ASSIGNMENT 3

How far luck influences your pay? Identify an individual who has been lucky enough to be paid more than he deserved.
In majority of the cases, luck does not play any major role in influencing an individuals pay. However, some people happen to be in the right place at the right time. Luck has played a major role in case of the employees in the loan processing department of The Surat Peoples Co-Operative Bank, Timaliyawad Branch. All the employees are only B.Com. graduates and have been promoted to that position because of their seniority. They lack knowledge about the field they are working in and therefore require a lot of help from the firms or accountants who apply for project finance. Still they are paid a ransom of about 80,000 rupees per month plus various benefits like residential facilities, transportation facilities, etc.

Wage Policy in India

A government policy on what percentage increases should be paid to workers is known as the wage policy. Since the national common wage policy does not exist for our country India. The wage policy is based on the Minimum Wages Act. Wages are remuneration which the workers are entitled for the work performed by them. The Minimum Wages Act, 1948 is landmark legislation in India for regulating of wages in the country. The Act was passed to provide for fixing minimum rates of wages in certain employments. The provisions of the Act are intended to achieve the object of doing social justice to the workers employed in the scheduled employments by prescribing minimum rates of wages for them. The Minimum Wage Act in India is being implemented by the Central and State Governments, and as such both are empowered to frame rules. Minimum rate of wages fixed or revised consists of the followings: 1. A basic rate of wages and a special allowance i.e. cost of living allowance;

2. 3.

A basic rate of wages with or without cost of living allowance and case value

of concessions for supplies of essential commodities; An all inclusive rate, i.e. basic rate, cost of living allowance and cash value concessions. The Government may fix the minimum rates of wages either by the hour, by the day, by the month or by such large wage-period as may be prescribed which may be revised at intervals and reviewed The minimum wage legislation is the main labour legislation for the workers in this sector. In India, the policy on wage determination had been to fix minimum wages in sweating employments and to promote fair wage agreements in the more organized industries. Wages in the organized sector are determined through negotiations and settlements between employer and employees. On the other hand, in unorganized sector, where labour is vulnerable to exploitation due to illiteracy and does not have effective bargaining power, the intervention of the government becomes necessary both from the perspective of social justice and also for increasing efficiency and productivity in the economy. The objective of the Minimum Wages Act, 1948 is to ensure a minimum subsistence wage for workers The Act also provides that different minimum wage rate may be fixed for 1) Different scheduled employments, 2) Different works in the same employment, 3) Adult, adolescent and children, 4) Different locations 5) Male and female. . Under the Minimum Wages Act, the appropriate governments are required to revise the minimum wages in all scheduled employments under their respective jurisdiction at an interval not exceeding five years. In order to protect the minimum wages against inflation, the concept of linking it to the rise in the consumer price index was recommended at the labour ministers' conference in 1988.

Why University professors and Administration staff are not covered under the incentive scheme?
Incentive Pay is also known as performance based pay and is given when the employees achieve a particular set target. The University professors educate the students and they do not have any set targets to be achieved. The administration staff, looks after the working of the concerned departments or colleges and they too do not have any targets to be achieved. Therefore the University professors and administration staff are not covered under the incentive scheme.

A Banglore based software company was the first to introduce ESOP in India. Can you name the company? Also ascertain the number of companies in India offering ESOP.
The First Company to introduce ESOP in India was Infosys Ltd., in the year 1993. Following are the companies in India offering ESOP: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Reliance Industries Limited Bharat Petroleum Corporation Ltd. State Bank of India Oil and Natural Gas Corporation Tata Steel Hindalco Industries Coal India Limited ICICI Bank Bharti Airtel Larsen & Turbo Essar Oil Mahindra & Mahindra Limited Sterlite Technologies Bank of Baroda HDFC Bank

16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43.

Canara Bank Aban Offshore Aditya Birla Group Aftek Ltd. Air India Ambuja Cements Ltd. Aptech Axis Bank Bajaj Auto Biocon Bharat Sanchar Nigam Limited Dabur India Ltd. Deccan Aviation Pvt. Ltd. Eicher Motors Federal Bank Limited Godrej Industries Limited HCL Technologies Hindustan Construction Company Hindustan Unilever Limited ITC Ltd. India Bulls Jindal Steel & Power Limited Kotak Mahindra Bank Mahindra Satyam MindTree NDTV Oracle Financial Services Software Ltd. Ranbaxy Laboratories Limited

44. 45. Wipro

Sun Pharmaceutical Industries Limited

External

and

Internal

Factors

having

impact

on

Remuneration,

incentives and Fringe benefits are

External factors affecting them are Labour Market:

Demand for and supply of labour influence wage and salary fixation and offering them fringe benefits..A low wage or incentive or other benefits may be fixed when the supply of labour exceeds the demand for it. A higher wage will have to be paid when demand exceeds supply, as in the case of skilled labour. Cost of Living:

A rise in the cost of living is sought to be compensated by payment of dearness allowance, basic pay to remain undisturbed .Many companies include an escalatory clause in their wage agreement in terms of which dearness allowance increases or decreases depending upon the movement of consumer price index (CPI) Labour Unions

The presence or absence of labour organizations often determines the quantum of remuneration, incentives or fringe benefits paid to employees. An individual nonunionised company may be willing to pay more to its employees if only to discourage them from forming union, but will collapse under the combine pressure from the other non-unionised organizations. The employees of strongly unionized companies too, have no freedom in wage and, salary fixation. They are forced to yield to pressure of labour representatives in determining and revising pay scales. Government Legislations Labour laws: We have plethora of laws at the central as well as at the state levels. Such as (the Payment of Wages Act 1936 , Payment of Bonus Act 1965 , Gratuity Act 1972 etc) The Society : the Minimum Wages Act, 1948, the Equal Remuneration Act, 1976, the Payment of

Remuneration and other incentives paid to employees is reflected in the price fixed by an organization for its goods and services. Remuneration paid to employees has social implications too. The Economy It is the state of the economy that affects the incentive fringe benefits or remuneration received by an employee.. In most cases, the standard of living will rise in an expanding economy. Since the cost of living is commonly used as a pay standard, the economys health exerts a major impact upon pay decisions .Labour unions, the government, and the society are all less likely to press for pay increases in a depressed economy. Rating of the factors from 1-5 for the fixation of 1- least important and 5 most important. Base Remuneration: the external factors which would affect the fixation of wages. The factors which would affect most is first and those affecting last is least important. So the list is as follows. 6) Government legislation: for any company to decide its compensation plan it is necessary that the organization should abide by all the laws and regulations such as minimum wage act, payment act .. so it is the most prominent factor affecting it. 5)Cost of living: the next affecting factor is the cost of living .it is the base for calculating the remuneration after considering the government legislation. 4)Labour Market: The next important factor would be demand and supply of labour which would further help in improvement in fixation of remuneration. 3)Labour Unions: Then this labour union factor comes into picture of considering unions for fixing the remuneration. 2)Economy: Then the second least important factor is the the state of the economy were the employee is residing. 1)Society: the least important factor affecting the remuneration package would be the societal factor.

Incentive. The order of factors affecting the incentive plan of an organization are:

5) Government legislation :

In Incentive pay plan also the most affecting factor is also govt laws regarding incentive plan. 3) Economy: the next important factor for providing incentive plan is the state of economy in which the employee is residing. 2)Labour union: Then the factor affecting incentive scheme is the planning of providing incentive by considering the labour unions. In the Incentive structure the above three factors are the only factors affecting the incentive. They are return in their importance from 1-3 Fringe Benefits: Fringe benefits are not much affected by the external factors.

Internal Factors affecting them are

Companys strategy The overall strategy which a company pursues determines the remuneration , incentives and fringe benefits paid to their employees. Where the strategy of the enterprise is to achieve rapid growth, compensation should be higher than the competitors pay. Where the strategy is to maintain and protect current earnings, because of the declining fortune of the company, compensation level needs to be average or even below average. Job evaluation and Performance Appraisal Job evaluation helps establish satisfactory wage differentials among jobs. Performance appraisal helps award pay increase to employees who show improved performance. Worker himself or herself: Several employee-related factors interact to determine his or her remuneration. These include: Performance: Performance is always rewarded with pay increase. Rewarding performance motivates the employee to do better. Seniority: Managements prefer performance to effect pay increases but union new seniority as the most objective criterion for pay increase Experience: makes an employee gain valuable insights and should therefore be rewarded.

Potential: is useless if it is never realized. Yet organizations do pay some individuals based on their potential. Young managers are paid more because of their potential to perform even if they are short of experience.

Sheer luck: some people have luck to be at the right place at the right time

Internal factors are rated in their order of importance from 1. the first is rating on remuneration Remuneration: 1- least important and 5 most important. 5) Performance Appraisal or Job evaluation: The Remuneration package is decided on the most important factor that is by doing the performance appraisal and job evaluation and fixing them after conducting the performance appraisal. 4) Companies Strategies: After considering the employees performance, employees remuneration are fixed according to their companies strategies. 3) Personal Characteristic: Then the person himself, his or her characteristic would ultimately lead to fixation of his/ her salary their potential, experience or by sheer luck. Incentive: 1- least important and 5 most important. 5) Performance appraisal or job Evaluation: in incentive also the most important is evaluation of performance to provide them with monetary or non monetary incentive. 3) Company Strategy: For providing incentive also companies need to provide incentive after the completion of targets so this factor is also important for considering the incentive.

Fringe Benefits: - least important and 5 most important 4. Companies strategy: To provide fringe benefits also companies strategy plays a major role over here. If companies strategy is to grow in future they would provide additional fringe benefits to go grow ultimately in future. 3. Personal factors:

For a company to provide Fringe Benefits an organization considers employees personal characteristics such as its potential, their experience or their luck as well to provide additional benefits to them. Since these two are the major factors affecting so they are ranked 4th and 3rd.

S. R. LUTHRA INSTITUTE OF MANAGEMENT HUMAN RESOURCE MANAGEMENT ASSIGNMENT 3 SEM-2 SHIFT 1, 1B PREPARED BY: OJAL MISTRY (01) DIVYA BAJAJ (31) SUBMITTED TO: Ms. PARINAAZ TODIWALA ON

14/03/2010