Documentos de Académico
Documentos de Profesional
Documentos de Cultura
4. SENIORITY-CUM-MERIT
5. PROMOTION POLICY
AND GOVERNMENT
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PROMOTION
When there are vacancies in an organization, they can be filled up by the internal
or external candidates. Though the organization prefers to fill up the vacancies
by the external candidates through the selection procedure, the internal
candidates may also apply for post and may be tested and selected for higher
level job in the organizational hierarchy at par with external candidates. Is such
upward movement of an employee a promotion? Or it is purely selection? It is
purely a selection. If the organization prefers to fill a vacancy only by the internal
candidates, it assigns that higher level job to the selected employee from within
through promotion tests. Such upward movement can be said as promotion.
Definition:-
“Promotion is advancement of an employee to a better job- better in terms
of grater responsibility, more prestige or status, greater skills and especially
increased rate of pay or salary.”
- Paul Pigors and Charles A. Myers.
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3) It works as golden hand-cuffs regarding employee turnover,
4) Further it continuously encourages the employees to acquire new skill,
knowledge etc. for all-round development.
Despite these advantages the merit systems suffer from some demerit. They
are:
1) Measurement or judging of merit is highly difficult.
2) Many people, particularly trade union leaders, distrust the management’s
integrity in judging merit.
3) The techniques of merit measurement are subjective.
4) Merit denotes mostly the past achievement, efficiency but not the future
success. Hence, the purpose of promotion may not be served if merit is taken
as sole criteria for promotion.
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7) This system seems to reserve the purpose in the sense that employees may
learn more with increase in the length of service.
1) The assumption that the employees learn more relatively with length of
service is not valid as this assumption has reverse effect. In other words
employees learn up to a certain age and beyond that stage the learning ability
of the cognitive process diminishes.
2) It denominates the young and more competent employees and results in
employee turnover particularly among the dynamic force.
3) It kills the zeal and interest to develop as everybody will be promoted with or
without improvement.
4) Organizational effectiveness may be diminishes through the deceleration of
the human resource effectiveness as the human resource consists of mostly
undynamic and old blood.
5) Judging the seniority though it seems to be in the theoretical sense. it is
highly difficult in practice as the problems like job seniority, company
seniority, zonal/regional seniority, service in different organizations,
experience as apprentice trainee, trainee, researcher, length of service not
only by days but hours and minutes will crop up.
Thus the two main basic of promotion enjoy certain advantages and at the same
time suffer from certain limitations. Hence, a combination of both of them may be
regarded as an effective basis of promotion.
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SENIORITY-CUM-MERIT
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PROMOTION POLICY
Every organizational has to specify clearly its policy regarding promotion based
on its corporate policy. The characteristics of a systematic promotion policy are:
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Compensation management-1
(Wage and incentive payment)
Real wage is more important than money wage. Money wage is the payment
in terms of money. For example, Rs. 500 per month. Real wage means goods
and services which a worker can purchase out of the money wage paid. It
represents the purchasing power of money payment. In these days of rising
prices, money wages are increasing but not the real wages as the price level is
increasing. For employees, real wages are more important than money wages as
money cannot be used directly for the satisfaction of human wants. At present,
even a worker drawing the salary of Rs.10000 in Mumbai city finds it difficult to
meet the essential needs of his family.
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considerations such as supply and demand of labour, cost of living, bargaining
power, economic situation in the country and so on.
Generally, compensation payable to an employee includes the following three
parts/ components:
a) Basic Compensation For The Job ( wage/ salary)
b) Incentive Compensation for the employee on job; and
c) Supplementary Compensation paid to employees ( fringe benefits and
employee services)
Majority of labour problems and disputes are directly related to wage payment.
The efficiency of workers and their interest and involvement in the work depend
on wage payment. Even their attitude towards employer depends on the wage
payment. In brief, wage payment is a matter of greatest importance to workers.
Wage problem is the most pressing and persistent problem before the entire
labour force.
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worker as they are equal partner in the production process. He should introduce
fair wages payment system which will give benefit to both the parties. Employees
will offer full co-operation to the management when they are paid attractive
wages. On the other hand, strike and disputes are likely to develop when workers
are paid low wages or when they are dissatisfied and angry due to low wages
rates. It is possible to earn more profit by paying attractive wages to workers.
In India, wage payment is a very critical, controversial and delicate issue for all
categories of work force. This is due to poverty, rising price, mass unemployment
and rising population. In India, all categories of workers (a factory worker drawing
Rs.4000 as salary and a bank manager drawing Rs.15000 or more as total
salary) demand higher wages. Due to rising prices, such demand is unavoidable.
Majority of our industrial disputes move around the wage payment. Wage
payment is indeed a vexatious problem and need to be tackled from economic,
social and humanistic angles. It is a human problems and certainly not a simple
arithmetic exercise.
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6. State regulations: wage regulation depends on the law regarding wage
payment i.e. minimum wages act and linking of wage with the cost of
living. Wages must be paid as per the legal provisions made by the
government from time to time. This is applicable to organized workers as
well as to worker from the unorganized sector.
7. Ability of the employer to pay: wage rate depends on the ability of the
employer to pay. Such ability depends on the profits earned financial
position of the company and so on. This is one important factor that
determines the wage rate. Wage rate depends on the ability of the
employer to pay. Workers are paid attractive wages when company gets
huge profit.
8. The present stage of economy: The wage rates are related to the
position of national economy. High wage rates are not possible when
there is recession. There will be increase in the labour supply in a
depressed economy. This, in turn, should serve to lower the going wage
rates. Wage rates are normally high during the period of prosperity.
9. Internal factors determining wage rates: such factors include business
strategy of the company, job evolution and performance appraisal and
employee related factors such as individual performance, seniority,
experience and potential. when the strategy of the enterprise is to achieve
rapid growth, remunerations should be higher than what competitors pay.
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wage fixed by legal provisions and is useful for meeting the basic needs of
workers.
3. Simplicity: an ideal wage is one which is simple and intelligible to an
average worker. As a result even as average worker will understand it
easily, quickly and correctly. He will know how much he is likely to get at
the end of the month such simple wage system is also easy and quick for
calculation and gives convenience to the employer.
4. Flexibility: an ideal system of wage payment is always elastic and flexible
so as to permit necessary adjustments periodically as per the changing
economic conditions. This facilitates periodically as per the changing
economic conditions. This facilitates periodical adjustments in the wage
rates. For example, the wage rate of allowances must change along with
the changes in the price level. In brief a good system of wage payment is
flexible and adjustable to the growing and changing economic social and
cultural needs of workers.
5. Promptness: an ideal wage system ensures prompt cash payment to all
categories of a worker after certain fixed period like a week or a month.
Wage payment must be prompt so as to enable workers to make their
essential purchases regularly. Promptness in wage payment gives
convince and psychological satisfaction to workers. Wages delayed are as
good as wages denied. Late payment of wage or irregular wage payment
creates many problems and inconveniences to the workers and their
family member.
6. Incentive for extra remuneration: a good system of wage payment is
one which creates desire among workers for efforts in order to extra
remuneration. This means there should be extra reward for special skill,
better workmanship, prompt performance and higher output.
7. Attractive to talented workers: an ideal wage system should be
attractive to regular employees as well as to outsiders. This will reduce
labour turnover. In addition, talented and skilled workers from other units
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will be attracted towards the company. Thus, a good wage system creates
satisfied labour force and attracts.
8. Equal pay for equal work: a good system of wage payment should be
based on the principle of “equal pay for equal work” such wage
discrimination exists but is not fair.
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3. Fringe benefits: these are monetary benefits provided to employees.
They include the benefit of a) Provident b) Gratuity c) Medical care d)
hospitalization payment e) accident relief f) health and group insurance.
4. Perquisites: there are special benefits offered to managers/ executives.
The purpose is to retain competent executives by offering them special
benefits. Perquisites are a) company car for traveling b) club membership
c) paid holidays d) furnished house e) stock option scheme.
5. Non monetary benefits: they include comfortable working conditions
impartial promotions support to workers facing special problems and so
on.
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the temptation to earning more. Workers work slowly and with care. The
quality of production is maintained. Support from trade unions: workers
and trade unions accept and support time rate system as all workers are
placed in one category as regards wage payment. This ensures unity
among workers. Trade unions normally prefer time rate system of wage
payment.
d) Convenient in factory system: time rate payment is convenient in
modern factory system where production process is continuous and
integrated. It is not possible to measure the work completed by one
individual worker and hence time rate system is convenient.
DEMERITS OF TIME RATE SYSTEM:
a) Not scientific: time rate system is not a scientific system of wage
payment as there is no direct linking between wages and production /
productivity. Wage bill ay increase without corresponding increase in
the production. This will bring loss to the employer / management
b) Absence of positive encouragement: in the time rate system there is
no positive encouragement to workers to improve their efficiency as
the wage rate is uniform to all workers efficient and inefficient
c) No effect on productivity: time rate system fails productivity and
efficiency of labour force. It is not an incentive system of wage
payment.
d) Strict supervision on workers necessary in the time rate system strict
supervision on the workers is essential as payment is for the period
and not for the production this raises the expenditure on supervision.
e) No initiative to workers: time rate system fails to encourage workers
to take more initiative in the work in fact it encourages them to follow
“go slow” policy. This is because wage payment is not linked with they
production given.
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2) Piece rate system: piece rate system is another basic system of wage
payment. It is opposite time rate system. It is also treated as an incentive
wage system as it encourages workers to produce more and also to earn
more. Wages are paid as per the output or production given by the worker
and not as per the time spent by the worker in the factory.
WE=NR, WE means workers earning, N means the number of piece
produced and R means the rate per piece of production. A worker who
produce 20 pieces at rate of 10 Rs per piece he will get Rs. 200 as the wage
payment for the day.
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DEMERITS OF PIECE RATE SYSTEM:
a) No guarantee of minimum wage payment: in the piece rate system,
there is no guarantee of certain minimum wage payment to a worker. This
may prove to be dangerous particularly to newly recruited workers and
workers who are below average.
b) Workers suffer even when they are not at fault: sometimes workers
suffer in wage payment even when they are not at fault for example due
to power payment even when they are not at fault. For example, due to
power failure, workers may not be able to give production and naturally
they will not be eligible for wage payment.
c) Not fair to trainees: piece rate system is not fair in the case of trainees.
Their capacity to produce is less and naturally they will get very less
wage.
d) Disturbs unity of workers: piece rate system affects the unity among
workers as wage payment will not be uniform to all workers. This will lead
to quarrels among workers trade unions oppose piece rate system on the
ground that it will lead to rivalry along workers and destroy unity among
them.
The wage plan should be highly incentive. This means, it should encourage
workers to take more initative and interest in the work, produce and also more.
The wage plan which serves all this purposes is called incentive wage plan.
Such an incentive plan is beneficial to both employers and employees. Incentive
are monetary benefits paid to workmen in recognition of there outstanding
performance. Incentive are defined as “variable rewards granted according to
variations in the achievement of specific results.” According to Dale Yoder,
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“Incentive wages relate earnings to productivity and may use premiums,
bonuses, or variety of rates to compensate for superior performance.” Thus
incentive wage plans offer an attraction of extra payment for efficiency. The basic
idea in the incentive plans is motive workers to produce more thorough monitory
attraction in the form of wages, allowances and so on
.
TYPES OF POPULAR INCENTIVE PLAN:
For the sake of convenience, incentive plans can be divided into two broad
groups. These are: (a) Individual incentive plans and (b) Group incentive
plans.
Individual incentive plans, meant for individual employee. He has to work hard
i.e. efficiently, produce more and share the monetary benefit for himself.
In the group incentive plans, the incentive is not for individual employee but
for the group employees working in one department or section. Such group
incentive plan may cover the entire labour force of production unit.
Managements/ employees are interested in group incentive plans while efficient
employees are interested in individual incentive plans. Production activities are
now conducted in an integrated manner and naturally incentives should be
offered to employees. Group incentive plans are better as they encourage team
spirit and develop cooperation and understanding among the employees. This
avoid wastage and promotes productivity. Types of incentive plans are as noted
below.
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i.e. to a group of employees. All employees have to participate for raising
production and all will participate in the extra benefits available. The benefit will
be also common for the whole group.
Group incentive plans are necessary under certain situation. For example the
performance of individual worker may not be measurable in an accurate manner.
In some cases the production process may require co-operations and
participation of all workers for better performance. Under such situation group
incentive plans are necessary and useful.
ADVANTAGE OF GROUP INCENTIVE PLAN:
(1) Better co-operation and understanding among employees of the group.
(2) Limited supervision on the employees is adequate.
(3) Administration of the plan is easy.
DISADVANTAGE OF GROUP INCENTIVE PLAN:
(1) The final benefit expected is uncertain and not depend only on the co-
operation among employees.
(2) The efficient and honest employees suffer at the cost of inefficient and lazy
workers as both are treated on par and share equal benefit.
(3) Rivalry among employees of the group defeats the very purpose of group
incentive plan.
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DEFINITION OF PROFIT-SHARING:
According to Pro. Henry R. Seager,”Profit-Sharing is an agreement freely
entered into by which the employee receives a share fixed in advance of the
profit.”
OBJECTIVES OF PROFIT SHARING:
1. To supplement the regular earning of the workers.
2. To create sense of partnership among the workers and the management.
3. To enable the workers to participate in the prosperity of their company.
4. To introduce incentive wage plan.
5. To raise productive efficiency by reducing cost.
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1) How to ascertain the net profit for sharing and share of all workers in terms of
percentage?
2) How to determine the base of profit sharing?
3) How to determine the share of profit of individual workers?
4) How to solve dispute if developed in due course out of the profit-sharing
agreement?
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BIBLIOGRAPHY
HUMEN RESOURCE MANAGEMENT: P SUBHA RAO.
PERSONNEL MANAGEMENT: AHMED & KALE.
PM & IR: RUSTOM DAWOR.
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