DHR11
WAGES & SALARY ADMINISTRATION
Assignment – I
Assignment Code: 2014DHR11A1 Last Date of Submission: 15th
May 2014
Maximum Marks: 100
Section – A (Each question is of 25 marks)
1. Indicate the steps to be followed in designing a salary
structure. Describe the features of
an effective salary administration procedure.
2. “When wages paid are inadequate, money becomes a bone of
contention, but when
wages paid are more, money becomes a burden to the
organisation.” Discuss how to
maintain internal and external wage parity from an
organisation’s point of view.
Section – B Case Study (50 Marks)
Panda International
Mohan Panda, a bright young M.B.A., fresh from Affinity
Management Institute, one of the top
management institutes, took over his father's
responsibilities as president of Panda International, a
manufacturing unit in Orissa. The company which is situated
at Rourkela is a major industrial unit which
manufactures electrical equipments. The company employed
approximately one thousand people in the
production division. It had never laced with a demand for
collective bargaining. So far as was known,
none of its employees were union members.
The company enjoyed wide reputation for its product quality,
customer dealings, distribution networks
and above all its people friendly approach. Majority of
employees were highly satisfied with company’s
HR policy as well as wages and benefits offered to them. The
wages offered by the company was so far
best in the locality. The working condition was conducive
for employees which had earned laurels for
the company. Recently two major players in the electrical
equipment segment started two major units
at Rourkela and offered better wages to employees including
prospective employees from Panda
International. Some of the existing employees also joined in
those units.
The new president, after three years of climbing the ladder
to his position, had a conference with three
long‐term employees, who explained that
they and their associates had been discussing the desirability
of bargaining collectively. They gained through such formal
representation. The employees had not
voiced any strong criticism of management, but they had held
several meetings and had invited
representatives of a national union to talk with them. They
concluded that they ought to try collective
bargaining and for this purpose formed a union and enlisted
a majority of workshop employees as
members. The three representatives had been elected to the
bargaining committee in order to present
a written memorandum to the president with a request for
collective bargaining agreement. A series of
issues carefully spelled out by the union were handed over
to the president by the three
representatives.
The young executive received them cordially and listened
carefully. He accepted their memorandum and
suggested that he would like to have time to study it
carefully. He proposed a meeting with them for
Tuesday of the following week.
When the committee members returned, the president reminded
them that the company had been
careful to maintain wages and working conditions at least on
a par with those in unionised companies in
the same industry and region. He expressed the opinion that
the specific proposals they had presented
seemed to him quite reasonable and appropriate. The
president however expected the employees to
maintain standard and raise productivity in order to
overcome competition from other industries and
maintain wage parity. He had been thinking of any of the
same changes and would probably have made
them without their request. He was pleased to hand them
their memorandum with a notation indicating
his acceptance. The members left, quite satisfied with the
effectiveness of their negotiations and
promising to report back to him as soon as possible
One week later, the president found the same group of
representatives waiting to see him. They
appeared somewhat crestfallen and embarrassed. They reported
that they had gone back to the
membership, presented a full report of their discussions
with him, explained. Is favourable attitude, and
recommended formal ratification of the memorandum as a new
collective bargaining agreement. After
extensive discussion, when the motion for ratification came
up for a vote, a majority of the membership
voted against ratification.
Case Questions:
(a) What are the problems in this case?
(b) Why did the members refuse to ratify the agreement?
(c) In a situation like the one above, how can the union and
management play an effective role in
fixing and revising wages and benefits through the process
of collective bargaining?
(d) What measures do you suggest to maintain wage
equilibrium and how?
DHR11
WAGES & SALARY ADMINISTRATION
Assignment – II
Assignment Code: 2014DHR11A2 Last Date of Submission: 15th
May 2014
Maximum Marks: 100
Section – A (Each question is of 25 marks)
1. What do you mean by ‘fringe benefits’? Explain the need
for fringe benefits. Describe
the various types of fringe benefits offered to employees in
India.
2. Define variable pay. Elucidate the advantages and
disadvantages of the variable
compensation plans as compared to the traditional
compensation plans citing suitable
examples.
Section – B Case Study (50 Marks)
Asian Polymers Ltd
Asian Polymers Ltd. reached an agreement with the Union on a
production incentive scheme to increase
production. The company had an unprecedented demand for its
goods and the Union agreed for the
incentive scheme. The management was pleased with the
assurance of the Union leader to personally
undertake the task of implementing the scheme. The
management promised to give him a free hand if
he could assist in increasing production.
The Union did increase production to almost double the
original level. As a result, the Union gained
importance. Any problem could be sorted out by the Union by
its direct access to the Chief Executive.
The incentive scheme benefited primarily the Union members.
The scheme was inequitable some
workers got disproportionately large incentives, some low
and some no incentive at all. The second
feature was that as the incentive was linked to the Consumer
Price Index (CPI), the distortion got further
accentuated. However, when the Union tried to misuse its new
found powers, the management struck
back one day by taking disciplinary actions against all the
leaders and the Union found all of a sudden
that it was without a leader.
Another Union arrived on the scene and the leader had
established a rapport with the Chief Executive,
and this new Union faithfully followed the tenets of the
management but as a price extracted some
benefits for its members exclusively. The Union saw to it
that production became its exclusive
responsibility and it had a hotline with CEO for any problem
solution.
As the years passed, the Union started agitating for
improvement in the wage scales. Because of the
incentive scheme, the company found that any improvement in
the basic wage would pose greater
problems and the primary question before the management was
to delink the CPI from the incentive
scheme. The Union refused to delink the CPI from the
incentive scheme as some of its members were
earning an amount equal to, if not more than the salary, as
an incentive itself. At the same time
workmen with no incentive and being grade barred began to
lose. And this resulted in discontentment
amongst the workmen. But the dilemma could not be resolved
and this led to an explosive situation.
A third union emerged on the scene and this led to intense
inter‐union
rivalry resulting in indiscipline,
loss of production, and violence within the factory
premises, as a result of which the company declared
a lockout.
When the plant reopened after four months, the Union in
power lost its credibility and the new Union
had the complete support of the workmen. The new Union
leader could develop a rapport not only with
the workmen but also with the management and expected the
management to solve the problem of not
having revised the wage scales for a long period. But this
was not an easy task as there were a lot of
inequalities that the management wanted to set right.
The union, though agreeing with the management, would not
agree for a cut in the wage in any manner
to set right the inequalities. The Union not only wanted to
cling to the beneficial aspects of the incentive
scheme but also insisted that the management somehow give an
increase in the basic wages. The
management was being drawn into a vicious circle of the
incentive scheme being inequitable but when
the Union's attention was being brought to the high
incentive categories, it reverted to the low basic
wage theme. The management remained in a quandary as regards
how to convince the workmen, to
win over the constituency of workmen and make managers
effective and regain supremacy in
production.
Case Questions:
(a) Identify the problems and their causes in this case.
(b) Under the given situation, how are the problems to be
remedied?
(c) Suggest various principles and strategies the management
has to keep in mind while
formulating a wage incentive scheme for the employees.
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