MS-27

MANAGEMENT PROGRAMMErn

Term-End Examination

December, 2009

MS-27 : WAGE AND SALARY ADMINISTRATION

Time : 3 hours Maximum Marks : 100

(Weightage 70%)

Note :

There are two Sections A and B.

Attempt any three questions from Section A. All questions

carry 20 marks each.

(iii) Section B is compulsory and carries 40 marks.

SECTION - A

Discuss the role of compensation. Explain thefunctions and responsibilities of compensationprogramme with suitable examples.

Discuss the scope and coverage of the minimumwages Act, 1948. Describe the procedure forfixation and revision of minimum wages underthe Act.

3. Briefly explain any two methods of job evaluationand their merits and demerits.

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Explain the need for payment of allowances andfringe benefits. Discuss the systems of paymentof dearness allowance. Give examples of somepopular fringe benifits practised by corporates.

Write short notes on any three of the following :

Downsizing

Pay Surveys

Executive compensation

Payment of wages Act, 1936

(e) The marginal productivity theory

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SECTION - B

Read the following case and answer the Questions

given at the end :

A public sector consultancy organisation recruitedMr. Alok an expert in a particular field of technicalspecialisation with Ph.D. and other highqualifications at a senior level, one level below thatof a director of the board. The company had amanaging director and three functional directorson its board apart from government directors.

Mr. Alok at the time of recruitment to thecompany was working as No. 2 in a CentralGovernment Research Organisation. Since hefailed to get selected to the No. 1 slot in thatorganisation for 'political reasons', according tohim. He chose to join the public sector companyat one grade higher than that held by him in thegovernment.

After joining the company, Mr. Alokrepresented to the Management that he shouldbe granted at least three advance increments sincein the government research organisation wherehe had worked, he used to get extra honorariumto the extent of Rs. 50,000 per annum forundertaking outside consultancy work. Themanagement of the company refused to grant theadvance increment to him since they felt that

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Mr. Alok's request cannot be dealt with inviolation and it will lead to similar requests fromother senior managers in the company.

After waiting for a few months, Mr. Aloksubmitted his resignation from the company. Hissuperior, viz., the functional director concerned(Mr. Rajeev), advised the managing director thatMr. Alok was resinging because his request forhigher salary has not been agreed to and that thematter needs review because it would be difficultto recruit another expert of the same calibre asMr. Alok. The Managing director, however,accepted the resignation of Mr. Alok and orderedthat the post be advertised for fresh recruitment.

As the recruitment process was on, Mr. Alokon his own chose to withdraw his resignation andrejioned the company apparently on a tacitundertakking given by Mr. Rajeev that his requestfor higher salary would be reconsidered. Themanaging director reconsidered the request andapproved the grant of three advance incrementsto Mr. Alok provided he would serve the companyat least till the date of his superannuating, whichwas two years away. The decision wascommunicated to Mr. Alok.

Mr. Alok once again felt insulted by beingasked to agree to an unaceptable condition, viz.,undertaking to continue in the company for two

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more years for the grant of additional incrementsto his salary. He thought he was fully justified inhis case. He did not agree to the condition andafter two months again submitted his resignation.

Mr. Rajeev discussed the matter with themanaging director. The managing director statedthat in return for the additional salary beinggranted to Mr. Alok which was not being givento any other senior manager of his status, heshould display some commitment, to serve thecompany. Without such a commitment Mr. Alokmight wait for an opportunity to look for greenerpastures and leave the company after gaining ahigher salary, vis-a-vis his other senior colleaguesin the organisation. The other employees wouldfeel that the Management can be blackmailed bythe so-called experts into granting more benefitswith the threat of resignation and theManagement would lose its credibility.

The managing director, therefore, decidedto accept the resignation of Mr. Alok. ButMr. Rajeev and other functional directors of thecompany were not happy with the decision asthey felt that competitors of the company wouldgain by Mr. Alok's departure and, therefore,allowing Mr. Alok to quit would jeopardize thecompany's business interests.

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Questions :

Do you agree with the Managing Director'sapproach to the problem ?

Do you think that Mr. Alok had reasons to beaggrieved or was he trying to exploit hisexpertise ?

3. What would be your solution to this case ?

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