Employee Feedback and Reward System: Caiib Paper 1 (Module C), Unit 4
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So, here we are providing “Unit 4: Employee Feedback and Reward System” of “Module C: HRM in Banks” from “Paper 1: Advanced Bank Management (ABM)”.
The Article is Caiib Unit 4: Employee Feedback and Reward System
- Satisfaction of employees at workplace is considered an important parameter for achieving organizational objectives. Progressive organizations always try to get the regular feedback from the employees on various human resource management aspects, and new initiatives taken in this regard through some satisfaction or climate surveys.
- The information is gathered both formally and informally about the attitude and satisfaction of employees. This information is used for refining and fine tuning the policy initiatives from time to time. At formal level the information and feedback is gathered through well designed questionnaires, psychological instruments, Suggestion schemes, etc.
Feedback through Climate Surveys
Organizations used to measuring employees’ perceptions of the prevailing climate in an organization are called climate surveys. The coverage of a typical survey can be as follows:
- Structure: The feeling that employees have about the constraints on the groups, rules, regulations, procedures, communications channels (layers in decision making), delegation and authority, etc.
- Responsibility: The feeling of being your own boss, clarity of role and responsibility vis-a-vis superior, subordinates and peers, etc.
- Reward: The feeling of being rewarded for a job done well, perception about reward and punishment system, perception about pay and promotion, etc.
- Risk: The sense of riskiness and challenge in the job and in the organization, and any emphasis on taking calculated risk (risk taking is encouraged and bona fide errors are protected) or playing safe is encouraged and accepted.
- Warmth: The general feeling of fellowship that prevails in the workgroup atmosphere, the prevalence of informal supporting culture and social groups.
- Support: The perception about helpfulness of managers and other employees in the group, emphasis on mutual support from above and below in the heirarchy.
- Standards: The perceived importance of implicit and explicit goals and performance standards, the emphasis on doing a good job, the challenge represented in personal and group goals.
- Conflict: The feeling that the managers and other workers want to hear different opinions, the process of conflict resolution, opportunity to express the views, etc.
- Identity: The feeling of belonging to the organization and perceived value in the organization and work group, etc.
Reward and Compensation System
- The wages in the form of compensation is viewed as the main attraction to join or change a job. The compensation should not be so meager that employees do not feel motivated to put in their best. the compensation should be such that it continually attracts talent, it is a major source of retention of the existing manpower and has an edge which motivates them to give their best.
Types of Compensations
Compensation is expressed in terms of money. It would thus include: wages or salary, bonus, cash allowances and benefits such as accident, health insurance cover, employer’s contribution to the retirement funds, provision of accommodation, etc. The jobs are broadly classified in four groups and the compensation for them is commonly referred to as shown below:
- Managerial (top, middle, junior) … remuneration
- Supervisory … salary
- Clerical or Administrative … salary
- Unskilled, semi-skilled, skilled and highly skilled … wages
Compensation policy is an important element in personnel management. What is the basis or factors on which compensation gets decided? It could be:
- Company objectives
- Market situation or prevailing market rate
- Internal and external pressures.
- Let us now consider conceptual and theoretical aspects of compensation. A good compensation package should cover factors like adequacy, societal considerations, supply and demand position, fairness, equal pay for equal work and job evaluation. These concepts are explained briefly:
Adequacy of Wages
The Committee on Fair Wages pronounced certain wage concepts such as:
- Minimum wages
- Living wages
- Fair wages
- Need-based minimum wages
Alignment of Corporate Strategy, HR Strategy and Compensation system
|Strategy||HR Program||Compensation System|
|Innovator||Committed to agile , risk taking, innovative People||Reward innovation in products Market based pay Flexible|
|Cost Cutter||Efficiency Operational Excellence||Focus on competitors labour cost increase variable pay Emphasize productivity Focus on system control and work Specifications|
|Customer Focused||Delight Customer Exceed Expectations||Customer Satisfaction Incentives Value of Job and Skills based on Customer contact|
Societal Consideration and Legal Framework
- The level of compensation in any industry, theoretically, gets decided by the socio-economic considerations. Skewed distribution of wages will make the flow of supply shift and with the application of basic principle of demand and supply the equilibrium will be attained. This means that the compensation levels will, more or less, tend to be at par for the comparable work. In practice, however, this happens very rarely. In the free economy the Government does not control the aspect of wage administration and normally the market forces determine the compensation level. However, the administration is bound to protect the workforce from irrationally low wages. Taking this as the prime objective the Indian Government has enacted:
- The Payment of Wages Act, 1936,
- The Minimum Wages Act, 1948
- The Payment of Bonus Act, 1965, and
- The Equal Remuneration Act, 1976.
This is one important measure to determine the level of compensation package. A scientific job evaluation will ensure parity of compensation levels for similar or equal jobs. It also helps in distinguishing jobs in the level of complexity, skills required, the risk involved and link compensations accordingly. Job evaluation is a method of appraising the value or worth of one job in comparison to other jobs in the organization. The objectives are:
- To determine the compensation rates
- To link pay with the requirement of the job
- To provide for pay differentials taking into account skills, efforts, hazards required in each job
- To establish a compensation structure.
Job Evaluation Techniques
- Ranking or Job Comparison
- Grading or Job Classification
- Point Rating
- Factor Comparison
Designing Compensation Structure
- Step1: Create a complete job Description for Jobs
- Step 2: Calculate the Job evaluation point for the Job, provide a rationale for assigning specific degree to the various Jobs.
- Step 3: Outliers to be considered, (assume no extreme data points exits in the dataset)
- Step 4: Conduct a simple regression in Excel to create a market pay line by entering the job evaluation point (on the X axis) and the respective weighted average market base pay (on the Y axis) for each benchmark job.
- Step5: Finding out R squared (Variance explained)? Is it sufficient to proceed?
- Step 6: Calculate the predicated base pay for each benchmark job.
- Step 7: Assuming company wants to lend in base pay by 3%, adjust the predicated pay rates to determine the base pay rate you will offer for each benchmark job.
- Step 8: Create pay grades by combining any benchmark jobs that are substantially comparable for pay purpose.
- Step 9: Determine the pay range (Minimum & Maximum) for each pay grade.
- Step 10: Given the pay structure you have generated.
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