putting in
place systems and procedures.
 (vi) Structural problems: New organization structure with a different legal form and
separation of ownership from management will create problems of
communication, reporting discipline, legal compliances of labour laws.

Question

Discuss the following:

(i) Economic efficiency and consumer welfare have been the key objectives of
competition policy.

Answer (i)

Traditionally economic efficiency and consumer welfare have been the key objectives of
competition policy. It is these principles that form the basis of legislations in various
countries and also of global and multilateral institutions, such as the World Bank and
OECD. These are worthy goals that naturally form the core of any rational competition
law, which, on being effectively enforce, contributes inestimably to the efficient and
equitable, functioning of the progressive market economy.

The main objective of every competition law and policy is to promote competition as a
means of assisting in the creation of markets responsive to consumer signals, and
ensuring the efficient allocation of resources in the economy and efficient production
with the lowest prices and adequate supplies to consumers, leading to increased
competitiveness, resulting in substantial growth and development. There is growing
consensus that competition is an essential ingredient for enhancement and maintenance
of competitiveness in the economy and consumer welfare.

In almost all countries that have a competition law, the stated objective of the legislation
is to improve economic efficiency and thus contribute to economic development. It is
also widely accepted that the competition policy and law should aim to increase
consumer welfare.

Question

Read the following case and answer the questions given at the end:

Washwell Detergents (P) Ltd., a five-year old traditionally managed company

employing 200 workforce under one personnel manager, two personnel officer and three
supervisors, manufactures soaps in a factory situated 20 kilometers away on NH-8 in a
rural setting. The managing director is overall in-charge of the company and is assisted
by assistant company secretary, Ghulam, who looks after personnel department as well.
Most of the workers come form joint-families and own ancestral agricultural lands.
During lean agricultural seasons, a large number of candidates flock the company gates
for jobs in the factory; but after three or four months, almost all leave jobs to look after
their crops. They come to work only for liquid cash. Their performance on manual jobs
is on the whole casual and slipshod. There are no permanent employees, no union
activities, no promotion or training policies. The company follows hire-and –fire
recruitment policy. Conflicts, accidents, damages and turnover are galore.

Pervaiz, an M.Sc, MBA, has been its personnel officer for the last three years. He handles
industrial relations and overall co-ordination of supervisors through Swati, an MA, BBA
having 2 years experience and who is the second personnel officer, The company’s
products being cheap and of good quality stand well in the market. In fact, its detergent
‘Easy Wash’ commands solid brand loyalty.

Recently, the position of personnel manager fell vacant due to his sudden death. Both
the personnel officers applied for promotion to it. As no criteria for selection was readily
available, Ghulam, ACS, decided to get their candidatures appraised by subordinates.
The three supervisors, who were also ‘approach’ in their villages, were asked to award
marks out of 400 on the behavior, guidance capacities, controlling and human touch of
the personnel officers on the basis of subjective likings. Both the officers heavily lobbied
with the supervisors who were inexperienced in such a task. They finally gave averaged
scores as follows:

Pervaiz Swati

Behavior 45 35

Guidance 10 05

Controlling 40 50

Human touch 45 35

Total 140 125

In view of marginal difference, none was promoted and an external fresher was
appointed. As anticipated, both the personnel officers resigned in disgust. Within a
month, the three supervisors also left the job.

Now, answer the following---

(i) Is the given situation in the company congenial? If not, what are the lacunae?
(5 marks)
 (ii) Was the appraisal by subordinates justified? What could be done otherwise?
(5 marks)
(iii) Work out a more effective recruitment, motivation and appraisal system for the
company. (10 marks)

Answer (i)

The situation in the company is not congenial. While analyzing the factual situation, the
noticeable lacunae are:

(i) Non-availability of permanent job committed and care-oriented employees,

attendance bonus, yearly increments based on criteria including regular
minimum attendance;
(ii) Lack of professional approach in personnel management;
(iii) Absence of recruitment and training policies;
(iv) Hire-and-fire recruitment;
(v) Lack of proper, logical and scientific appraisal of candidatures for promotion;
(vi) Absence of policy for appointment of fresher or old experienced personnel
officers.

Answer 1(ii)

Not at all. The appraisal by subordinates is not justified, Inexperienced, unprofessional,

casual subordinates cannot be given the task of appraising the performance of
management professional. Performance appraisal is a formal programme in an
organization, which is concerned not only with the contributions of the members who
form part of the organization, but aims at spotting the potential also. Generally the
evaluation is done by the individual’s immediate superior in the organization and
whose rates others below him is also rated by his superiors. The ACS, MR. Lal himself
ought to have appraised the candidatures along with consultant for making the
assessment systematic, professional and transparent.

Answer 1(iii)

An effective system would focus around---

(a) Basic change in the outlook and approach of the MD and ACS form traditional
style to modern scientific management.
(b) Clear long-term policies on all the important aspects of Human Resource
Management viz., recruitment, selection, and training, etc.
(c) Creating well-defined jobs with promotion hierarchies.
 (d) Employing regular, permanent, and duly qualified employees. Even for manual
work, loyal, career conscious and hardworking employees are preferable.
(e) Attendance bonus, yearly increment policy, lack of trust depicted by hire-and-
fire policy should be replace by a stable, scientific, HR management where trust
and highest respect for each person is assured.
(f) Recruiting employees through employment agency or through advertisement by
interviewing on scientific lines.
(g) Providing liberal compensation package, performance based incentives, and
other welfare measures to the employees.
(h) Introducing periodic data based performance appraisal by the employee and
review by the immediate superior. Provision for appeals against unfair
assessment should be made.
(i) Promotions be within the prescribed time limit or before, form within the
company and fair, preferably through interviews.
(j) All this is easier said than done, but sincerity, fairness and treating men as social
capital and consistent investment in them will go a long way in improving the
situation.

Question

(a) “Human resource management is the art of acquiring, developing and

maintaining a complete work force in such a manner as to accomplish with
maximum efficiency and economy the functions and objective of the
organization.” Discuss. (10 marks)
(b) What do you understand by ‘human resource accounting’ and state its benefits?
(5 marks)

Answer (a)

Ransis Linkert has summarized the importance of human component in an organization

and the need for managing it effectively in the following words:

“Every aspect of a firm’s activity is determined by the competence, motivation and

general effectiveness of the human organization. Of all the tasks of management
managing the human component is the central and most important task because all
depends upon how well it is done.”

Management’s basic job is the effective utilization of human resources for the
achievement of organizational objectives, viz., profitable operations and growth through
the satisfaction of certain needs of the customer and society. It is through the combined
efforts of human resources or personnel that technological, financial, physical and all
other resources are utilized. Without human efforts, no organization can achieve its
objectives. Therefore, motivation of human resources is of utmost importance
everywhere.

Of the many factors, which impinge on the management task and influence its
accomplishment, the human factor is probably-the most significant. The technological
and material factors do frequently play a large part in the operations of a firm, yet in the
ultimate analysis, it is on the quality of its people, the opportunities they get to develop
and utilize their skills and the manner in which they are managed and supervised in
their work, that the performance of the organization depends. The differences in
productive efficiency between units in the same industry and even between department
within one enterprise cannot be explained solely by variations in the methods of
manufacture and technical organization of work. The importance of human contribution
to organizational and managerial effectiveness cannot be overstressed.

It is task of human resource management to study and develop ways in which human
beings can be effectively organized for maximum contribution to the achievement of
organizational and social goals. The concept, role and range of activities are focused on
the basic problems of directing and organizing human effort towards the achievement of
highest levels of efficiency, adaptability and productivity.

Human resource management aims to achieve both efficiency and justice, neither of
which can be pursued successfully without the other. It seeks to bring together and
develop into an effective organization, men and women who make up an enterprise
enabling each to make his own best contribution to its success.

Management must have the support of all employees. In an information society, human
resources are at the cutting edge. And it means that human resource professionals are
becoming much more important in their organization.

Answer 2(b)

Human Resource Accounting (HRA)

Accounting for the human resources deals with the measurement of costs, which are
associated with recruiting, selecting, training, placing and developing the employees of
an organization. This also involves measuring the present economic value of human
resources to an organization. The basic objective underlying HRA is to facilitate the
effective and efficient management of human resources as it would provide the manager
with the information needed to acquire, develop, allocate, conserve, utilize, evaluate and
reward human resources. Besides, HRA also provides feedback to a manager of his own
performance.

Benefits: In the field of managerial decision-making, HRA would help in making

meaningful choices between various types of investments in human resources and other
assets. It would assist the manager particularly with regard to:

i. Direct recruitment vs. promotion.

ii. Transfer vs. retention.
iii. Retrenchment or relieving vs. retention,
iv. Utility of cost reduction programme in view of its possible impact on human
relations.
v. Impact of budgetary control on human relations and organizational behavior.
vi. New dimension added to capital budgeting process that includes human
resource investment costs.
vii. Consideration of an adequate return on investment in human assets and also a
more useful interpretation of return on capital employed.
viii. Decision on relocating factories, developing overseas subsidiaries, closing down
or streamlining existing units.

Question

Write notes on any three of the following:

(i) Manpower planning

(ii) ‘Assets make things possible, people make thing happen’
(iii) Evaluation of benefits of training programmes
(iv) Learning principles
(v) Job analysis.

Answer (i)

Management planning is basically the process by which it is determined how an

organization should move from its current manpower position to its desired manpower
position. Management scholars have defined manpower planning in different ways.
According to Edwin B. Gester “manpower planning is a process including forecasting,
developing, implementing and controlling by which a firm ensures that it has the right
number of people and right kind of people at the right time for things for which they are
economically useful. Under manpower planning, acquisition, development and
maintenance of human resources are well organized and planned in a systematic
manner. It is based on various factors like inventory of existing personnel, labour
turnover, internal and external environment. Manpower planning is clearly linked with
business plans. With changes in business plans, manpower plans also undergo
simultaneous changes. As manpower planning is concerned with optimum use of
human resources, it can be of great benefit at national and business levels.

Answer (ii)

The question aims at judging the importance of human resources in achieving

organizational goals. AN organization is nothing but a group of people whose activates
have been planned and co-ordinate to meet organizational objectives. An organization
that exists to produce goods and services has a good chance to survive and prosper if it
consists of the right people.

Management’s basic job is the effective utilization of human resources for the
achievement of organizational objectives, viz., profitable operations and growth through
the satisfaction of certain needs of the customers and society. It is through the combined
efforts of human resources or personnel that technological, financial, physical and all
other resources are utilized. Without human efforts, no organization can achieve its
objectives.

Human resources, along with financial and material resources contribute to the
production of goods and services in an organization. Physical and monetary resources,
by themselves cannot improve efficiency and contribute to an increased rate of return on
investment. It is through the combined and concerted efforts of people that monetary or
material resources are harnessed to achieve organizational goals.

All the activities of any enterprise are initiated and determined by the persons who
make up that institution. Plants, offices, computers, automated equipment, and all else
that a modern firm uses are unproductive except for human effort and direction. Of the
many factors, which impinge on the management task and influence its
accomplishment, the human factor is probably-the most significant. The technological
and material factors do frequently play a large part in the operations of a firm, yet in the
ultimate analysis, it is on the quality of its people, the opportunities they get to develop
and utilize their skills and the manner in which they are managed and supervised in
their work, that the performance of the organization depends.
 People are the common element in every organization. They create the strategies and
innovations for which organizations are credited. “Assets make things possible; people
make things happen”. It is people who create the strategies that produce a nation’s
valued products and services.

Answer (iii)

Training involves the development of skills that are usually necessary to perform
specific job. It involves the development of skills that are usually necessary to perform a
specific job. The purpose of training is to achieve a change in behavior of those trained
and to enable them to do their jobs better.

Since huge sums of money are spent on training and development, how far the
programme has been useful must be judged and determined. Evaluation helps
determine the results of the training and development programme.

Need for Evaluation: The main objective of evaluating the training programmes is to determine
if they are accomplishing specific training objectives that are, correcting performance
deficiencies. A second reason of evaluation is to ensure that any changes in trainee capabilities
are due to the training programme and not due to nay other conditions. Training programmes
should be evaluated to determine their cost effectiveness. Evaluation is useful to explain
programmes failure, should it occur. Finally, credibility of training and development is greatly
enhanced when it is proved that the organization has benefited tangibly form it.

Principles of Evaluation: Evaluation of the training programme must be based on the

following principles:

1. Evaluation specialist must be clear about the goals and purposes of evaluation.
2. Evaluation must be continuous.
3. Evaluation must be specific.
4. Evaluation must provide the means and focus for trainers to be able to appraise
themselves, their practices, and their products.
5. Evaluation must be based on objective methods and standards.
6. Realistic target dates must be set for each phase of the evaluation process. A sense of
urgency must be developed, but deadlines that are unreasonably high will result in
poor evaluation.

Answer 3(iv)

Training and development programs are more likely to be effective when they incorporate the
following principles of learning:

1. Employee motivation
2. Recognition of individual differences
3. Practice opportunities
4. Reinforcement
5. Knowledge of results (feedback)
6. Goal setting
7. Schedules of learning
8. Meaningfulness of material
9. Transfer of learning.

Motivation to learn is the basic requisite to make training and development programmes
effective. Motivation comes from awareness that training fetches some rise in status and
pay. Motivation alone is not enough. The individual must have the ability to learn.

Regardless of individual differences and whether a trainee is learning a new skill or

acquiring knowledge of a given topic, the trainee should be given the opportunity to
practice what is being taught.

Reinforcement may be understood as anything that (i) increases the strength of response
and (ii) tends to induce repetitions of the behavior that preceded the reinforcement.

Knowledge of results is a necessary condition for learning. Feedback about the

performance will enable the learner to know where he or she stand, and to initiate
corrective action if any deviation from the expected goal has taken place.

Goal setting can also accelerate learning, particularly when it is accompanied by

knowledge of results, individuals generally perform better and learn more quickly when
they have goals, particularly if the goals are specific and reasonably difficult.

Schedules of learning involve (i) duration of practice session, (ii) duration of rest of
sessions, and (iii) positioning of rest pauses. All the three must be carefully planned and
executed.

A definite relationship has been established between learning and meaningfulness of the
subject learnt. The more meaningful the material, better the learning process.

What is learnt in training must be transferred to the job. The traditional approach to
transfer has been to maximize the identical elements between the training situation and
the actual job.

Answer 3(v)

Job analysis may be defined as a process of discovering and identifying the pertinent
information relating to the nature of a specific job. It is the determination of the tasks,
which comprise the job knowledge, skills, abilities and responsibilities required of the
worker for successful performance of the job. The process of job analysis is essentially one
of data collection and then analyzing that data. It provides the analyst with basic data
pertaining to specific jobs in terms of duties, responsibilities, skills, knowledge, etc. This
data may be classified as follows:

(a) Job identification.

(b) Nature of the job.
(c) Operations involved in doing the job.
(d) Material and equipment to be used in doing the job.
(e) Personal attributes required to do the job, e.g., education, training, physical
strength, mental capabilities, etc.
(f) Relation with the other jobs.

The information relating to a job which is thus classified, if examined carefully, would
suggest that some innovation relates to the job and some concerns the individual doing
the job. The requirements of a job are known as Job Description and the qualities
demanded from the jobholder are termed as man specification. Thus, job description and
man specification are the immediate products of job analysis.

To quote Edwin B. Flippo, “Job analysis is the process of studying and collecting
information relating to the operation and responsibilities of a specific job. The
immediate products of this analysis are ‘job description’ and job specification”

Question

(a) “Education, training and development are different aspects of employee

development programme. “Elucidate.
(b) Prepare a brief note for your managing director visualizing new challenges being
faced by human resources managers in the rapidly changing economic
environment in the country.
(c) “To develop flexible managers for the future, we should teach them to write
poetry, read military history and study weather maps. “Discuss”.

Answer (a)

Training is an organized activity for increasing the knowledge and skills of people for a
definite purpose. It involves systematic procedures for transferring technical know-how
to the employees so as to increase their knowledge and skills for doing specific jobs with
proficiency. In other words, the trainees acquire technical knowledge, skills and problem
solving ability by undergoing the training programme.
The purpose of education is to teach theoretical concepts and develop a sense of
reasoning and judgment.

Another component of training and development programme is development, which is

less skill oriented but stress on knowledge. Knowledge about business environment,
management principles and techniques, human relations, specific industry analysis and
the like is useful for better management of a company.

Education, training and development functions in an organization or company has now

gradually become a major activity and an important part of employment costs in
modern industrial economies. Today, managements (managers and executives)
recognize a heavy responsibility for this activity and accept it as financial resources.
Undoubtedly, no organization or company can ignore the training and educational or
developmental needs of its employees for a long time without seriously hampering their
effective performance. The need for carefully designed and executed training and
development programs persists despite the most careful selection even
placement/orientation or induction of employees since process of organizational,
technological and human change are constantly occurring and working people have to
be molded according to changing specifications.

Thus, training and development of human resources in industrial or business

organizations is an important tool for the development of desirable motives and
attitudes on the part of both employees as well as management. From the standpoint of
employees, training serves as an important means for the development of effective or
productive work habits/methods of work and in consequence it improves job
performance, reduces costs by eliminating wastes. It enables employees to develop and
rise within the organization. To the management, training and development efforts do
not simply bring about improved production or achievement or higher standards of
quality along with larger quantity but also help the managers in building up satisfactory
organization structure, reducing employee dissatisfaction.

Answer 4(b)

The Managing Director

XYZ Ltd.Co.

Sir,

This is to bring to your kind attention that during the last decade, significant changes
have taken place in the social, economic, technological and political environment of
Indian business. However, the recent spate of changes in the economic liberalization and
trend towards globalization has brought many opportunities and threats for the modern
organizations. The Human Resource (HR) professionals cannot ignore such changes,
rather they have to design and execute innovative mechanisms of developing skills and
competencies of human resources to prepare them to accept the emerging challenges
including:

 changing technology leading to obsolescence of present skill and technique;

 economic and industrial policy changes leading to tough competition from
multinational corporations;
 changing international environment insisting on free flow of goods and
services throughout the world;
 changing profile of workers, e.g. increased educational level, rising share of
women in the workforce, increased emphasis on fulfillment of psychological
needs;
 changing needs and expectations of, customers rendering the existing
processes and products obsolete.

In the above backdrop, HR managers have to reorient their strategic response whereby
there is greater professionalism in Human Resource Management function, a better
integration of HR strategies with corporate strategies and a true recognition at all levels
of the importance of human resources in organizational success. Besides, HR managers
have to redefine their rules as ‘change agents’ rather than focusing on maintaining only
the status quo and the so-called ‘industrial relations’.

Submitted please.

Sd/-

(HR Manager)

Answer 4(c)

The changing global business environment has brought significant changes in the social,
economic, technological and political environment of Indian business during the last
decade. To work as an agent of change in the organization, a human resource person
must practice the principles of human values and ethical conduct in order to ensure
achievement of the objectives of the growth and development of human beings in the
organization towards a motivated and integrated social group.

Various capabilities are required to carry out different takes or to perform different roles
in an organization. These capabilities include (a) technical capabilities dealing with the
technical understanding and skills required to perform the tasks. (b) managerial
capabilities include abilities to develop systems, ability to plan, coordinate, monitor,
forecast, schedule, organize, evaluate etc. (c) human capabilities include capabilities
include capabilities like leadership, team-building, team management, initiative taking
ability, creativity, ability to motivate and maintain high morale among staff, ability to
identify and utilize potential of people etc. (d) conceptual capabilities include abilities to
conceptualize and visualize invisible, ability to form perspectives, abilities to think of
larger contexts (like the national economic environment and its impact on the
organization, developmental needs and the role of the organization etc).

Performing different roles require different combinations of these capabilities. Normally

at lower levels of organizational hierarchy technical capabilities are required to perform
different roles. As one goes up the hierarchy into supervisory and managerial levels
managerial capabilities become more important. Along with managerial capabilities,
behavioral capabilities like initiative, supervision, and leadership become important. At
still higher level, i.e., as one goes to the level of heading a department or factory
behavioral capabilities become increasingly important. A General Manger should have
leadership, managerial capabilities, team-management, etc capabilities. Otherwise the
organization may suffer from morale problem.

Question

(b) “Industrial relations in Pakistan are largely regulated, shaped and structured by
the State.” Comment.

Answer

Off all the Human Resource Management problems that have emerged on the corporate
forefront in recent times, the problem of industrial relations has acquired more
prominence than any other one. The increased importance of this vital aspect of Human
Resource Management is due to one single factor that it deals with people who are the
base of industry-a class of people that makes things to happen. Their inaction or violent
action very often makes paper headlines. Certainly, the strikes, redundancies, gears by
the workforce and the indifferent and inhuman attitude of employers in dealing with
various labour problems is a matter of great concern for one and all. In fact, the very
relationship between labour and management is the basis of industrial relations.

Industrial relations system is made up of certain components, popularly known as

“three actors” of the system. In all developed and developing economies, these actors
are workers (employees) and their organizations (trade unions), management
(employers) and their organization (employer’s associations/federations), and the
government. These factors jointly determine the output of the system, which largely
consists of rules/regulations relating to terms and conditions of employment. On the
fact of it, the system seems to be very simple but in fact is very complicated. It is for this
reason that the management of industrial relations system is regarded as quite an uphill
task. Let us now deliberate on the role behavior of three actor of industrial relations
system.

Question

I am an MBA and an Associate Member of ICPAP with three year experience as a

Human Resource Manager in Aslam Saqib Printer Lahore. It was a medium sized
factory with 150 workforce headed by an entrepreneur tow whom I reported. We paid
special attention to training and welfare of the employees as a result of which
production increased four-fold in two years. Labour and management alike appreciated
our sincere efforts. But the organization could not give me higher salary then Rs.10,000/-
per month. So, I looked for change.

When the Pakistan State Oil (PSO) a public sector undertaking – advertized for Deputy
Company Secretary – cum General Manager (HR), I applied for it. I got the appointment
on a salary of Rs.30,000/- per month plus perks. My foremost task was to implement
and HRD Course for managers, executives and non-executive; and campaign for its
success. 6,000 Executives and non-executives spread all over Pakistan posed a
communication, coordination, scheduling and feedback challenge. As it was a new
experience, senior manager were enthusiastic. All the 15 managers were inducted in the
task-group to give lectures to the executives and non-executives highlighting the
advantages of joining the development programme of the corporation and ensuring
compliance with labour laws.

After six months, the campaign was reviewed. It was found that for no apparent
reasons, only a dozen non-executive had applied for the course, an area manager left
with one year to retire and six executives in their mid-thirties too had applied was this
programme a non-starter? Were all the managers fully trained and developed to stay
out?

In the review meeting, the Chairman, ICPAP surmised that the lack of adequate
motivation may be a reason for poor response. He hinted that three year back, another
company too had carried out similar exercise and experienced a similar situation. Later
on, with some secret changes in their programme, they had succeeded quickly.

He wanted me to ascertain those changes. But with my best efforts, I could not. The
Chairman had also indicated that HRD might sound appealing as promoting
harmonious human relations, but not industrial relations. In areas like self-study
schemes and heavy menu canteens, sagging productivity was his experience. So, he
advised cautious approach.
I am confused as all this is quite contrary to what we learnt in academics. Could you
enlighten me on the following points:

ix. Why did we fail and why could another company succeed in its HRD program?
What should be the scope, main items and approach in our programme?

(ii) Is our Chairman right in his experience-based views? Why? Is not HRD a new
attractive name for traditional HRM activities like welfare, training or manpower
planning?

Answer 1(i)

The basic problem for the HRD program in this case is the poor response of
executives/non executives. It involves issues of persuasion and motivation for joining
the HRD course. Following factors affect it:

(a) Vision and direction: The HRD program must have a long term vision properly
spelled in terms of appealing to the target audience i.e. executives and non
executives. It must have a positive direction regarding employees’ development.
The managers who lectured did not have it. Mere enthusiasm does not work.

(b) Proper understanding: Manager lacked conceptual clarity. HRD is not for
company’s development (which may be its result though) and better compliance
with labour laws (which is an HRM function). Instead, it is for the development
of potential personality traits of employees for more effective organizational
involvement that would prompt them for putting is greater efforts towards
improving efficiency.

(c) Lack of commercial involvement with potential-user of the campaign: Ineffective,

formalized, droning lecturing about the HRD program hardly motivates anyone.
It is not a classroom lecture but favorable responses eliciting exercise. The
managers were not trained for this task – no wonder campaign failed.

(d) Status problem: Manager were waived by executives/non executives as bosses.

Their lectures did not prompt audience to respond, the way HRD program
wants. Possibly the IOC might have retailored their campaign after initial failure,
by inducting more of executive/non-executives into the lecturing platform.
People listen more to equal status levels. Lecturers and students at near parity
levels ensure better learning and motivation. So, participation and not dry
lecturing, is the secret technique.

(e) Perceptual problems: Perception of employees about HRD programs is generally

different as compared to that of companies. Company failed to appreciate that
 HRD is purely for employees benefit and success. They must empathies with
employee’s viewpoint.

(f) Poor programme design: The programme contents must be worked out on the basis
of effective motivators. For a big heterogeneous volume of audience (6,000 over
India), this is a big task in itself. Yet it is the foundation for success of the
campaign.

In view of the afforested factors, the HRD programme should not aim at covering all the
6,000 employees in one go. Batches should be worked out and differential design be
framed for different categories of employees. Programme should be batch scheduled.

The main items of the programme will depend on the employee-traits and
organizational requirements. Mainly they are:

(a) Acquisition of capabilities: knowledge, perspectives (attitudes, values and skills)

required to perform various task or functions associated with their present or
future expected rules.

(b) Development of capabilities: identification and tapping of potentials.

(c) Organization culture: Where superior subordinate relationship, teamwork and

collaboration among different sub-units are strong and contribute to
organizational health, dynamism and pride of the employee.

As for approach, the programme ought to be humanistic, optimistic, empathic and well
knit with HRM activities of the corporation.
Answer 1(ii)

Surely, HRD is not merely HRM, although the modern approach is to treat them co-
related, HRD is more change adaption process while HRM is more of day-today
management of employees in the organization through the mechanism of power,
control, conflict, consent and dependence. HRM is the latest management response to
these issues/mechanisms and not an explanation of them, which is HRD’s domain.

Secondly, Mr. Sood Chairman is quite right in his views as to motivate like self study
courses. Long back, Herzberg had spotted ‘hygiene’ factor, the lack of which take many
things for granted-hygiene factors are such. In fact, these factors do improve human
relations by creating an impression of ‘care’ and’ bon honie’ but in formal company
organizations, the concept of relations is formal, officials, obligatory and even legal.
While it is mandatory, for example, to take welfare and safety measure under Chapter
IV of the Factories Act, 1948, it is left to management to take up or not many HRD
measures like self-study program.

Question

(a) “HRD is not a mare technical concept, it is a professional innovation necessitated

by the exigencies of the situation. “Comment”.

(b) How do you conceptualize the ‘new’ role of HR Manager in the present
millennium?

(c) “Six ‘whats’ make hiring ‘practices most effective. “what are they?

Answer (a)

HRD is not a mere theoretical concept. It is a professional innovation necessitated by the

exigencies of the situation, fuelled by human idealism, supported by a growing
knowledge about human systems and chiseled by pioneering practitioners. Since 1980
“High Performance Work Systems” has become increasingly popular. In this changing
context, total human resource management the holistic approach and not partial
personnel management would be relevant. Describing people as “resource” is a
relatively recent practice in India. Describing people as a resource underlines the fact
that people are as important as other resources. Managers and workers together
represent the human resources of an organization.

The personnel department in any organization should have a policy, planning and
research role in addition to the role of providing personnel services such as recruiting,
information and guidance to line managers on matters such as industrial relations. This
contrasts with Drucker’s criticism of the personnel functions that the work of the
personnel department consisted of partly a file clerk’s job and partly fire fighting to head
off union trouble or to settle it.

Last but not the least, personnel function has a key role in facilitating change. This is
because most organizations today must change in order to survive. Change has mainly
to do with people. Many of the industrial problems which we face today have to deal
with change-changes of value, changes in methods of working, introduction of new
technology, changes in perceived career patterns and adaptation to external social
values and expectations in the country.

Answer (b)

Human Resource Management in the ‘nineties has undergone a greater revolution by

questioning the accepted practices and re-inventing the organizations as well as
structures. It upgrades the norms and standards of work as well as performance.

The new role of human resource management, is much more strategic than before. Some
of the new directions of the role of HRM can be summed up as under:

 A facilitator of change: To carry people through upheaval requires the true

management of human resource.
 A integrated approach to management: Rather than being an isolated function,
human resource is regarded as a core activity, one which shapes a
company’s values. In particular, this can have an impact on customer
services.
 A mediator: Establishing and balancing the new and emerging aspirations
and requirements of the company and the individual.

These changes, which are taking place, involve more commitment of the organization to
the development of people by improving performance and cutting costs. As a result of
this, the duration of tenure, which was traditionally long standing, is now limited. The
future creative careers, so notified by P.A. consulting Group, will require more involved
approach to career development, which will inter alia include:

 Share employees with strategic partner organization (customers or

suppliers) in lieu of internal moves.
 Encourage independence: employees may go elsewhere for career
development, possibly to return in few years.
 Encourage employees to think of themselves as business and of the
organization’s various departments as customers.
 Indentify skilled individual in other organizations who can contribute on a
temporary project basis or part time.
  Regularly expose employees to new people and new ideas to stimulate
innovation.
 Balance external recruitment at all levels against internal promotion to
encourage open competition, “competitive tendering” for jobs to
discourage seeing positions as someone’s territory which causes self-
protective conformity.
 Abandon top-down performance appraisal in favour of self appraisal based
on internal customer satisfaction surveys and assessing people as you
would suppliers.
 Replace top down assessment processes with self-assessment techniques
and measure performance in terms of result.

HRM is fast developing into a process of achieving strategic goals of an organization

through improving human resource utilization. HRM, in future, will entail much more
creativity in converting organization.

Answer (c)

The employment function of the Human Resource Manager is concerned with the task
of hiring people to fill current or future job vacancies in the organization.

For making the hiring practices most effective, answers must be sought to the following
questions.

1. What are the requirements of the jobs to be filled?

2. What kinds of and how much manpower must be hired?
3. What sources of recruitment may be utilized for procurement?
4. What procedures should be adopted to screen the candidates for
employment?
5. What is the utility of employment test and interviews in the selection
process?
6. What is the place of transfer and promotions in employment and
placement?

Question

Write notes on any three of the following.

(i) Effective team building as morale booster.

(ii) Work-load analysis vs. workforce analysis
(iii) Career anchors
 (iv) Principles of wage administration.

Answer (i)

Effective Team building as morale booster

An HR man should be a leader with high intellectual powers, a visionary and

philosopher with practical approach. He has to lead the human beings in the
organization for achieving its objectives in a changing and challenging world. For this,
he requires an effective team of dedicated capable subordinates. This exercise requires
spotting capabilities of skills, character and behaviour. He must have empathy, excellent
communication skills, draftsmanship, a human feel, judgment about men, perception of
challenges and likely solutions and an educator cum executive leader.

Team building is a difficult task and requires dynamic leadership. It is difficult because
people with individual differences join organization with different personalities, value,
system, attitude and needs, the individual have a tendency to feel close to those who
have similar values and attitude, therefore, people like the company of those who are
alike them. To integrate and polymerize the efforts of the people. It is therefore
important that leader must understand their needs, hierarchy, their problems attitude
and value system.

An effective leader is one who is able to draw out full potential of his team members.
The team leader should be able to give a direction for investing their potentials. They should
have to use his authority appropriately in tune with personal values of the team members. An
effective leader is to be sensitive to both the individual needs and the organization needs and
thus try and integrate them. The individual’s look for recognition when they do anything of
significance. Those in leadership position should appreciated recognize the individual’s worth
and should ensure that members do not become complacent and should consistently give their
best. Because at times the lack of recognition can be a source of frustration to the individual and
may effect the team work.

Answer (ii)

Work-load Analysis

In work-load analysis, the manpower planning expert needs to find out sales forecasts, work
schedules and thus determine the manpower required per unit of product. The sales forecasts
are translated into work performance for the various department of the enterprise. In a
manufacturing enterprise, one shall first find out the master schedule and then departmental
schedules. The departmental work loads are converted into man hours in terms of different
skills required work load analysis is used to determine who many employees of various types
are required to achieve total production targets. Similarly, plans are made concerning the
amount of work that all other departments (marketing department, purchase department etc) of
the organization are expected to accomplish during the coming year. It is essential to determine
the work load in some tangible units so that they may be translated into man hours required per
unit. Past experience can, of course, be utilized for translating work load into man hours
required.

To take an illustration, let us assume that the annual production budget of a accompany is
1,80,000 units. The standard man hours required to complete a unit of the product are 2 hours.
The past experience reveals that a worker on an average can contribute about 2,000 hours per
year. The work load may be calculated.

a) Annual Production budget = 180,000 unit

b) Standard Man-hours required per unit = 2 hour
c) Planned Man-hour for the year (axb) = 360,000 hours
d) Annual Contribution of a worker = 2,000 hours
e) No. of workers required (c/d) = 180.

Thus, 180 workers are needed throughout the year to meet the production target of 180,000
units. But this figure cannot be relied upon fully as the actual production is influenced by many
other factors such as availability of inputs and power, breakdown of machinery, strike, lockout,
etc. nonetheless, work load analysis is quite suitable for short-term projections of manpower
requirements.

Workforce Analysis

Long term projections can be made with the help of workforce analysis. In the above
illustration, we came to a c conclusion that 180 workers are required to make 180,000 units a
year. Assuming that all other factors are favorable, this conclusion is illusory because of the two
major problems (i) absenteeism, and (ii) labour turnover. Both these factors operate to reduce
the number of workers available. Therefore, it is essential to do work force analysis, in other
words, it is necessary to keep a sufficient margin for absenteeism, labour turnover and idle time
on the basis of past experience. If it is essential to keep a margin of 20% of the manpower
required as per work load analysis, the company must ensure that it has at least 210 workers on
its payroll to meet the annual production target.

Answer (iii)

Career Anchors

Career anchor denotes the basic drives that create the urge to take u a certain type of career.
These drives are as follows:
 (a) Technical competence: Professional satisfaction, continuous learning and updating
one’s expertise in a technical or specialized area such as quality control, advertising,
public relations, etc.
(b) Managerial competence: Opportunities for higher responsibility, decision marking,
control and influence.
(c) Security: Security of career through compliance with the organization’s norms and
prescriptions.
(d) Autonomy: Freedom of action and independence or autonomy.
(e) Creativity: Opportunities for innovation and risk-taking.

Answer (iv)

Principles of Wage Administration

Wage administration should be guided by the following basic considerations:

1. Wage policies should be carefully developed, having in mind the interests of (a)
management as the representative of the owners, (b) the employees, (c) the consumers,
and (d) the community.
2. Wage policies should be clearly expressed in writing to ensure uniformity and stability.
3. Wage decisions should be checked against the carefully formulated policies.
4. Management should see to it that the employees know and understand the wage
policies.
5. Wage policies should be evaluated from time to time to make certain that they are
adequate for current needs.
6. Departmental performance should be checked periodically against the standards set in
advance.
7. Job description and performance ratings should be checked periodically to keep them up
to date.

Question

(a) Explain the concept of ‘management by objectives and self control’ enunciated by Peter.
F. Drucker as a method of performance appraisal. How is it an improvement over the
traditional methods of performance appraisal?

(b) “Personnel audit refers to an examination and evaluation of policies, procedures and
practices to determine the effectiveness of personnel management. “Discuss and
highlight the objectives and scope of personnel audit.
Answer (a)

It was Peter Drucker who proposed goal setting approach to performance appraisal which he
called ‘Management by Objectives and Self Control’. This approach was further strengthened by
Douglas Mc. Gregor. Mc Gregor was concerned with the fact that most traditional appraisal
systems involved ratings of traits and personal qualities that he felt were highly unreliable.
Besides, the use of such trait rating produced two main difficulties: (1) The manager was
uncomfortable about using them and raised making appraisals, and (2) it had a damaging effect
on the motivation and development of the subordinate.

Goal setting approach or “Management by Objectives” (MBO) it the same as behavioral

approach to subordinate appraisal, actually called “work planning and review” in case of
General Electric Co., U.S.A. under this approach, an employee is not appraised by his
recognizable traits, but by his performance with respect to the agreed goals or objectives. Thus,
the essential feature of this approach is mutual establishment of job goals. The application of
goal setting approach to performance appraisal involves the following steps:

1. The subordinate discusses his job descriptions with his superior and they agree on the
contents of his job and the key result areas.
2. The subordinate prepares a list of reasonable objectives for the coming period of six to
twelve months.
3. He sits with his superior to discuss these targets and plans, and a final set is worked out.
4. Check points are established for the evaluation of progress, and the ways of measuring
progress are selected.
5. The superior and the subordinate meet at the end of the period to discuss the result of
the subordinate’s efforts to meet the targets mutually established.

The goal setting approach is based on clear and time bound objectives from the corporate level
to the operative level. This approach can be applied with great success if the performance
appraisal programme consists of the following elements:
(i) Good job descriptions are available to help setting of goal for different positions.
(ii) Superiors have trust in the subordinates to establish reasonable goals; and
iii) There is emphasis on problem solving rather than criticism of the performance of the
subordinates.
The goal setting approach has done away with the judgmental role of the superiors in the
appraisal of their subordinates. It has led to greater satisfaction, greater agreement, greater
comfort and less tension and hostility between the workers and the management. This approach
is considerably superior to the traditional approach of performance appraisal. It emphasizes
training and development of individuals. It is problem solving approach rather than tell and sell
approach. This approach has also got a built in device of self appraisal by the subordinates
because they know their goals and the standards by which their performance will be measured.
Answer (b)

Objectives and scope of Personnel Audit

As organizations have tended to grow bigger, so have the staff departments along with the line
functions. A time comes when each of them becomes so big that does not get a fair idea of how
they are gong unless special effort is made and studies undertaken.

For the line function, some indices are available in production for instance, performance can be
judged by how much was produced, to what extent schedules were adhered to, at what cost
manufacturing was done, what was the unit cost, etc. These figures in themselves are important
and they take added meaning when they are compared with, say, previous year or years or
with the planned and budgeted figures. Similarly, marketing department’s efficiency can be
judged by the quantum of sales, sales vis a vis competitor’s sale, cost of sales, territories
covered, new customers explored, old customer retained, etc.

In case of department like personnel, such yardsticks are not readily available. Essentially they
have to be evolved according to an organization’s requirements. Today personnel departments
have become big and employ sizeable staff and specialists. As such, some kind of audit needs to
be undertaken to ascertain the functioning of the department.

Personnel audit refers to an examination and evaluation of policies, procedures and practices to
determine the effectiveness of personnel management.

Objective of personnel audit:

1. To review the management, policies and programmes relating to manpower planning,

recruitment, selection, placement, promotion, transfer, training and development of
employees, administration of employees compensation and welfare with a view to
determining the effectiveness of these programmes.
2. To evaluate the extent to which the line managers have implemented the policies and
programmes.
3. To evaluate the personnel staff and employees.

There is no legal obligation for audit of this nature for personnel department. It is a tool for
evaluation of policies, procedures, practices and compliance.

Scope of personnel audit

The scope of personnel audit has over the year expanded. The traditional personnel audit was
limited to review of activities of the personnel department. Today’s audit represents what is
described as the “who man” approach. It is assumed that managing human resources involves
much more than guiding, having and retaining. Therefore, the entire system of manpower
management requires frequent evaluation.

Management recognizes that performance by people is a complex product of personnel interests

qualifications, commitment and expectations on the one hand and employment on the other.
Personnel Audit may broadly cover the following areas:

(1) Manpower planning,

(2) Organizing the manpower resource,
(3) Staffing,
(4) Communication, motivation and
(5) Controlling.

Question

(a) “The management’s task of developing an effective workforce is dependent upon

good personnel administration. “Explain the important points to be kept in mind for
review of personnel policies of a company.
(b) State the meaning of ‘efficiency audit’ and elaborate as to who it is useful in
preventing sickness in an industry.

Answer (a)

The statement “the management’s task of developing an effective workforce is

dependent upon good personnel administration”, is correct.

The employees of each organization collectively represent a formidable resource. The

employee’s ability to think and exercise judgment is a quality, which makes the workforce a
valuable resource. It is necessary to acknowledge the worth of a committed team of
individual with an appropriate range of aptitudes and skills and an identity of interest in
the continued progress of their employer. Managing an effective workforce is a fundamental
responsibility of top management for specialist professional guidance is usually required
and sometimes indispensable.

The management’s task of developing an effective work force is dependent upon good
personnel administration. This necessitates efficient pay administration, good working
conditions, a positive approach to training, development and promotion prospects, effective
communication systems and employee involvement programmes etc.

Effective controls and internal audits can contribute to the achievement of personnel
management objectives in a number of ways. A prominent risk area is recruitment. A sound
personnel policy should have inherent safeguards against the risk of appointing a person
with a negative track record to a position of trust and ensure that references are considered
properly, the audit work for recruitment, training and management development activities
should be in phases. First and foremost, appraisal of policies should be carried out to
identify any gaps in meeting the corporation’s strategic manpower planning objectives.
Secondly, proper attention and diligence should be exercised in the spheres dealing with
evolution of systems for implementation of policies and procedures for communication and
monitoring. Apart from this, compliance testing should nr applied to the disciplines
adopted in recruitment for proper job specification, adequate interviewing skills,
considering references etc. Finally, all personnel administration procedures can benefit from
regular internal audit examinations which would be able to give assurance that procedures
were adequate to satisfy the purposes for which they had been set up and are being applied
properly as Personnel Management. The following main points would be considered by an
auditor.

1. Is there a management declared policy on personnel? Is it evidenced through a

management manual and/or personnel manual setting out, amongst others, authorities
and responsibilities of personnel department?

2. Are the management policies evidenced through various policy statement(s), agreement
with union and other members of staff, rules, official orders, employment rules etc.

3. Does the personnel department have adequate staff and other facilities for proper
functioning?

4. Is the personnel function, performed by a distinct, separate department with proper

status and is the department competent in advising and assisting management?

5. Is the personnel department’s role effective in respect of productivity, manpower

planning, performance appraisal, selection, handling employees’ grievances, incentive
schemes, promotions, visioning with trade unions, transfers, employees, welfare etc.

6. Are the wage rates, overtime, payments and working hours etc. in line with industry
norms and rare there proper procedures to review workers’ health, safety and security
etc.

7. Role of personnel Department in the planning, conduct of training programmes for the
employees of the organization (in house, campus, etc)

8. Are proper employee records maintained and predicable management information

report prepared and submitted to management by personnel department.

9. Is there fruitful contribution by industrial engineering department in shaping a healthy

growth of personnel management vis a vis workers’ productivity and contentment
among workers.

10. Does the personnel department have contacts with educational institutions for
recruitment of suitable personnel for company’s work? Is there a system of outside
recruitment of additional hands through submission of full justification for the same?

11. Is there a healthy climate prevailing for achieving targets of production and profitability
and are the workers apprised of their achievement and plan to render all possible
assistance to achieve organization goals?

12. Is there a suggestion scheme and encouragement given through promotions or cash
awards? Is the promotional policy capable of motivating workers?
 13. Does the personnel department have frequent discussions with union and management
and visioning with various labor institutes, government labour departments to keep
abreast of developments for the benefit of the workers and to organization?

14. Existing system of personnel information i.e. employees number(s), date of birth, family
size, qualification, experience etc., is up to date, reliable to facilitate performance
appraisal, and other personnel policies and programmes in the organization.

Answer (b)

Efficiency audit presupposes certain levels of efficiency at which the operations are being
carried on. Efficiency audit establishes relationship between input and output. It measures the
efficiency with which the resources employed are being used. It is the application of basic
economic principle, namely, resources flow into the most remunerative channels. Its main
purpose is to ensure that all business operations are being carried on in the most appropriate
manner. Further efficiency audit is to ensure that every rupee invested in capital or other fields
fives the optimum return, and that the balancing of investments between different functions
and aspects is designed to give optimum results.

Efficiency audit is the verification of activities of an undertaking from the records maintained as
well as the verifiable information available in order to ascertain whether optimum utilization of
all the factors contributing to the production of goods and services has been made resulting in
the least cost of production. This is possible only when scientific standards are established,
relating the cost of the factors of production to the value of production both in quantities and in
value with proper specification as to the qualities of the factors.

It can also be stated that efficiency audit consists of the appraisal of performance to determine
whether the plan has been executed efficiently. Efficiency audit starts with the examination of
the plan and extends to the comparison of actual performance against the plan and the
investigation with the reasons for variances. Such comparison may also be made with reference
to the performance during the periods or may be extended to inter firm comparison between
units of the same industry or of different industries.

Further, efficiency audit is directed towards the assessment of whether or not corporate plans
have been efficiently and economically executed. Therefore, it is concerned with every
functional or operational area of the organization to find out whether resources of the
organization, both physical and economic are being utilized in an effective and efficient manner
to achieve the objectives of the company. It is comprises studying the plans, financial as well as
quantitative and investigation into the reasons for variances, to take remedial action.

An additional objective of efficiency audit is to see that management control system has been
functioning properly in its functional or operational areas. The appraisal and review under
efficiency audit may be divided into two broad heads.

(a) To study whether the personnel working to attain the business objectives are of
adequate caliber, and have got proper qualification and training to take u the
responsibility entrusted to them.
(b) To study whether the tools and techniques applied in achieving the business
objectives are proper and effective.
An appraisal under efficiency audit would cover the following.

i. To strengthen the factors for continuity and growth of the business

ii. To remove the bottlenecks for achieving the business targets and objectives of the
business.
iii. Recommendations to remove inefficiency and ineffectiveness of operating results
say, for example, some sort of cash drainage or other kinds of losses.
iv. Recommendations for better planning and management control for achieving
increased profitability in future.
v. Recommendations for safeguarding against the causes of business failure.
vi. Recommendations for enhancing efficiency and effectiveness of human resources
in the organization.
vii. Recommendation for increase of efficiency of physical resources.

Thus, efficiency audit of physical resources is to ensure that resources are being utilized at the
optimum level. While no resource is kept idle, efficiency audit is also carried out to ensure that
no resource is being used more than optimum to ensure that the down time of any equipment is
not more than the minimum and to put a reliance on efficiency and durability of equipment.
The overall result is that it prevents sickness in the industry.

Question

i. “Wage in an industry are determined by wage laws and industry’s capacity to

pay” Discuss
ii. “Succession planning facilities and ensure continuity in an organization”.
Explain.
iii. Good luck ltd, is planning a scheme for participation of employees in the
shareholding of the company through the employees stock option scheme
(ESOS). What should be the salient features of such a plan?
iv. Grow Fast Ltd, has retained you as a Consultant (HR). The company assigned
you the task of planning out a position analysis questionnaire (PAQ). Outline the
types you would take to prepare the questionnaire.
v. A survey of Pakistan industries recently revealed that effective training was
lacking in most of the organizations. Productivity and morale were at a discount.
Employee turnover was abnormally high. In your opinion, what out have been
the causes of such a trend.

Answer (i)

Employment today has many dimensions, and wages, which play a vital role in labour-
management relations, cannot be registered as merely a price, as the labour market is not
synonymous with markets for the sale of products.

Base compensation involves monetary benefits to employees in the form of wages or salaries,
the terms ‘wage’ is used to denote remuneration to workers; doing manual or physical work.
Thus, wages are given to compensate the unskilled workers for their services rendered to the
organization. Wages may be based on hourly, daily, weekly or even monthly basis. Btu the
term ‘salary’ is usually defined to mean compensation to office employees, foreman, managers
and professional and technical staff. It is generally paid on monthly or yearly basis. Thus, the
time period for which salaries are paid is generally higher than in case of wage payment.

Wages may be based on the number on units produced (i.e., piece wage system) or the time
spent on the job. But salary is always based on time spent on job. Where it is difficult to
measure the production of the employee, the compensation is paid in the form of salary. Both
wages and salaries constitute a significant portion of the cost of operation of business.

Employer’s ability to pay is an important factor affecting wages not only for the individual
firm, but also for the entire industry. This depends upon the financial position and profitability
of the firm. However, the fundamental determinants of the wage rate for the individual firm
emanate from supply and demand of labour. If the firm is marginal and cannot afford to pay
competitive rates, it employees will generally leave it for better paying jobs in other
organizations. But, this adjustment is neither immediate not perfect because of problems of
labour immobility and lack of perfect knowledge of alternatives. If the firm is highly
successful, there is little need to pay more than the competitive rates to obtained personnel.
Ability to pay is an important factor effecting wages, not only for the individual firm but also
for the entire industry. Wages are determined taking into conservative nature of business, it
geographical location, wages paid by competitors, cost of living and collective bargaining and
not only on industry’s capacity to pay.

Answer (ii)

A succession plan to fill key positions over time is essential for the survival and success of an
organization. The purpose of succession planning is to identify and develop people to replace
current incumbent in key positions in cases of resignation, retirement, promotion, growth, etc.
Succession can be from within or from outside the organization. Succession by people from
within provides opportunities to employees for advancement in their careers. Income
professionally managed companies, every key executive is usually asked to indentify two or
three best juniors who could replace him in his job should the need arise. Compete dependence
on internal sources may however case conflicts and stagnation in the organization. Similarly,
complete dependence on outside talent may cause stagnation in the careers of present
employees which may in turn lead to a sense of frustration and job dissatisfaction.

Succession planning is generally required for higher level executives. A succession plan
involves identification of vacancies that are likely to occur in the higher levels and locating the
probable successors. Succession planning facilitates continuity of the organization.

Answer (iii)

Salient features of an ESOP plan.

i. It should be voluntary
ii. It should offer an option to-
a) Purchase certain amount of stock/shares in the future at a stated price; or
b) In the present at a price lower than the market price.
iii. Aim to procure and retain talented employees and professionals
iv. It should confer part ownership of the employee on the company
 v. It should create mutuality of interests between employee and employer.
vi. Stocks are held in trust until the employees choses to withdraw from the plan or
leave the company
vii. Eligibility for offer is to be determined on the basis of wage levels or length of
service. It is an extended version of profit sharing. Permanent employees only
are eligible.
viii. Purchase may be in lump sum or in installments or deductions from
salary/wages or outright purchase by employee from his own resources.
ix. The share shall be non-transferable non-saleable or non-mortgagee. This is
necessary to ensure that this plan remains a social security plan rather than a
commercial exercise.

Answer (iv)

The Position Analysis Questionnaire is a method for analyzing jobs in quantitative from. The
PAQ covers 195 job elements grouped into six sections:

(a) Information input: Where and how do worker get information to do their jobs?...... 35
elements.
(b) Mental Processes: What reasoning; planning; organizing and decision making
done…..15 elements.
(c) Work output: What physical activities tools and machines are used?....49 elements.
(d) Relationship: What contact with other people, both in the company and outside of it is
maintained or developed?.......36 elements.
(e) Job Context: What is the physical and social context in which the job is performed?.....
19 elements.
(f) Other job characteristics: What other activities, conditions, or characteristics not
covered by the other categories are relevant?....41 elements.

The major problem with PAQ is the time to take for a job analyst to fill all the ratings. However,
PAQ has been widely researched and tested and appears to be both reliable (among different
rates) and valid (correlates with job pay).

Answer (v)

There are many impediments which can make a training programme ineffective. Following are
the major hindrances:

(j) Lack of professional approach

(ii) Treating HR as mare factors of production
(iii) Management commitment is lacking and uneven.
(iv) Education does not give practical skills.
(v) Large scale poaching of trained workers
(vi) No Help to worker displaced due to downsizing
(vii) Employers and B-School do not have close ties
(viii) Organized labour help is lacking.
Question

(a) “Training improves the skills of employees and enhances their capacity to cope with
ever changing demands of work situation in an organization”. Would it be wise to
spend 2.5% of revenue on ‘employee training’ as is being done by Xerox
Corporation, USA particularly when young technocrats believe in career jumping?

(b) Explain any two of the following.

(i) Evaluation of training
(ii) Case study.
(iii) Labour turnover index

(c) State, with reason in brief, whether the following statements are correct of incorrect:
(i) HRD climate is not the same as organizational climate.
(ii) Line managers are habitual complainants on human resources functions.
(ii) Morale and productivity move together like the east and west sides of an
elevator.

Answer (a)

Modern HRM professionals treat expenditure on training as investment. Human resources are
expandable – production, marketing, etc, are possible only due to optimum utilization of
human resources. That way these are the assets of the organization. If properly handled, this
asset is essential for the very survival of the organization. Man is no longer a factor of
production. But this asset becomes liability due to inept handling, organizational conflicts, poor
work culture, and indiscipline over protectionism by government or court, and political
interference. Even economic factors like inflation can make this asset a burden. But for training
expenditure, it is rightly an investment, if properly carried out.

Nothing can prevent career jumping in these days of increasing job opportunities; even service
bounds do not exert much pressure. Yet this is no excuse for desisting from investing on
training, promotion of congenial work environment and organization culture as there are best
attributes to such trends of quick turnover. Expenditure on training depends on a company’s
needs for training and a percentage of revenue is not sacrosanct, but would differ in different
cases.

Answer (b)(i)

Since huge sums of money are spent on training and development, how for the programme has
been useful must be judged and determined. Evaluation helps determine the result of the
training and development programme.

Need for Evaluation: The main objective of evaluating the training programmes is to determine
if they are accomplishing specific training objectives that are, correcting performance
deficiencies. A second reason of evaluation is to ensure that any changes in trainee capabilities
are due to the training programme and not due to any other conditions. Training programmes
should be evaluated to determine their cost effectiveness.

Evaluation is useful to explain programme failure, should it occur. Finally, credibility of

training and development is greatly enhanced when it is proved that the organization has
benefited tangibly from it.

Principles of Evaluation: Evaluation of the training programme must be based on the following
principles.

1. Evaluation specialist must be clear about the goals and purposes of evaluation.
2. Evolution must be continuous.
3. Evaluation must be specific.
4. Evaluation must provide the means and focus for trainers to be able to apprise
themselves, their practices, and their products.
5. Evaluation must be based on objective methods and standards.
6. Realistic target dates must be set for each phase of the evolution process. A sense of
urgency must be developed, but deadlines that are unreasonably high will result in poor
evaluation.

Answer (b)(ii)

Case Study

A written description of an actual situation in business which provokes, in the reader, the need
of decide what is going on, what the situation really is or what the problems are, and what can
and should be done. Taken from the actual experiences of organizations, these cases represent
attempts to describe, as accurately as possible, real problems that managers have faced.
Trainees study the cases to determine problems, analyze causes, develop alternative solutions,
select the best one, and implement it? Case study can provide stimulating discussions among
participants, as well as excellent opportunities for individuals to defend their analytical and
judgmental abilities. It appears to be an ideal method to promote decision making abilities
within the constraints of limited data.

Answer (b)(iii)

Labour Turnover Index

The traditional formula for measuring wastage is the labour turnover index:

Number of leaves in a specified period (usually 1 year) x 100

Average number of employees during the same period

This method is in common use because it is easy to calculate and to understand. This formula
can be misleading also. The main objection to the measurement of labour turnover in terms of
the figure may be inflated by the high turnover of a relatively small proportion of the labour
force. Thus, a company employing 1,000 people might have had an annual wastage rate of 20%
meaning that 200 jobs and become vacant during the year. But this cl8uld have been spread
throughout the company, covering all occupations and long as well as short service employees.
Alternatively, it could have been restricted to be a small sector of the labour force only twenty
hobs might have been affected although each of these had to be filled ten times during the year.
These are totally different situations, and unless they are appreciated, inaccurate forecasts
would be taken to deal with the problem. The labour wastage percentage is a suspect if the
average number of employees upon which the percentage is based is unrepresentative of recent
trends because of considerable increases or decreases during the period in the number
employed.

Answer (c)(i)

Correct: HRD is not a set of techniques but a process of helping people to acquire competencies.
HRD is a holistic concept while traditional personnel functions ware exclusively departmental.
HRD is looked upon as a subsystem of a larger system. HRD has been widely accepted as one of
the most effective tools for effective development of the organization. The traditional personnel
function is the exclusive responsibility of the personnel department, but HRD is the concern of
all mangers in the organization.

Answer (c)(ii)

Correct: Line managers perceive that they are directly related to the process of production and
the achievement of the objectives of an organization and therefore expect proper recognition
and fair treatment. They generally consider the staff to be in the periphery of the organization
contributing their share, but only to a marginal extent. At the same time, most production and
operation oriented organizations experience this conflict, not as manifested warfare but as an
item in a catalogue of irritants through which managers normally go through in their anxiety to
meet the targets of production. It is virtually a cold war which sometimes gets expressed
through snide remarks or by accusations of delays. The warfare is intensified by the realization
that staff managers are provided better working conditions, better office accommodation and
get better treatment than line managers.

Answer (c)(iii)

Morale associated with high productivity. This means that workers who perform very well in
their work do not necessarily have high morale.

Thus, the relationship between morale and productivity is not predictable. It will differ from
organization to organization and from time to time. It may happen that high productivity
brings high morale with it. This happens when a group of workers perceives high productivity
as a path or group goal fulfillment. But when a group sets the norm of production for its
member, their productivity will not increase even though morale in increased. High morale will
be associated with low productivity because workers drive satisfaction through fulfillment of
social needs for belonging and affiliation by conforming to group norms.
Question

Write notes on any three of following:

(i) Flextime.
(ii) Significance of human resources audit.
(ii) Different wage differentials commonly found in organizations.
(iv) Impact of globalization on human resources functions.

Answer (i)

Flextime

Flextime is a plan whereby employees determine their own starting and stopping hours within
limits fixed by the employer. For example, the traditional work day may be 9 A.M. to 5 P.M. or
11 A.M. to 7 P.M. conditions for success.

Several things can mark a flextime programme more successful.

1. Management maintenance, particularly at the supervisory level, has to order several

programmes before they become operational so we need to convince the supervisors
about its success.
2. A Flexi time is usually more successful with clerical, professional and managerial jobs
and less so with factory job where the nature of work demands inters dependence
among workers.
3. The greater the flexibility of flexi time programme, the greater the benefits the
programme can produce.
4. The way you install the programme is important; the fears and misunderstanding of
supervisors and employees have to be cleared up and trust created.

Answer (ii)

Significance of HR Audit

The significance of HR Audit can be explained in the following points:

(a) Expanding, diversifying and entering into a fast growth phase by the organizations and
reviewing HR policies.
(b) For promoting professionalism and evaluation of practices.
(c) In creating benchmarking for improving the quality of HR practices.
(d) In organizational growth and diversification.
(e) In reducing dissatisfaction among employees and managing leadership change.
Answer (iii)

Wage differentials

Wage differentials may be classified in the following categories:

(a) Occupational differentials or differentials based on skill.

(b) Inter firm differentials
(c) Inter area or regional differentials
(d) Inter industry differentials
(e) Differentials based on sex

Answer (iv)

Globalization indeed has widened the scope of HR management function in the following areas:

(a) Human Resource Planning and Procurement

(b) Wage and Salary Administration
(c) Trade Union Management Negotiations
(d) Collective Bargaining and Participative Management
(e) Enhanced need for Human Resource Development and best HR practices.

Question

You are an MBA from IBA Karachi and working as Secretary (personnel) to the Executive
Chairman (EC) of Xylophone Corporation a US telecom giant with global operations. Yours is a
professionalized HR Management team committed to employees and customer care. When with
U Fone Pakistan on two main issues, you were pretty amused when the Pakistani company
insisted upon inclusion of the following conditions in the MOU:

(a) All the existing employees be taken over and duly protected as per existing rules,
irrespective of poor work culture and volatile unionism; and
(b) Their service conditions, assessment and promotion systems, wages, perks, etc., be at
par with Xylophone Corporation and all employees be trained in the US in small group
at a time, with all the costs of training, board and lodging, etc., borne by Xylophone
Corporation.

While talks progressed, the worker of U Fone went on strike because of subjective performance
appraisal system and apprehended retrenchments due to computerization.

The EC wants your expert advice so to:-

i. Whether Pakistani Company’s terms be accepted in modified from to suit Xylophone

Corporation’s ‘management by objectives’ (MBO) work culture?
 ii. Would xylophone corporation‘s ‘existing system of computerized performance appraisal
require modifications after taking over the Pakistan company? Should be the draft
preformed therefore?
iii. what measures would you suggest to convert prevailing poor work culture and
unionism by workforce in U-FONE PAKISTAN into on opportunity for Xylophone
Corporation?.

Answer (i)

Both the conditions demand by U-Phone Pakistan is fair and reasonable. These may be
accepted. Once the US Company Xylophone takes over/purchase the Indian Company, it is
their human resources. The MBO culture is designed to provide such modification in policy and
may be accepted.

Both the terms if Pakistani Company be accepted, namely

(a) All these existing employees of the Tesserae shall become Xylophone employees and
their conditions of service shall be duly protected.
(b) They shall be trained in the US as per merger MOU.

Answer (ii)

Yes. Certain modifications would be necessary in the performance appraisal. The draft of a
computerized performance appraisal could be as follows:

Personnel

1. Name of Employee
2. Date of Birth
3. Age
4. State of Health
5. Major illnesses/Handicaps
6. Family details
7. Immovable property owned
8. Other (specify)

Education

1. Academic Qualification
2. Technical
3. Advanced Education
4. Special Training Courses
5. Current educational assignments
6. Other (Specify)
Career

1. Previous posts held

2. Pay Scales/Perks
3. Performance displayed
4. Career Plans/Aspirations
5. Special Skills
6. Job Satisfaction Level
7. Residuary (Special)

Self-Performance Assessments

1. Tasks/Projects Assigned/Handled during current year

2. Achievement appraisal
3. Reasons for shortfall, if any
4. Reasons constraints
5. Other date (specify)

Answer (iii)

The project of a successful takeover should be the overall growth, betterment of the
management, benefits to staff and stakeholders. It should be realized that mechanistic, financial
personnel the situation will improve. It is necessary here that an expert consultants be retained
on this project of crisis handling.

The first steps would be

 Stocktaking of culture, educational, conceptualization etc. levels of different cross

section of employee;
 Categorization of such trait group;
 Identifying core managers and their leadership styles;
 Political unionism and legal environment, and
 Public relations requirements involved

And an action plan with policies is framed. At the same time:

 Due importance of communication, attitudinal campaigning and public relations

exercise as plan-implementation media be recognized.
 Participative, interactive propagandist campaigning in a systematic manner with
periodic feedback and review/error correction is necessary.
 Management must ensure sincerity, empathy, TQM and fairness in its interactions with
employees. That apart, financial security is the major concern of the employees. So
 timely payment of salaries to the employees will ensure financial security to the
employees.

Question

(a) Recently, a government company in the automobile sector was allowed by the court to
be closed down as it was not possible to continue with its business activity. Its workers
were retrenched and retrenchment compensation was paid. The official’s liquidator
wound up the company under the court order.

Two year later, the Parliament passed an Act floating another company. The new
company took over the assets of earlier company as government had notified for
acquisition of title, rights, and interests of earlier company.

The workers of earlier company raised an industrial dispute seeking preference in

employment in the newly floated company. The labour court decreed the worker claim
under section 54HJ of the Industrial Dispute Act. The company is going in appeal
against the order. Would it succeed? Discuss with reference to case law, if any.

(b) State, with reasons in brief, whether the following statements are true or false:
(i) An employee would cease to be a member of a trade union on termination of his
employment.
(ii) Minimum wages payable under the Minimum wages Act shall be paid in cash
only.
(iii) Under the Contract Labour, the principal employer is under statutory obligation
to absorb contract labour on abolition of contract labour system in the concerned
establishment.

Answer (a)

The company will succeed. The facts of the given case are based on the case of Maruti Uduog
Ltd v. Ram Lal and others, SCC (2005)2 638. The Supreme Court while interpreting the
provisions of the Industrial Disputes Act pointed out that a plain reading of the provisions
contained in Sections 25-FF and 25-FFF of the Industrial Disputes Act, 1947 leaves no doubt that
Section25-F thereof is to apply only for the purpose of computation of compensation and for no
other. The expression “as if” used in Sections 25-FF and 25-FFF of the Industrial Disputes Act,
1947 is of great significance. The said term merely envisages computation of compensation in
terms of Section 25-F of the 1947 Act and not the other consequences following there from. Both
Sections 25-FF and 25-FFF provide for payment of compensation only in case of transfer or
closure of the undertakings. Once a valid transfer or a valid closure comes into effect, the
relationship of employer and employee does not survive and ceases to exist. Compensation is
required to be paid to the workman as a consequence thereof and for no the purpose.
Once it is held that Section 25-F will have no application in a case of transfer of any undertaking
of closure thereof as contemplated in Section 25-FF and 25-FFF of the 1947 Act, the logical
corollary would be that in such an event Section 25-H will have no application.

The aforementioned provisions clearly carve out a distinction, that although identical amount of
compensation would be required to be paid in all situations but the consequence following
retrenchment under Section 25-F of the 1947 Act would not extend further so as to envisage the
benefit conferred upon a workman in case falling under Section 25-FF or 25-FFF thereof. The
distinction is obvious inasmuch as whereas in the case of retrenchment simplicity a person loses
his job as he becomes surplus and, thus, in the case new persons are proposed to be employed
by the said undertaking; but in case of transfer or closure of the undertaking the workman
concerned is entitled to receive compensation only. It does not postulate a situation where a
workman despite having received the amount f compensation would again have to be offered a
job by a person reviving the industry.

Regarding Industrial Disputes Act 1947, the court observed that we have noticed that the
consequence other than payment of compensation envisaged in Section 25-F of the Act do not
flow in case of transfer or closure of the undertaking. Section 25-H of the 1947 Act cannot, thus,
be invoked in favour of the respondent in view of the fact that they were not in the employment
of the Company on the appointed day.

Answer (b)(i)

False: The Supreme Court in Bokajan Cement Corporation Employee’s Union v. Cement
Corporation of India, (2004)1 SCC 142 has held that the membership of a trade union is valuable
right which can be taken ways only within the clear parameters of the Act and the constitution
of the trade union. There is no provision in the Act or the constitution of the trade union
providing for the automatic cessation of membership on cessation of employment. It cannot be
held that an employee would cease to be a member of the trade union on termination of his
employment.

Answer (b)(ii)

True: Minimum wages payable under the Minimum Wages Act must be paid in cash. The
government may, however, permit the payment of minimum wages wholly or partly in kind
where it is customary to do so and also allow the supply of essential commodities at
concessional rates.

Answer (b)(iii)

False: The principal employer is not liable to absorb the contract labour. In steel authority of
India v. National Union of Water Front Workers and other, AIR 2001 SC 3527, the Supreme
Court overruled the judgment delivered in the AIR India Statutory Corporation Case. The Apex
Court held that neither section 10 of the Act nor any other provision in the Act whether
expressly or by necessary implication provides for atomistic absorption of contract labour
issuing a notification by the appropriate government under section 10(1) prohibiting
employment of contract labour in any process or operation or other work in any establishment.
Consequently, the principal employer cannot be required to order absorption of contract labour
working in the concerned establishment.

Question

(a) “Most strikes are politically motivated.” Comment.

Answer (a)

Industrial relations may be harmonious or strained and acrimonious. In the latter case, there
may be many causes which are rooted in historical, political and socioeconomic factors, and in
the attitudes of workers and their employers. Most of the strikes generally speaking do not have
any grievance or industrial dispute as such. Quite often, politicians and political parties
“engineer” strikes, gheraos and bandhs to demonstrate its political strength. Invariably, the
political party which is in power favours that trade union organization which is affiliated to it,
as a result of which a number of disputes often arise.

The political instability and the strained centre state relations are reflected in industry, resulting
in industrial conflicts. Other potential factors, such as rampant corruption in industry and
public life, easy money, conspicuous consumption, permissive society, character crisis and
general breakdown in national morale have brought, in their train, debasement of social values
and social norms – all these can and have perpetuated all kinds of unrest, including industrial
unrest.

The tense inter-union rivalry among less important and dominant trade unions invariably
sparks of disputes.

Question

(a) Is the ‘voluntary retirement scheme’ (VRS) a pre-requisite for making an

organization efficient? Outline the arguments for and against VRS.

Answer (a)

The effects of restructuring process especially Voluntary Retirement Scheme (VRS) on

individual as well as on organizations, are several. As the system is comparatively new, no long
term studies are yet carried out, which are needed to investigate the consequence.

VRS is expected to have economic as well as organizations benefits. The major economic benefit
is increased value of shareholders. The rationale is that future costs are more predictable than
future revenues; therefore, cutting costs will improve revenues. Other anticipated results are
lower overhead, less bureaucracy, faster decision making, smoother communication, greater
entrepreneurship and increased productivity.

Few surveys have been conducted to increase the benefits of VRS. It has been reported that
some organizations have immensely benefited by implementation of VRS and it has
consolidated the assumptions that it cut cost, improved earnings, improved productivity,
improved customer service etc. Hence it has become a pre-requisite for making an organization
efficient.

Further, a wide variety of organizational measures are used to assess the effectiveness of VRS
i.e. increased profits, improved cash flow, increased productivity, reduced bureaucracy
increased customer satisfaction. However, these indices of effectiveness cannot always readily
be applied to work groups or individual employees. Since organizational outcomes such as
return on investment or improved cash flow are dependent upon the activities of individuals
and groups of individual within the organization, a more encompassing view of effectiveness is
needed.

Therefore, it is implied that VRS is usually undertaken in order to improve organizational

performance. VRS may be reactive and defensive, or may be proactive and anticipatory.
However, ineffectiveness or impending failures are not prerequisites to VRS. Rather, VRS may
be undertaken when no threat or financial crisis exists at all in all organization.

A focus on VRS necessarily concentrates attention internally. An efficient focus on redesign is

more likely to incorporate systematic change and to extend redesign to relationship with
interdependent outsiders. Greater use of inter organizational relationship is likely in
organizations where redesign devices VRS compared to organization where VRS drives
redesign somehow, VRS can still be taken as an important tool for effecting organization
efficient.

****THE END****