Que.1 List the various elements of compensation. Ans.

Following are the various elements of compensation: BASE PAY: Base pay is the fixed rate of compensation that an employee receives for performing the standard duties & assignment of a job. Employers need to ensure that base - pay programs are designed to reveal market practices within their identified competitor group. To achieve this, organisations must first identify their competitive market. This can be achieved by considering different factors, including the nature of the industry, geographic location, total employment & annual revenue. Next they need to conduct an assessment of market pay practices for similar jobs within the recognized competitor group. This assessment should involve the duties, skill, & impact levels of each job evaluated that is, each job of similar size and scope. Variable Pay: Performance - based variable pay continues to achieve momentum as a more successful way to identify & reward employee performance. Also known as pay - per Performance, variable pay is popular in todays corporate world by including a percentage of variable pay in the competition plan; organizations ensure that two people with different efficiency levels do not get the same benefits. By doing this the company rewards productivity and hard work and motivates the underperformers to work hard. Once limited to senior management levels, there incentive or bonus plan are being redesigned to reward the achievement of specific company or employee calculated targets. Amounts are usually calculated as a percentage of base pay depending on job category and position. Skill and competency based pay Skill-based pay offers employees extra compensation when they have new skills specially recognized by the company as essential to achieve a competitive advantage skill-based Pay can be particularly useful for employees who like their current jobs but are looking for new challenges competency based pay is more widespread than skill based pay because the criteria cover not only measurable skills but also knowledge, performance behaviors & personal attributes. It helps out employees to grow in the company & helps them to close the knowledge gaps needed for creative moves. Long Term incentive compensation: Long term incentive compensation such as stock option plans & other deferred compensation plans, which are not usually used to reward performance, are achieving desirability among employees. These long term incentive compensation plans appreciate employees based on company performance over a long term that is typically three to five years. Que.2 What is CTC? What are the components of CTC? Ans. Cost to Company is the amount that you cost your company. That is, it is the amount that the company directly or indirectly spends on you because of employing you:

Following are the components of CTC: Basic Dearness Allowance (DA) House Rent Allowance (HRA) Medical Allowance Conveyance Allowance Special Allowance Vehicle Allowance Incentives or bonuses Leave Travel Allowance or concession (LTA/LTC) Telephone/ Mobile Phone Allowance CTC includes the salary directly paid to the employees, the benefits directly attributable to the employees such as companys contribution to the provident fund, pension funds, medical insurance premium, cost of loans offered to the employees, telephone expenses for mobile phone connections & land-line connections, benefits offered for visiting the home country or hometown & so on. It is important to note that even a lower CTC might mean a higher take home pay than an offer with higher CTC, if the other components are arranged differently. Similarly, you must not infer that with increase in salary or position, your pay as percentage of salary will increase /decrease. You have to assess each offer separately. Most companies usually talk in terms of CTC as the figures look more impressive. You should carefully look at their offer & calculate yourself how much you take home pay will be. The total compensation includes the value of all the perks & benefits the employee is offered by the company in addition to the employees salary. Calculating the annual CTC is important from the employees & the organisations perspective. This helps the organisation ascertain the HR cost & the employees understand what they are being offered, as they can benchmark their CTC with other comparable organisations. Employees can decide on other job offers depending on the CTC.

Que. 3 Explain the link between employee satisfaction & compensation. Ans.Linking employee satisfaction to compensation is being practised since long time in most of the organisations. Compensation designs based on this link usually measures performance from a relatively objective side, such as sales or revenues, stock price, productivity gains & so on. The example of this effort in recent times is embedded in

labour contracts recently negotiated at United Airlines (UAL). The unions were able to push for a major new approach in part because they own 65 percent of UAL's stock. Under the terms of agreement more than half of the bonus pay received by the top 625 UAL managers was determined by criteria like time performance & employee satisfaction is less objective & more unusual. In fact, only a small handful of other firms use satisfaction to determine executive pay. Employee satisfaction has to be measured & evaluated before a new compensation plan can be implemented. Usually, an outside survey firm is hired to perform the annual survey for employees. The results of this survey is shared through out the company. Thus, the top management will get to know how employees feel about the compensation. Employee satisfaction towards compensation is the most important discourse for any company, because it is directly related to the performance that can be achieved by employees. The more an employee is satisfied & happy with their compensation, the better they perform. In turn, this will influence the company performance too. Thus companies should strive to bring in a fair compensation plan so as to increase employee satisfaction. Appropriate type of compensation plans, rewards & benefits ae important for employees. Financially, the employees must be satisfied that their salaries are justified & are according to their contribution to the company. In this respect, both employees & employer basically work towards the same goal for mutual benefit. Non financial rewards should also be given to employees of the month programs, nominations to training programs, career growth opportunities & so on. To provide incentives, these models support the existence of reward systems that structure compensation so that the employees' expected value increases with observed employee productivity. Thus compensation can take many various forms, including appreciation from managers & co-workers, implicit promises of future promotion opportunities, feelings of self- esteem that come from superior achievement & recognition & current & future cash rewards related to performance. Que. 4 What are the major issues related to repatriation? Ans.The term repatriation refers to bringing the employees who are on an international assignment back to home country. It is very important to manage repatriation of employees in a very careful way. A poorly managed repatriation can lead to a feeling of frustration & cynicism in the empolyees. These feelings can be worse than the culture shock experienced in the first weeks of the assignment. It requires transparency in repatriation policy, sharing information on the career progression path, degree & support from the organisation during the international tenure & so on.

Expatriate managers often return to to the home office with a wealth of experience & perspectives. Yet, poor repatriation processes are blamed for underutilizing talent, losing human capital, & discouraging skilled managers from accepting overseas assignments. Often the impact of repatriation for the employee is far greater than that of the original move to the host location. The move abroad is usually exciting, involving a promotion or at the very least, an increase in peer status. Also, the day to day impact of life in the new culture is more keenly felt by the spouse & children, who interact with it on a far more personal basis. As the project comes to an end, the expatriate starts the closure process of the post, probably handing over to a locally based team or manager. At this point, home country HR should be back in touch with the employee, to start the career planning for the home move. However, most companies provide no post assignment guarantees, & this has a dual impact on the employee. Firstly, they will feel deeply insecure since they may have taken their family away from extended family & friends, interrupted education programmes & careers, & for what? To retun home with no job? Another issue is the change in living standards. While settling down in a foreign country, they would have been offered financial incentives for the family to relocate from generous housing allowances to the payment of school fees. On returning home, these are taken away & the lifestyle that the family has become used to is radically reduced. This is particularly a factor for Europeans coming home from USA, where living standards are very high in comparison with the cost of living in most European cities. It is the children of expatriates that impact canbe the mast pronounced, & the most dramatic, especially or teenagers caught between school systems , deep friendships & hormonal angst! Where the assignments has been a long one, there is the risk of the child becoming a Third culture kid - far more familiar with the host culture than the home one. For them the return is a far greater challenge, as they are already at home & will be going somewhere completely foreign. Not only will they face a profound culture shock, they will also struggle with a sense of loss of identity as they leave their friends & peers behind. Que 5. Write short notes on the following economic theories of wages: (a) Residual claimant theory (b) Subsistence theory Ans. (a) Residual Claimant Theory The residual-claimant theory states that, after all other factors of production have received compensation for their contribution to the process, the amount of money left over will go to

the remaining factors like wages. Smith suggested this theory for wages, since he assumed that rent would be deducted first & pofits next. Walker worked on a residual theory of wages & suggested that the shares of the landlord, capital owner, & industrialist were determined independently & subtracted, thus leaving the remainder for an employee in the form of wages. However , it should be noted that any of the factors of production may be selected as the residual claimant assuming that independent determinations may be made for the shares of the other factors. (b) Subsistence Theory: Subsistence theory, also known as the "Iron Law Of Wages" was proposed by David Ricardo. According to this theory, employees should be paid towards their labour in producing goods so as to enable them to survive, thereby neither increasing nor diminishing the human race. In other words, wages cannot fall below subsistence level because without subsistence, labourers will be unable to work. On the contrary, if the compensation increases beyond the subsistence level, then the number of employees would also increase, because the employees will be in a better position to support larger families. This would then cause the compensation to fall due to the increased supply of labour than demand. When the compensation falls below the subsistence level, employees would die of hunger, malnutrition & diseases. Hence, the number of employees available for employment will come down, which, in turn, would push up the demand for labour. This increase in demand will push up the compensation beyond subsisence level. Differences in the statement of the subsistence theory of wages continued to arise, even from those who have been regarded as its reliable advocates. Malthus, basing his theory of wages on his theory of population, followed the supply & demand theory, advocating the restraint of marriages as a means of decreasing the supply of employees & thus raising the standard of wages. Malthus stated it as "that amount of those necessaries & conveniences, without which they would not consent to keep up their numbers."

Que. 6 Mr. Sarvesh is the HR Manager of First Source Pvt. Ltd. He found that many of the employees have been doing the same work for a long period of time. He decided to enrich some of their jobs. List some of the strategies which can be used by Mr. Senthil to enrich jobs in organisations. Ans. According to Mr. senthil, following are some of the strategies that should be used:

(a) Operational Strategy-> This focuses on how the business should be operated to drive the corporate in the right direction. An operational strategy therefore focuses on issues of resources, processes, people & so on. (b) Design School-> It views strategy as a process of conception (from the start). Under this school, strategy formation is a process of matching the task environment to the mega environment, emphasising a fit between the strengths & weaknesses & the opportunities & threats of an organisation. This school, therefore, applies conscious thoughts. Conscious thought is not analytical or perspective. It involves putting together the collective inputs of members of an organisation for informed decisions. (c) Cognitive School: According to this school, the development of strategy is a mental process that analyses how people perceive patterns & process the information. It subscribes to the view that strategies are developed in people's mind as frames, models, or maps. Hence the cognitive school looks inwards into the minds of strategists. It can be said that this school adopts a more subjective interpretative or constructivist view of the strategy process, where cognition is used to build strategies as creative interpretations, rather than simply to map reality in some more or less objective way. (d) Learning School:This school views the formation of strategy as an emergent process, which evolves out of the management's experience about what works & what does not work over a period of time. Therefore, strategies emerge as people come to learn about a situation as well as their organisation's capability of dealing with it.