Assignment

201508-Semester IV-MU0015-Compensation Benefits

Subject Code :
Name
Roll No
LC Code

MU0015

Kritika Rastogi
:

1402011210
:

03469

Q.1 Discuss the contents of Job Evaluation. Describe the process of Job evaluation
Explain the contents of Job Evaluation
Explain the process of Job Evaluation
Answer: Job Evaluation
A job evaluation is a systematic way of determining the value/worth of a job in relation to
other jobs in an organization. It tries to make a systematic comparison between jobs to assess
their relative worth for the purpose of establishing a rational pay structure.
Job evaluation needs to be differentiated from job analysis. Job analysis is a systematic way
of gathering information about a job. Every job evaluation method requires at least some
basic job analysis in order to provide factual information about the jobs concerned. Thus, job
evaluation begins with job analysis and ends at that point where the worth of a job is
ascertained for achieving pay equity between jobs.
The process of job evaluation involves the following steps:
Gaining acceptance - Before undertaking job evaluation, top management must explain the
aims) and uses of the programme to the employees and unions. To elaborate the program
further, oral presentations could be made.
Creating job evaluation committee - It is not possible for a single person to evaluate all the
key jobs in an organization. Usually a job evaluation committee consisting of experienced
employees, union representatives and HR experts is created to set the ball rolling.
Finding the jobs to be evaluated - Every job need not be evaluated. This may be too taxing
and costly. Certain key jobs in each department may be identified.
Analysing and preparing job description - This requires the preparation of a job
description and also an analysis of job needs for successful performance.
Selecting the method of evaluation - The most important method of evaluating the jobs
must be identified now, keeping the job factors as well as organisational demands in mind.
Classifying jobs - The relative worth of various jobs in an organisation may be found out
after arranging jobs in order of importance using criteria such as skill requirements,
experience needed, under which conditions job is performed, type of responsibilities to be
shouldered, degree of supervision needed, the amount of stress caused by the job, etc.
Installing the programme
Once the evaluation process is over and a plan of action is ready, management must explain it
to employees and put it into operation.

Reviewing periodically
In the light of changes in environmental conditions (technology, products, services, etc.) jobs
need to be examined closely. New job descriptions need to be written and the skill needs of
new jobs need to be duly incorporated in the evaluation process.

Q.2 Suppose you are a HR Manager and you are asked to develop an effective Incentive
Scheme for your organization. What are the pre-requisites you will consider while
developing an Effective Incentive Scheme? Discuss the merits of Incentives.
Answer:
The pre-requisites for an Effective Incentive Scheme
Employee incentive programs are useful to sales management for a range of purposes such as
gathering new ideas and ways to improve your business right through to achieving sales
management targets. Where better to get that information from than the 'nuts and bolts' of any
business - your employees. Employee motivation is essential to obtaining relevant, accurate
information.
1. The co-operation of workers in the implementation of an incentive scheme is essential
because the employees somehow devise, if they do not like a scheme, ingenious ways of
evading or sabotaging the plan, often with the tacit connivance of the foreman or supervisor,''
Workers' co-operation may be secured through proper discussion with their representatives.
2. The scheme must be based on scientific work measurement. The standards set must be
realistic and must motivate workers to put in better performance. Workers must be provided
with necessary tools, equipment and materials so as to enable them reach their standards.
3. Indirect workers, such as supervisors, foremen, charge hands, helpers, crane operators,
canteen staff, store keepers, and clerical staff should also be covered by incentive schemes.
4. There should be management commitment to the cost and time necessary to administer
incentive schemes properly, and these must be carefully assessed before embarking on an
incentive programme. There are many situations in which the potential gains are just not
worth the cost and effort involved.
5. There is greater need for planning. Many incentive schemes, started hurriedly, planned
carelessly, and implemented indifferently have failed and have created more problems for the
organisation than they have tried to solve.
The merits of Incentives
Incentive system of wage distribution has following merits to its credit:

Incentive system is a healthy way to strengthen the productive front of the industry.
Employers as well as workers, both are at advantage.

Incentive system reduces the burden of heavy supervision costs. It has been found that
the cases of absenteeism arc comparatively lower than in other systems of wage
payment.

It develops healthy industrial relations and reduces chances of disputes between the
workers and the employers.

Incentive system provides better scope for developing human ingenuity.

Incentive system develops the feeling of co-operation among the workers.

Supervision instead of acting as watch dogs, now act as individuals responsible for
managing machines and materials being employed.

Q.3 Discuss the types of managerial remuneration. Explain the elements of a managerial
remuneration.
Answer:
The types of managerial remuneration
Managerial remuneration is compensation for services provided to a company in a managerial
capacity. Some of the most common forms of manager remuneration include salaries,
management fees, and bonuses. Other kinds of compensation include health benefits,
reimbursement for memberships and entertainment costs, and the use of high-end company
property such as automobiles. Manager remuneration may also include other financial
compensation such as deferred income, retirement allowances, and death benefits. Some
companies will also provide loans for managers.
The elements of a managerial remuneration
Elements of a managerial remuneration
For Group Management, total remuneration consists of fixed salary, short-term and long-term
variable remuneration, pension and other benefits. If the size of any one of these elements is
increased or decreased, at least one other element has to change where the competitive
position should remain unchanged.

FIXED SALARY

SHORT-TERM AND LONG-TERM VARIABLE REMUNERATION AS PERCENT

OF TOTAL TARGET REMUNERATION

Fixed salary
Fixed salaries are set to be competitive within an individuals home market. When setting
fixed salaries the Remuneration Committee considers the impact on total remuneration,
including pension and associated costs. The absolute levels are determined by the size and
complexity of the position and the year-to-year performance of the individual. Together with
other elements of remuneration, Group Management salaries are subject to an annual review
by the Remuneration Committee, which considers external pay data to ensure that levels of
pay remain competitive and appropriate to the remuneration policy.
Short-Term Variable remuneration
The annual variable remuneration is delivered through cash-based programs. Specific
business targets are derived from the annual business plan approved by the Board of
Directors and, in turn, defined by the Companys long-term strategy. Ericsson strives to grow

faster than the market with best-in-class margins and strong cash conversion and therefore the
starting point is to have these as three core targets:

Sales Growth

Operating Income

Cash Flow

Long-Term Variable remuneration

Share-based long-term variable remuneration plans are submitted each year for approval by
shareholders at the Annual General Meeting. All long-term variable remuneration plans are
designed to form part of a well-balanced total remuneration and span over a minimum of
three years. As these are variable plans, outcomes are unknown and rewards depend on longterm personal investment, corporate performance and resulting share price performance.
Total remuneration
When we consider the remuneration of an individual, it is the total remuneration that matters.
We first consider the total annual cash compensation, looking at target level of short-term
variable compensation plus fixed salary. We then add target long-term variable remuneration
to get total target remuneration and, finally, pension and other benefits to arrive at the total
package.

Q.4 Define Pay Structure. What are its objectives? Explain the major decisions involved
in designing and setting competitive pay structures.
Answer:
Pay structure : A pay structure is a collection of pay rates or pay ranges. Structure setting
and adjustment is the process of developing, adjusting, and maintaining a pay structure.
Salary structures are a necessary part of effective management. They help make sure that the
pay levels are externally competitive and internally fair..
Objectives of pay structure

To balance strategy of reward with the strategy of the business so as to encourage and
motivate high performance people.

To bring out clarity and order between organisation and its people in managing career
progression as well as increase in pay.

To make transparency and ensure lawfulness and fairness while designing the pay
structure.

Major decisions in designing and setting competitive pay structures

1. Specifying the competitive pay policy of the employer with the help of surveys which
gives data for converting the pay policy into pay structures, pay levels and pay mix.
2. Defining the purpose of survey which is conducted because of the following reasons:

To analyse pay related problems and establish pay structure

To estimate labour price of services and product market competitors and to select the
market competitors which are based on similar skills, same services and products as
well as employees within the similar geographical area.

3. Selection of jobs in the survey with the help of two approaches:

Low - high approach which identifies lowest and highest paid benchmark jobs for the
relevant competencies in the relevant market and to use the salaries for these jobs as anchors
basically for the skill based structures.
Benchmark job approach includes the entire structure of the job which comprises of all the
key functions and levels that can be matched with the descriptions of the benchmark jobs.
4. Designing the survey with the help of three categories of data:

Providing information about the nature of the firm.

Providing information about the total pay system

Specifying compensation data on each incumbent in the jobs understudy

5. Interpreting the survey results by analysing and assessing the outcomes as well as using
statistics in order to construct the market line so as to check the accuracy of the job matches,
the anomalies, age of data and the nature of the firms.
6. Balance the competitiveness with internal alignment which includes use of bands, ranges
and flat rates which offer flexibility so as to deal with pressures from external markets and
differences among firms.

Q.5 Explain the process of designing a successful Reward Strategy.

Answer:
Process of Designing a Successful Reward Strategy
The steps that are essential in designing the effective reward strategy in the service sector
organisations which are as follows:
Step 1: Review changes to the size and structure of job roles
As the firms finances are re built and re organized, the boundaries of many job roles are
likely to be extended. Thus both the breadth and depth of the roles may modify and hence,
evaluation techniques and effective job design will help the organization to revalue these
roles more clearly and fairly.
Step 2: Check the validity of pay and grading structure
The second step helps the organization to find out and check whether the old compensation
structure is suited to the new compensation structure and its impact on grades and levels and
also its influence on the career and pay progression.
Step 3: Obtain accurate and current market data
The third step is to obtain accurate and current market data as the organisations must keep
their eyes on the market trends when the economy begins to recover so as to reduce the risk
of losing competent people when the job market ease.
Step 4: Review the cost effectiveness of the provisions made on benefit and incentive
scheme
The next step focuses on the reviewing the cost effectiveness on the scheme of incentive and
benefits so as to get the best rate.
Step 5: Re-communicate the value of total reward package
Most of the employees in the organization are unaware of the worth of their benefits. So for
this organization have to work hard in order to communicate the total worth of the reward
package in a more clear way to their staff.
Step 6: Ensure reward strategy is equal to pay compliant
In the last step, the organization must ensure that their reward strategy must equal to the pay
compliant.

Q.6 Write a short note on the following:

Wage policy plan in India
Voluntary retirement Scheme (VRS)
Answer: Wage Policy
Wage policy can be defined as the principal which act as guidelines for determination of a
wage structure. It relates to all systematic efforts of the Government in relation to a national
wage and structure of wages.
The wage policy in India is built around the following fundamental principles:

Equal compensation for an equal work performed

Providing living wages for employees

Payment of wages without any deduction on the appointed dates

Use of collective bargaining to resolve wage related issues

As per legal provisions paying 8.33% as statutory bonus

Determination of fair wages above minimum wages in respect to labour and place of
industry in the financial system

Wage policy in India

The plans of wages in India are explained as follows:

The first plan (1951 to 1956)

The second plan (1956 to 1961)

The third plan (1961 to 1966)

The fourth plan (1969 to 1974)

The fifth plan (1974 to 1979)

The sixth plan (1980 to 1985)

The seventh plan (1985 to 1990)

The eighth plan (1992 to 1997)

Voluntary Retirement Scheme (VRS)

Voluntary Retirement Scheme is the most common method which is used by organisations to
reduce excess manpower. It helps the employer not only to compete and survive in this
current business scenario but also improve his/her performance. This scheme also becomes
the prominent means of downsizing of employees. VRS is also known by the names such as
Voluntary Separation Scheme, Golden Handshake and Early Separation Scheme.
Though the criteria of eligibility of VRS may differ from organisation to organisation, it is
given only to those employees who have either served 10 years of working or attained 40
years of age. Thus, the employees who opt for this scheme are permitted to get 45 days of
benefits for each completed year of working or monthly benefits during retirement time
which is multiplied with service months that are left before the date of working whichever is
less.