IIBM Institute of Business Management
Examination Paper MM.100
Compensation Management
Section A: Objective Type
Part One:
Multiple Choices
1. A ________ is a hierarchy of jobs to which wage rates have been attached.
a. Wage Level
b. Wage Structure
c. Wage Index
d. Wage Policy
2. It is the wage which is above the minimum wage but below the living wage.
a. Basic wage
b. Overtime
c. Fair wage
d. Compensation
3. It is the process of minimizing the physical and perceptual loads imposed on people engaged in any type of work.
a. Motion Economy
b. Human Engineering
c. Value Analysis
d. Task Identity
4. It is the method which lists frequency of critical behaviors in an employee.
a. Performance Appraisal
b. Performance Matrix
c. 360 degree feedback
d. Management by Objectives
5. A map to illustrate behavioral parameters requires in competent performance is:
a. Competency Mapping
b. Balanced Score Card
c. Behavioral Observation Scale
d. Key Results Areas
6. In this type of team, team members are temporarily assigned some tasks to accomplish:
a. Cross functional Team
b. Hybrid team
c. Process Team
d. Parallel Team
7. The practice of comparing compensation with other competing to offer a competitive pay
package to employees, is refer as:
a. Broadband Policy
b. Bench Marking
c. Retention Policy
d. None of the above
8. Any wage cost not directly connected with the employees’ productive effort, performance
service, is called:
a. Allowances
b. Incentives
c. Fringe Benefits
d. Bonus
9. It is a company’s expenditure spent directly on employees excluding the cost of infrastructure:
a. Basic Salary
b. Cost to company
c. Allowances
d. Bonus
10. Strategy that provides overall guidelines for the organization is refer as:
a. HR Strategy
b. Functional strategy
c. Corporate strategy
d. Operational strategy
Part Two:
1. Discuss the terms ‘wages’ and ‘salary’. What factors determine the wage structure in an industrial
enterprise?
2. Define job design. Briefly explain various technique of job design.
3. What is a balanced Score Card.? What are its different perspectives?
4. Write a short note on 360-degree performance feedback.
END OF SECTION A
Examination Paper: Personnel Management
IIBM Institute of Business Management 8
Section B: Caselets (40 Marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
In 2001, a Chennai- based two- wheeler major introduced a bonus scheme for its employees. Employees
covered under this bonus scheme are evaluated through a three-tier process- (1) meeting production
schedules, 2) maintaining machines, and (3) reducing overtime, scrap and shipping errors. In 2002,
productivity surged, and some employees even added as much as 15 per cent to their paychecks.
The two- wheeler company started facing competition from international players and also was riddled in
patent issues. A court order forced them to stop production of many models, causing significant
manpower restricting successive drop in sales, the company was forced to withdraw the bonus scheme,
and asked employees to be prepared for a financial structure, which would mean a reduction in their
benefits and perks. This message had a highly demoralizing effect on the employees and many efficient
designers and engineers left their jobs to join the competitors. The trade unions also took up the matter as
the workers only faced pay- cut while the senior management remuneration remained unchanged.
A portion of the employee compensation is paid as variable pay, of which bonus is a major part. Other
variable incentives are based on allocated weight age on group target achievement. To rationalize the
compensation cost, the company decided to further switch over to individual performance track record. A
formal announcement to this effect made the workers furious and led to workers protest, resulting in
production loss an a regular basis. The company made it clear to the employees that their behavior would
lead to the closure of the company, which would put them in financial and went on an indefinite strike.
A few months later, the company obtained clearance from the court and the production of all the premium
high- selling brands, which was stopped earlier, could be resumed, as the patent issue was found to be
untenable. The company feels that the whole issue was masterminded by competitors to poach valuable
employees from the company.
Question:
1. Study the case and provide an alternative compensation design, which would redress the problem
faced by the two- wheeler major in Chennai.
Caselet 2
You are a Manager, the Financial Analysis department of Mendelssohn’s Insurance. Your assistant,
Denzil Worsnip, has worked for you two years. He is 24 years of age and joined Mendelssohn’s as an ‘A’
level entrant. He progressed through the support functions, from junior clerk to section head. He showed
such promise that the company sponsored him at evening classes to study for the accounting technicians
exams. He is over half way through this at the moment and is due to take his final exams in 9 months
time.
His aim in joining your team was to use the job as a stepping tone to one of the sales teams. You were not
bothered that Denzil looked on the job in this way a you are all in favor of encouraging people to get on.
Examination Paper: Personnel Management
IIBM Institute of Business Management 9
In nay case, you know it is exceptionally difficult to get onto one of these sales teams, particularly these
days with the company placing so much emphasis on its graduate recruitment. You know he was put out
recently when the Unit Trust team hired a graduate trainee, as he had put a lot of effort into chatting them
up. Nevertheless, Denzil does not accept that the new recruit had an advantage in that he is a qualified
actuary.
Until a few months ago, Denzil had been an above average employee. He was always cheerful,
enthusiastic and willing. He also picked things up quickly. You used to have regular weekly team
meetings. You used to use these meetings to get suggestions on your new procedures. Denzil used to
make an excellent contribution to these meetings; he was always full of ideas. It is a shame that there is
now so little time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late without overtime pay.
In the last few months, he seems to have really changed. The other day, he refused to take on a job you
wanted him to do. You remember that about four months ago, a similar thing happened. He complained
that he had enough to do and could not take on any more and that he was fed up of working every day
until 8’o clock. You were annoyed at this because you felt Denzil could take on the extra work, he would
just have to assess his priorities better. Anyway, it was only additional routine work you wanted him to
do. You knew he was too busy to do ant projects so you were doing this yourself to keep the pressure off
Denzil. As for all the overtime, partly, Denzil does go in for long lunch breaks. Networking he calls it.
The loss of one person has put additional pressure on the team, but you feel you should most of it. The
others just need to find more efficient working practices.
Denzil has also recently taken to being very off-handed to people. You have overheard him several times
being rude, both on the ‘phone and in person’ to people from the business teams who ask him for
information or help. He has been very rude to you too and obviously completely fails to appreciate the
extreme pressure you are under. Last week, for instance, you got your team together to tell them about the
new procedure, you are implementing, Denzil sat there fuming and then started carrying on at you for
having drawn up this new procedure in secret and also claimed the procedure to be unworkable and
pointed out some faults. The faults he mentioned were valid. But they are easily rectifiable. You know
perfectly well that the new procedure is workable and it will save them all considerable time and effort as
it cuts out a layer of admin. Denzil is just being obstructive. Maybe he has girlfriend problem and he is
taking it out on the office?
Questions:
1. Identify aspects of Denzel’s behavior that indicate that he was well-motivated.
2. Identify those actions taken by the Manager that helped to motivate Denzil.
END OF SECTION B
Examination Paper: Personnel Management
IIBM Institute of Business Management 10
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 10 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 Words)
1. What is compensation management? What goals or objectives does it follow?
2. What are some of the challenges which HR managers face in designing a compensation system?
3. What is a fringe benefit? Can it be made a part of an employee benefits plan?
S-2-210311
END OF SECTION C
Examination Paper MM.100
Compensation Management
Section A: Objective Type
Part One:
Multiple Choices
1. A ________ is a hierarchy of jobs to which wage rates have been attached.
a. Wage Level
b. Wage Structure
c. Wage Index
d. Wage Policy
2. It is the wage which is above the minimum wage but below the living wage.
a. Basic wage
b. Overtime
c. Fair wage
d. Compensation
3. It is the process of minimizing the physical and perceptual loads imposed on people engaged in any type of work.
a. Motion Economy
b. Human Engineering
c. Value Analysis
d. Task Identity
4. It is the method which lists frequency of critical behaviors in an employee.
a. Performance Appraisal
b. Performance Matrix
c. 360 degree feedback
d. Management by Objectives
5. A map to illustrate behavioral parameters requires in competent performance is:
a. Competency Mapping
b. Balanced Score Card
c. Behavioral Observation Scale
d. Key Results Areas
6. In this type of team, team members are temporarily assigned some tasks to accomplish:
a. Cross functional Team
b. Hybrid team
c. Process Team
d. Parallel Team
7. The practice of comparing compensation with other competing to offer a competitive pay
package to employees, is refer as:
a. Broadband Policy
b. Bench Marking
c. Retention Policy
d. None of the above
8. Any wage cost not directly connected with the employees’ productive effort, performance
service, is called:
a. Allowances
b. Incentives
c. Fringe Benefits
d. Bonus
9. It is a company’s expenditure spent directly on employees excluding the cost of infrastructure:
a. Basic Salary
b. Cost to company
c. Allowances
d. Bonus
10. Strategy that provides overall guidelines for the organization is refer as:
a. HR Strategy
b. Functional strategy
c. Corporate strategy
d. Operational strategy
Part Two:
1. Discuss the terms ‘wages’ and ‘salary’. What factors determine the wage structure in an industrial
enterprise?
2. Define job design. Briefly explain various technique of job design.
3. What is a balanced Score Card.? What are its different perspectives?
4. Write a short note on 360-degree performance feedback.
END OF SECTION A
Examination Paper: Personnel Management
IIBM Institute of Business Management 8
Section B: Caselets (40 Marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
In 2001, a Chennai- based two- wheeler major introduced a bonus scheme for its employees. Employees
covered under this bonus scheme are evaluated through a three-tier process- (1) meeting production
schedules, 2) maintaining machines, and (3) reducing overtime, scrap and shipping errors. In 2002,
productivity surged, and some employees even added as much as 15 per cent to their paychecks.
The two- wheeler company started facing competition from international players and also was riddled in
patent issues. A court order forced them to stop production of many models, causing significant
manpower restricting successive drop in sales, the company was forced to withdraw the bonus scheme,
and asked employees to be prepared for a financial structure, which would mean a reduction in their
benefits and perks. This message had a highly demoralizing effect on the employees and many efficient
designers and engineers left their jobs to join the competitors. The trade unions also took up the matter as
the workers only faced pay- cut while the senior management remuneration remained unchanged.
A portion of the employee compensation is paid as variable pay, of which bonus is a major part. Other
variable incentives are based on allocated weight age on group target achievement. To rationalize the
compensation cost, the company decided to further switch over to individual performance track record. A
formal announcement to this effect made the workers furious and led to workers protest, resulting in
production loss an a regular basis. The company made it clear to the employees that their behavior would
lead to the closure of the company, which would put them in financial and went on an indefinite strike.
A few months later, the company obtained clearance from the court and the production of all the premium
high- selling brands, which was stopped earlier, could be resumed, as the patent issue was found to be
untenable. The company feels that the whole issue was masterminded by competitors to poach valuable
employees from the company.
Question:
1. Study the case and provide an alternative compensation design, which would redress the problem
faced by the two- wheeler major in Chennai.
Caselet 2
You are a Manager, the Financial Analysis department of Mendelssohn’s Insurance. Your assistant,
Denzil Worsnip, has worked for you two years. He is 24 years of age and joined Mendelssohn’s as an ‘A’
level entrant. He progressed through the support functions, from junior clerk to section head. He showed
such promise that the company sponsored him at evening classes to study for the accounting technicians
exams. He is over half way through this at the moment and is due to take his final exams in 9 months
time.
His aim in joining your team was to use the job as a stepping tone to one of the sales teams. You were not
bothered that Denzil looked on the job in this way a you are all in favor of encouraging people to get on.
Examination Paper: Personnel Management
IIBM Institute of Business Management 9
In nay case, you know it is exceptionally difficult to get onto one of these sales teams, particularly these
days with the company placing so much emphasis on its graduate recruitment. You know he was put out
recently when the Unit Trust team hired a graduate trainee, as he had put a lot of effort into chatting them
up. Nevertheless, Denzil does not accept that the new recruit had an advantage in that he is a qualified
actuary.
Until a few months ago, Denzil had been an above average employee. He was always cheerful,
enthusiastic and willing. He also picked things up quickly. You used to have regular weekly team
meetings. You used to use these meetings to get suggestions on your new procedures. Denzil used to
make an excellent contribution to these meetings; he was always full of ideas. It is a shame that there is
now so little time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late without overtime pay.
In the last few months, he seems to have really changed. The other day, he refused to take on a job you
wanted him to do. You remember that about four months ago, a similar thing happened. He complained
that he had enough to do and could not take on any more and that he was fed up of working every day
until 8’o clock. You were annoyed at this because you felt Denzil could take on the extra work, he would
just have to assess his priorities better. Anyway, it was only additional routine work you wanted him to
do. You knew he was too busy to do ant projects so you were doing this yourself to keep the pressure off
Denzil. As for all the overtime, partly, Denzil does go in for long lunch breaks. Networking he calls it.
The loss of one person has put additional pressure on the team, but you feel you should most of it. The
others just need to find more efficient working practices.
Denzil has also recently taken to being very off-handed to people. You have overheard him several times
being rude, both on the ‘phone and in person’ to people from the business teams who ask him for
information or help. He has been very rude to you too and obviously completely fails to appreciate the
extreme pressure you are under. Last week, for instance, you got your team together to tell them about the
new procedure, you are implementing, Denzil sat there fuming and then started carrying on at you for
having drawn up this new procedure in secret and also claimed the procedure to be unworkable and
pointed out some faults. The faults he mentioned were valid. But they are easily rectifiable. You know
perfectly well that the new procedure is workable and it will save them all considerable time and effort as
it cuts out a layer of admin. Denzil is just being obstructive. Maybe he has girlfriend problem and he is
taking it out on the office?
Questions:
1. Identify aspects of Denzel’s behavior that indicate that he was well-motivated.
2. Identify those actions taken by the Manager that helped to motivate Denzil.
END OF SECTION B
Examination Paper: Personnel Management
IIBM Institute of Business Management 10
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 10 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 Words)
1. What is compensation management? What goals or objectives does it follow?
2. What are some of the challenges which HR managers face in designing a compensation system?
3. What is a fringe benefit? Can it be made a part of an employee benefits plan?
S-2-210311
END OF SECTION C
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