PARA 13.2 HRM (IC90) One Liner, Chapter 10: Maintaining Human Resources

PARA 13.2 HRM (IC90) One Liner, Chapter 10: Maintaining Human Resources

Insurance exams offered by the Insurance Institute of India (III), consist of various papers either in Life or Non Life or Combined. Here we are providing ONE LINER IC 90, HRM Chapter 10: Maintaining Human Resources for para 13.2 and III exam . These questions will be very helpful for upcoming promotional exam in 2020.

IC 90, Human Resource Management is a very important topic in insurance promotional exam. This IC 90, Human Resource Management paper comes in all GIPSA exams which makes it very important.

Chapter 10: Maintaining Human Resources

  • Wages and Other Benefits
  • Discipline and Vigilance
  • Grievance and Conflicts
  • Industrial Relations

Wages and Other Benefits

1.Wages: In common parlance the terms salary, pay and wages are interchangeable terms, though, strictly speaking, they have different meanings. However, these differences are not material to our study. Salary or wages is considered the remuneration for the work done by an employee. It may have many components, like basic pay, variable pays, allowances, bonus and so on.

2.Wages differ for different categories of employees

  • There is no answer to the question „What is the reasonable wage for a job?‟ For comparable jobs, like drivers and sweepers or typists and cashiers, the wages are not at all uniform in society. They differ substantially between the central government offices, the state government offices and the municipalities.
  • Fayol suggested that wages should be fair keeping in mind the costs of living and the need to maintain family. Costs of living vary between different parts of the country and even different parts of a big city. Even if an attempt is made to determine minimum wages on the basis of expenses per family for food (2700 calories per adult), cloth (72 yards per family), housing and so on, there could still be variables on what kind of food or cloth or housing is being looked at for different levels of employees.

3.Periodic wage revision: The fact is that wages fixed historically when the enterprise was started, are modified upwards from time to time, after hard bargaining by the managements and the workers. At any point of time, the agreement on wages is struck depending on the relative strength of the management and of the workers. The employers try to improve their strength by being members of various associations and the workers do the same through their unions affiliated to political parties

4.Job evaluation: The theoretical background to fixing wages lies in what is known as the process of job evaluation. In this process, every job is evaluated in terms of:

  • Tasks (difficulty),
  • Responsibility,
  • Knowledge and skills required,
  • Span of control,
  • Extent of discretion to be used, etc.

5.The information available from job evaluation is used to determine the value of various jobs in relation to all other jobs. This is job the evaluation method.

  • Ranking method: In the ranking method jobs are simply ranked in the order of their importance or the difficulty of performance.
  • Classification method: Another method is known as the classification method. Under this method an attempt is made to find a common denominator like skills, knowledge, responsibility and the jobs are classified accordingly. Example: clerical jobs, shop jobs, sales jobs would be three different classes of jobs.
  • Factor comparison method: A third method is the factor comparison method. Some key jobs are selected. Then the criteria of mental requirements, skill requirement, responsibility and working conditions are identified. Thereafter, the key jobs are ranked according to the criteria chosen.
  • Point method: Another method is the point method. This method consists of breaking up jobs based on various criteria like skill, effort and responsibility. Then points are allocated to each of the criteria. Depending upon the importance of each criterion to the performance of the job appropriate weightage is given. The points are then summed and jobs with similar totals of points are placed in similar pay scales.

5.Scales of pay: Wages may be fixed as payable on a:

  • Monthly basis or
  • Weekly basis or
  • Daily basis or
  • Hourly basis or
  • Piece rate basis

6.Piece rate, hourly and daily basis payments are adopted mostly in the case of casual labour, who are engaged without a long term commitment to the organisation. Such cases may be found even within well organised companies.

7.Wages are normally fixed on what are called “Scales of Pay”, which would indicate a starting pay, an increment payable every year and a ceiling at the end of the scale.

8.Basic pay: The pay based on the scale of pay is usually called basic pay. Apart from the basic pay, employees would be entitled to various benefits. Some of them are as follows:

  • Dearness allowance to compensate for inflation
  • City compensatory allowance when posted in costly cities
  • House rent allowance, if accommodation is not provided
  • Conveyance allowance
  • Education allowance for one or two children
  • Hardship allowance if posted to difficult locations
  • Machine allowance for working on special equipments
  • Uniform washing allowance

9.Bonus: Basic pay and other allowances would be payable every month. They may also be entitled to receive bonus at the end of the year. Bonus may be paid subject to conditions like the following:

  • To an individual if his work is better than the target fixed for him To every member of a group if the group produces more than target
  • To every employee as a percentage of salary, if company’s profits cross a specified level
  • To every employee as a percentage of salary if company’s revenues cross a specified level
  • A percentage of salary to every employee on say, Diwali or New Year.

10.Other Benefit: In addition, employees could be entitled to benefits of the following kinds. Some of these would be available only for certain jobs.

  • Loans or advances for festivals
  • Home leave travel to go to the home towns once in two or three years Holiday travel to any place in India or abroad once in two or three years as
  • May be fixed Commission on sales
  • Lump sum for acquiring additional qualifications Reimbursement of medical expenses Reimbursement of entertainment expenses
  • Reimbursement of membership in one or more prestigious clubs
  • Uniforms and protective (for safety) wear
  • Reimbursement of telephone charges, servants” wages, etc. at home

10.1)Individual incentives: There are individual incentives such as time saving bonuses, piecework incentives and commissions.

10.2)Group incentive plans are becoming more and more popular nowadays.

10.3)Organisation wide incentives: Many organisations have experimented with organisation wide incentives also, under which all the employees are given incentives for achieving organisation wide cost reduction. Some of the experiments of this type have met with phenomenal success.


  • Increment based on annual appraisal
  • Increment based on company performance

12.Employee benefits and services

  • Security: Security is one of the major benefits individuals seek from their employment. It is concerned with safety at work due to accidents as well as due to the presence of toxic chemicals in the work environment that affect health adversely. It is also concerned with the possible loss of income as a result of layoffs, disability or retirement.
  • Legally prescribed benefits: Benefits can be classified as legally prescribed benefits and voluntary benefits.

i)In some countries like the USA, social security insurance for retirees, unemployment compensation, and workers‟ compensation for death and disability are legally mandatory benefits.

ii)In our country government has made statutory provision for workmen‟s compensation, disability benefit, old age pension, health care and the like under the social security programmes and these contribute to the financial security of employees.

  • Psychological security: These employees have to be helped to prepare themselves for retirement and helped in making adjustments to retired life so that the transition from active life to retired life may be smooth and without stress. A number of organisations are having what are known as special pre- retirement counselling programmes.
  • Fringe benefits: Employee benefits which are not a part of normal pay are sometimes called “fringe” benefits, but some benefits like maternity leave and sick leave are considered so essential that the use of the term „fringe‟ seems quite inappropriate. Moreover, the amount spent on them by employers is also considerable.
  • Cafetaria type of benefits: Benefits have become something far more than the “fringe”. Employees have come to expect the extras as the norm rather than the exception. Organisations allow employees to choose from a set of available benefits, according to how they see their needs to be. Known as the “cafeteria” type of benefits, this system seems to succeed. While older employees may prefer retirement benefits the younger ones may opt for immediate benefits like holidays and flexible working hours.

Discipline and Vigilance

13.Discipline is a broad term dealing with the norms, rules, role expectation, duties and behaviour. Any deviation from the laid down norms is termed as breach of discipline and will call for action under the rules. Action may be just a warning or more severe punishments.

14.Attendance and punctuality: Adherence to working hours is the first requirement of every employee. For many employees work may not be their central concern. Therefore, they may often come late for work or absent themselves frequently from work. In India, people are very fond of festivals and religious ceremonies and their priorities may often tilt towards such celebrations even at the cost of work. Those who are regularly unpunctual, even when there are no festivals, may need some help to organise their personal time

15.On the job indiscipline, Examples of job indiscipline are:

  • Quarrelsome behaviour,
  • Disobeying instructions,
  • Non-cooperation,
  • Neglect of essential procedures,
  • Dereliction of duty,
  • Gambling and drug abuse

16.Dishonesty may range from misappropriation (even temporarily) of funds, stealing of company property, to not maintaining secrecy relating to knowledge about the company. The problem of dishonesty is considered to be more serious than any other type of indiscipline and usually calls for dismissal.

17.Outside activities: Normally, an employee’s actions outside office premises will not be seen as attracting the requirements of the company’s rules. The matter would become different if he is taking up outside employment or is indulging in activities that could undermine the company‟s reputation.

18.Disciplinary action: The general principles involved in taking care of disciplinary problems are the following:

  • Make disciplinary action corrective rather than punitive.
  • Make disciplinary action progressive – begin with oral warning for the first offence, then written warning and only thereafter take sterner steps like salary cut, decrement, demotion and so on.
  • Make disciplinary action impartial. Impartiality means applying disciplinary rules uniformly to all persons without fear or favour. If there is no impartiality, morale will go down.
  • Keep disciplinary action impersonal
  • Follow due procedure and provide adequate opportunity to the employee to explain his position

19.Hot stove rule: In this context the rule known as “hot stove rule” is relevant. Just as when someone touches a hot stove he gets an immediate sensation of burning and he not only withdraws the hand but refrains from touching it again, every act of indiscipline should invite an immediate response which conveys the message that there is infringement and compelling withdrawal from the violation. The hot stove rule emphasises that the response to indiscipline should be impersonal, quick and consistent.

20.Principle of Natural Justice: The most important principle underlying the legal procedures is called the „Principle of Natural Justice‟. This principle says that punishment can be given only after the person being punished is given an opportunity to explain himself. Such an opportunity must be given even before coming to a conclusion that there is a punishable offence.

21.Framing of rules

21.1)Detail framing of rules on the subject: The first step in setting up a proper disciplinary system is to frame detailed rules on the subject. Spelling out the rules clearly benefits both employees and employers because they set the norms of behaviour and conduct at work and make clear to the employees what is expected of them.

21.2)Important issues to be covered

Organisational rules should cover all important issues relating to discipline, such as:

  • Attendance, absence from work,
  • Health and safety,
  • Misconduct,
  • Use of company facilities,
  • Productivity,
  • Sub-standard performance on the job,
  • Time keeping,
  • leave arrangements, etc.

21.3)Politeness and courtesy: It is difficult to lay down clearly what politeness or courtesy mean in dealing with customers. The clarity will come gradually through observation of how the seniors behave and also from disciplinary actions that may be taken for lack of politeness and courtesy.

21.4)Steps involved in a formal disciplinary procedure Usually, the steps involved in a formal disciplinary procedure are:

  • To issue a charge sheet.
  • To hold a domestic enquiry, if the employee denies the charge.
  • Peruse the report of the enquiry officer
  • Issue show-cause notice to the employee, if the charges are proved, indicating the proposed punishment
  • Issue order of punishment after receipt and perusal of reply from the employee to the show-cause notice.

22.5)Role of departmental managers: Departmental managers need not be well versed with these rules. They should try to correct the errors in behaviour.


23.1)Vigilance in public sector organisations: All government and public sector organisations have vigilance departments. They work under the supervision of the Central Vigilance Commissioner of the Government of India.

23.2)Laws relating to prevention of corruption among public servants: The vigilance department has to administer the laws relating to prevention of corruption among public servants. Such a law did not apply to the private sector. There is a move to extend the provisions of these laws to the private sector as well.

23.3)Role of vigilance department in matters other than corruption: One would expect that vigilance within organisations may have to concern itself with many matters other than corruption. These would be issues related to the increasing emphasis on human rights. There are bodies set up to protect the rights of:

  • Women (against molestation or harassment),
  • Backward classes and dalits (against abuse and discrimination)

23.4)Women related issues: There is an increasing awareness of the need to protect women against offences. The offence does not have to be as serious as a rape. Even “touching inappropriately” can be an offence. A “sexist” remark can also be a problem. The laws relating to the protection of women apply in all such cases. The laws are very strict.

23.5)Caste related issues: Behaviour that is discriminatory or disrespectful of persons belonging to the scheduled castes, scheduled tribes, backward classes, dalits and other such groups will invite severe penalties. The offence does not have to be only in matters related to jobs. Any personal remark or action that is derogatory can become an offence.

23.6)Consumer related issues: The Consumer Protection Laws provide relief to consumers if there is deficiency of service. The relief granted can be heavy if the deficiency is proved to be as a result of neglect.

23.7)Environment related issues


24.1)Misuse of internet facilities by employees: There are laws which make organisations responsible when employees misuse the internet facilities provided to them at work and post abusive comments on social media like Twitter or Facebook. Such comments may attract the laws protecting women and dalits. They could also be defamatory of individuals or be considered obscene

24.2)Breach of security requirements by employees: It is expected that increasing proportions of defence requirements would be manufactured in India. Many of the manufacturing will be done in the private sector as well.

24.3)Misconduct by employees: Organisations run the risk of being hauled up for major offences because of the conduct of some of their employees. They have to be careful to monitor what is going on within the premises and have adequate safeguards against any violations.

24.4)Wrongful exercise of duty or negligence: Public servants in India are protected from being prosecuted for any wrong, if the impugned action was done in the course of duty. Of late however, when it was shown that the action was wrongful exercise of duty or negligence in the course of one‟s duty, courts have made the civil servant personally liable for damages. Policemen and doctors have had to face such problems. Employees of private sector organisations also will be exposed to such liabilities.

Grievance and Conflicts

25.Grievance: The term grievance refers to such dissatisfaction, regardless of whether it is valid or invalid, written or verbal. Grievances are feelings, sometimes justified, sometimes not, which an employee may have in regard to his employment situation. They should not be ignored. They should be taken seriously and looked into without delay.

25.1)Handling of grievances: If a grievance is ignored, it may give rise to:

  • Unhappiness,
  • Frustration,
  • Discontent,
  • Indifference to work,
  • Poor morale, and
  • Ultimately lead to inefficiency and low productivity

25.2)Cause for grievances: A grievance arises when an employee perceives that there has been an infringement of his rights or that his interests have been jeopardized. The supervisor‟s attitude and behaviour towards individual workers and the union may provide a fertile source of grievances. Grievances may also be due to unfair distribution of rewards like promotion or incentives, transfer, amenities, conditions of work.

26.Conflicts: Conflict can range from a minor difference of opinion between two persons to war between nations. For our purposes we can define conflict as a situation which arises when one person perceives that another person has negatively affected (or is about to affect) something that the first party cares about.

26.1)Causes of conflict: An organisation is unlikely to be a place of peace, tranquility and harmony, without any conflict at all. The system will have pulls and pressures between and within each of its parts, caused by:

  • Multiplicity of objectives,
  • Complex and heterogeneous characteristics of interacting people,
  • Conflicting demands and
  • Scarcity of resources

26.2)Conflicts within individuals and organisation: Conflicts may exist within the individual or between individuals and within the organisation. An individual who is offered a change of job might have a problem choosing between the better status and money in the new job (career prospects) and the prospects of shifting to a new place far away from the aging parents (duty as a son or daughter).

26.3)Resolving conflicts: Faulty communication can create conflicts. These are quickly resolved when the persons concerned discover the cause of the problem, which can then be rectified. Conflict within cohesive groups (teams) can be also resolved relatively quickly by the team itself, through confrontation, trust and support. Difficulties may arise when the conflicts are between groups. The leader has a role to play in handling conflicts.

26.4)What leads to conflicts? Conflicts may arise due to:

  • Individuals seeking individual satisfactions
  • Struggle for power, dominance and resources at individual or group level
  • Competition for rewards
  • Difference in preferred goals
  • Incompatibility of individuals

27.Strategies for dealing with conflict management: Strategies adopted to deal with conflicts have been called avoidance strategy, accommodation strategy, collaboration strategy, competition strategy and compromise strategy.

  • Avoidance strategy: Avoidance strategy just ignores the conflict. It is like allowing cataract to develop and ripen before it is surgically removed. This strategy will be appropriate when any intervention may aggravate tempers on either side.
  • Accommodation strategy: The accommodation strategy is adopted when one or both of the conflicting parties agree to give up some of its concerns to satisfy the concerns of the other. This may seem to be generosity, charity, submission or self-sacrifice. It can happen when during discussions, some of the aspects of other viewpoints are recognised to be more beneficial. This strategy develops goodwill
  • Competition strategy: The competition strategy is the opposite of the accommodation strategy. This occurs when one party gets to be very rigid and is not willing to give up any of its concerns. This is possible when one has power or authority (one is a boss) to impose oneself, has the capacity to argue with facts and data, can muster support, has the ability to impose sanctions or to cause defeat.
  • Collaboration strategy: The collaboration strategy is the most desirable but not necessarily the easiest. There is mutual concern for both the contesting parties and their viewpoints. This is important to strive for, if the stakes are high for the organisation. This is usually the most satisfying for all concerned. Consensus decisions are outcomes of collaboration strategies.
  • Compromise strategy: The compromise strategy is the strategy in which expediency is sought. The solutions found are mutually acceptable, because it satisfies both sides partially, having made (or exchanged) concessions.

Industrial Relations

28.Industrial Relations Act, 1945: The Industrial Relations Act, 1945 lays down the legal framework under which workers are allowed to form unions which may negotiate with managements for matters concerning the workers.

29.Trade unions: In India, trade unions are powerful organisations. All of them have affiliations with political parties, as workers form a big constituency for political parties. Some of the major federations of trade unions are:

  • The All India Trade Union Congress (AITUC),
  • The Indian National Trade Union Congress (INTUC), The Hind Mazdoor Sabha (HMS),
  • The Bharatiya Mazdoor Sangh (BMS) and The Centre for Trade Unions (CITU)
  • The AITUC is affiliated to the Communist party,
  • The INTUC is affiliated to the Indian National Congress
  • The CITU is affiliated to the Communist Party of India (Marxist)
  • The BMS is affiliated to the RSS and the Bharatiya Janata Party

30.Employer associations: Along with the development of nation level federations of unions, employer associations also have come up. There are three major federations of employers” associations:

  • All India Organisation of Employers (AIOE),
  • Employers” Federation of India (EFI) and
  • All India Manufacturers Association (AIMO)

Note: In 1965, the AIOE and the EFI came together to form the Council of Indian Employers (CIE). In 1970, a separate organisation of public sector institutions known as the Standing Committee of Public Enterprises (SCOPE) came into being. Similarly all banks have organised themselves under the banner of Indian Bankers Association (IBA).

31.Collective bargaining: Collective bargaining is the process by which the terms and conditions of employment of workers are negotiated and regulated by agreements between the representatives of the employees (unions) and the employers.

32.Current scenario: The Industrial Relations Act expects that the three parties, namely the unions, management and government, together will be able to settle the disputes and the resort to strikes will be rare. The experience however, is that negotiations rarely lead to agreements soon, particularly in the public sector. Unions and managements tend to take rigid positions. Agreements are finally reached after agitations, including hartals and strikes.

32.1)Indemnity from civil action: The legislation gives unions indemnity from civil action when they act in pursuance of the trade union rights. The indemnity however, is available only if the action is within the provisions of the law. Often, the strikes are called for without notice. They may even have been declared illegal. There may have been damage to persons and property because of violence by the agitators or police action during the agitation.

32.2)Role of HR department: Once an industrial dispute develops into an agitation or confrontation between the management and the workers, it has to be treated as a legal matter to be managed between the personnel or establishment department and the legal department. The HR department‟s responsibility will be to see that such situations do not develop.

33.3)Building harmonious relations: Building up harmonious relations is not an easy task.

  • First of all, management should make harmony as its goal and try to pursue it vigorously.
  • Norms which are just and humane should be set up and vigorously followed.
  • Policies should be applied uniformly to all employees and divide and rule policy (when there are many unions) should be scrupulously avoided.
  • Even though there is collective bargaining, management should never give up direct two-way communication between itself and the workers. Finally, as far as possible, workers should be involved in the decisions being taken where their interests are involved.

34.Safety and health: Management has a responsibility for the health and safety of the employees. Every year, a number of employees die due to work related accidents. Many more get injured or contract diseases.

34.1)Create awareness: Safety awareness can be created through training, display of safety slogans, exhibiting video films and so on. Incorporate accident prevention measures in the initial training itself. This has the advantage of instilling safety awareness in the new worker right from the very beginning of his joining the organisation.

34.2)Layout and supervision: Jobs and equipment can be designed in such a way as to reduce the risk of accidents. The layout of the work place can also be a factor affecting the possibility of accidents. Supervisors will have to make sure that the work place is clean and free from spillages of oil or grease or sharp edged equipment that can cause injuries.

34.3)Health programmes: There should be strict control on drugs and alcohol being used at the work place. Both drug abuse and alcoholism have to be treated as serious illnesses. Some organisations have arrangements with hospitals for the regular medical check of their employees and sometimes of the families.

35.Personnel research

35.1) Pure and applied research: Research is classified as pure and applied.

  • Pure research: is carried out usually by scientific and research institutions without any particular purpose in view.
  • Applied research: When research is conducted for the purpose of finding solutions to particular problems, such research is termed applied.

35.2)Benefit of Research: In the field of HR management, research can be of great help in:

  • Wage surveys,
  • Effectiveness of recruitment sources,
  • Effectiveness of training methods,
  • Labour benefit settlements,
  • Employee needs,
  • Attitudes,
  • Performance appraisal and a number of other areas

35.3)Organisations doing research: Researches are done by various journals pertaining to the economy or pertaining specifically to the industry.

36.Exit interview

36.1)Reasons for leaving jobs: Employees will leave their jobs because of retirement, death, resignation or dismissal. Of these, those who leave by resigning and dismissal should be of concern to the HR department. The reason is that such exits nullify the effort and time spent in recruitment and selection.

36.2)Dismissals: In the case of dismissals, there would have been a serious misconduct. The concern of the HR department would be to examine whether the selection process could have detected the tendency for such or other misconducts. Such a study may throw up some ideas of what may be looked at more carefully in future selections.

36.3)Resignation: The cases of resignations should be of greater concern, because they  suggest the possibilities of some deficiencies in the organisation. Interviews with persons leaving the organisation, called „Exit Interviews‟, may throw some light on what might need correction in the HR practices.

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