Master of Business Administration-MBA Semester 1

MB0027 – HRM
(Book ID: B0909) Assignment Set- 1

2Q. Trace the growth of Trade Union Moment from Factories Act 1881 to Factories
Act 1948?

Ans:
GROWTH OF TRADE UNION MOVEMENT FROM FACTORIES ACT 1881 TO FACTORIES
ACT 1948

 According to the Factory Act of 1881, the workers employed in the factories were
allowed a week-off and provisions were also made for inspection as well as limiting
the hours of work for women workers to eleven per day.
 In 1890, the first labor organizations designated as Bombay Mill Hands Association
were established. Subsequently,
 in 1905, the printer's union at Calcutta and
 In 1907, the Postal Union at Bombay was established.
 In 1981,the Madras Labor Union .
 In 1922, the Indentured Labor System and Central Labor Board and All Trade
Union Congress
 In 1926, the Indian Trade Union Act( a landmark in history of industrial relations)
 During Second World War, rapid growth in Trade Unionism
 Between 1939-40 and 1944-45 the no of registered trade unions increased from
666 to 865
 After second world war especially after the independence large scale of expansion
of the trade union movement
 According to the provisions of section 49 of the Factories Act 1948,it become
obligatory for the-employers to employee a Welfare Officer in a factory employing
500 or more workers
 During 1947-1960, employment rose by 2.8 times
 During 1960, 45 percent of the total industrial workforce was claimed to be
unionized
 Explicitly, during post-independence period, the activities of Personnel Department
in different public and private sectors have multiplied

Reason for rapid growth:

1. The cumulative impact of the acute economic distress stemming from war conditions
and removal of war-time restrictions on strikes
2. the development of three more central labor organizations and the competition among
them
 3. the labor policy of the government based on adjudication rather than collective
bargaining
4. growth of the spirit of trade unionism among workers

3Q: Elaborate HR planning System?

Ans:

Concept of HR Planning

According to Beach Human resource planning is the process determining and

assuming that the organization will have a adequate number of qualified persons, available
at the proper times , performing jobs which meet the needs of the enterprise and which
provide satisfaction for the individual.

Importance of Human Resource Planning:

Effective HR planning offers the following benefits:-

 Employees with adequate knowledge, experience and aptitudes are available in

organization to carry out work and to achieve its objectives.
 HR planning identifies gaps in existing manpower, in terms of their quantity and
talent. Suitable training and other steps can be taken in time to fill these gaps.
 Provision for replacement of personnel can be made through HR Planning.
 HRP facilitate the expansion and diversification of an organization.
 It creates awareness about the effective utilization of human resources throughout
the organization.
 It is helpful in effective utilization of technological progress.
 Areas of surplus manpower can be anticipated and timely action can be taken.
 It is useful in anticipating the cost of human resources which facilitate the
budgeting process.
 It helps in planning for physical facilities like canteen, staff quarters and
dispensary, schools etc.
 At the national level it facilities educational reforms, geographical mobility of talent
an employment generation.

Level of HR Planning:

1. National Level: - The central Government plans for HR at national level. It forecast the
demand for the supply of human resources for the country as a whole.
2. Sectoral level:- Central and state Govt. formulate HR plans for particular sectors i.e.
agricultural sector, industrial sector, tertiary sector, etc.
3. Industry Level:- HR plan for specific industries like textiles , cement, iron and steel ,
computers etc.
4. Unit Level:- HR requirements of particular enterprise are forecast at this level.

Limitation of HR Planning:-

 In accuracy in forecasting demand for and supply of HR

 Employees and trade unions resist because they feel that human resource
planning increase their workload regulates them through productivity bargaining.
 Uncertainness in labor absenteeism, labor turnover, technological changes and
market fluctuations are constrains to HR planning.
 In efficient information system
 Lack of to management support
 Manpower planning is time consuming an expensive exercise.

1Q. Write a short note on Hawthorne effect?

Ans: The Hawthorne effect is a form of reactivity whereby subjects improve an aspect of
their behavior being experimentally measured simply in response to the fact that they are
being studied, not in response to any particular experimental manipulation.
The term Hawthorne was coined in 1955 by Henry A. Landsbergis when analyzing
older experiments from 1924-1932 at the Hawthorne Works, Western Electric manufacturing
facility outside Chicago). Hawthorne Works had commissioned a study to see if its workers
would become more productive in higher or lower levels of light. The workers' productivity
seemed to improve when changes were made and slumped when the study was concluded.
It was suggested that the productivity gain was due to the motivational effect of the interest
being shown in them. Although illumination research of workplace lighting formed the basis
of the Hawthorne effect, other changes such as maintaining clean work stations, clearing
floors of obstacles, and even relocating workstations resulted in increased productivity for
short periods of time. Thus the term is used to identify any type of short-lived increase in
productivity.

History of Hawthrone

The term gets its name from a factory called the Hawthorne Works, where a series of
experiments on factory workers were carried out between 1924 and 1932.This effect was
observed for minute increases in illumination. Evaluation of the Hawthorne effect continues in
the modern era.
Most industrial/occupational psychology and organizational behavior textbooks refer to the
illumination studies. Only occasionally are the rest of the studies mentioned in the lighting
studies, light intensity was altered to examine its effect on worker productivity. The findings
were not significant. The workers appeared to try harder when the lights went dim, just
because they knew that they were in an experiment. This led to the idea of the Hawthorne
Effect, that people will behave differently when they are being watched.
Relay assembly experiments

In one of the studies, experimenters chose two women as test subjects and asked
them to choose four other workers to join the test group. Together the women worked in a
separate room over the course of five years (1927-1932) assembling telephone relays..

Output was measured mechanically by counting how many finished relays each dropped
down a chute. This measuring began in secret two weeks before moving the women to an
experiment room and continued throughout the study. In the experiment room, they had a
supervisor who discussed changes with them and at times used their suggestions. Then the
researchers spent five years measuring how different variables impacted the group's and
individuals' productivity. Some of the variables were:

• changing the pay rules so that the group was paid for overall group production, not
individual production
• Giving two 5-minute breaks (after a discussion with them on the best length of time),
and then changing to two 10-minute breaks (not their preference). Productivity
increased, but when they received six 5-minute rests, they disliked it and reduced
output.
• providing food during the breaks
• Shortening the day by 30 minutes (output went up); shortening it more (output per
hour went up, but overall output decreased); returning to the first condition (where
output peaked).

Changing a variable usually increases productivity, even if the variable was just a change
back to the original condition. However it is said that this is the natural process of the human
being to adapt to the environment without knowing the objective of the experiment occurring.
Researchers concluded that the workers worked harder because they thought that they were
being monitored individually.

Researchers hypothesized that choosing one's own coworkers, working as a group, being
treated as special (as evidenced by working in a separate room), and having a sympathetic
supervisor were the real reasons for the productivity increase. One interpretation, mainly due
to Mayo was that "the six individuals became a team and the team gave itself wholeheartedly
and spontaneously to cooperation in the experiment." (There was a second relay assembly
test room study whose results were not as significant as the first experiment.)

Interviewing Program

The workers were interviewed in attempt to validate the Hawthorne Studies. The
participants were asked about supervisory practices and employee morale. The results
proved that upward communication in an organization creates a positive attitude in the work
environment. The workers feel pleased that their ideas are being heard.
Bank wiring room experiments

The purpose of the next study was to find out how payment incentives would affect
group productivity. The surprising result was that productivity actually decreased. Workers
apparently had become suspicious that their productivity may have been boosted to justify
firing some of the workers later on. The study was conducted by Mayo and W. Lloyd Warner
between 1931 and 1932 on a group of fourteen men who put together telephone switching
equipment. The researchers found that although the workers were paid according to
individual productivity, productivity decreased because the men were afraid that the company
would lower the base rate. Detailed observation between the men revealed the existence of
informal groups or "cliques" within the formal groups. These cliques developed informal rules
of behavior as well as mechanisms to enforce them. The cliques served to control group
members and to manage bosses; when bosses asked questions, clique members gave the
same responses, even if they were untrue. These results show that workers were more
responsive to the social force of their peer groups than to the control and incentives of
management.

4Q: Discuss the Multiple Person Evaluation Methods?

Ans: Techniques of evaluating one employee in comparison to another. Three such

frequently used methods in organization are – ranking, paired comparison and forced
distribution.

Ranking method
This is a relatively easy method of performance evaluation. Under this method, the ranking
of an employee in a work group is done against that of another employee. The relative
position of each employee is tested in terms of his numerical rank. It may also be done by
ranking a person on his job performance against another member of the competitive group.
The quintessence of this method is that employees are ranked according to their levels of
performance. While using this method, the evaluator is asked to rate employees from highest
to lowest on some overall criterion. Though it is relatively easier to rank the best and the
worst employees, it is very difficult to rank the average employees. Generally, evaluators pick
the top and bottom employees first and then select the next highest and next lowest and
move towards the average (middle) employees. The longstanding limitations of this method
are:

1. The ‘whole man’ is compared with another ‘whole man’ in this method. In practice,
it is very difficult to compare individuals possessing varied behavioral traits.
2. This method speaks only of the position where an employee stands in his group. It
does not tell anything about how much better or how much worse an employee is
when compared to another employee.
3. When a large number of employees are working, ranking of individuals becomes a
tosticating issue.
 4. There is no systematic procedure for ranking individuals in the organization. The
ranking system does not eliminate the possibility of snap judgments.

In order to overcome the above limitations a paired comparison technique has been
advanced by organizational scholars.

Paired comparison method

Ranking becomes more reliable and easier under the paired comparison method.
Each worker is compared with all other employees in the group; for every trait the worker is
compared with all other employees. For instance, when there are five employees to be
compared, then A’s performance is compared with that of B’s and decision is arrived at as to
whose is the better or worse. Next, B is also compared with all others. Since A is already
compared with B, this time B is to be compared with only C, D and E. By this method when
there are five employees, fifteen decisions are made (comparisons). The number of
decisions to be made can be determined with the help of the formulae n (n-2). Ranking the
employees by the paired comparison method may be illustrated as shown in the Table

For several individual traits, paired comparisons are made, tabulated and then rank is
assigned to each worker. Though this method seems to be logical, it is not applicable when a
group is large. When the group becomes too large, the number of comparisons to be made
may become frighteningly excessive. For instance, when n=100, comparisons to be made
are 100 (100-2) = 100 (98) = 9800.

Table: Employee Rated

As compared to A B C D E
A + – + –
B – + – +
C + – + –
D – + – –
E + – + +

Forced distribution method

Under this system, the rater is asked to appraise the employee according to a predetermined
distribution scale. The rater’s bias is sought to be eliminated here because workers are not
placed at a higher or lower end of the scale. Normally, the two criteria used here for rating
are the job performance and promotability. Further, a five point performance scale is used
without any mention of descriptive statements. Workers are placed between the two
extremes of ‘good’ and ‘bad’ performances. For instance, the workers of outstanding merit
may be placed at the top 10% of the scale. The rest may be placed as – 20% —good, 40%
—outstanding, 20% —fair and 10% —fair. To be specific, the forced distribution method
assumes that all top grade workers should go to the highest 10% grade; 20% employees
should go to the next highest grade and so on.
Job performance as the criterion apart, another equally important factor in this method is
promotability. Employees may be classified according to their promotional merits. The scale
for this purpose may consist of three points – namely, quite likely promotional material,
may/may not be promotional material and quite unlikely promotional material.

One strong positive point in favor of the forced distribution method is that by forcing the
distribution according to predetermined percentages, the problem of making use of different
raters with different scales is avoided. Further, this method is appreciated on the ground that
it tends to eliminate rater bias. The limitation of using this method in salary administration is
that it may result in low morale, low productivity and high absenteeism. Employees who feel
that they are productive, but find themselves placed in a lower grade (than expected) feel
frustrated and exhibit, over a period of time, reluctance to work.

Other methods of appraising performance include:

1. Group Appraisal
2. Human Resource Accounting
3. Assessment Centre
4. Field Review

5Q: Write a note on different theories for managing Compensations?

Ans: Different theories are available for discussing the Managing compensation, a few
theories are discussed below:-

Subsistence theory:

This theory, also known as a “Iron Law of Wages”, was propounded by David Riccardo
(1772-1823) .According to this theory, wages tend to settle at a level just sufficient to
maintain the workers and his family at a minimum substance level. The theory applies only to
backward countries where laborers are extremely poor and are unable to get their share from
the employer.

Standard of living theory:

This theory is modified form of subsistence theory. According to this theory, wages are
determined not by subsistence level but also by the standard of living to which a class of
labors becomes habituated.

Residual climate theory:

Francis A walke propounded this theory. According to him, there were four factors of
production /business activity viz, land, labor, capital and entrepreneurship. Wages present
the amount of value created in the production which remains after payment has been made
for all these factors of production. In other words, labor is the residual climate.

The wage fund Theory:

According to this theory, after rend and raw materials are paid for , a definite amount remains
for labour. The total wage fund and the number of workers determine the average work’s
share in the form of wages.

Demand and supply theory:

According to this theory, wages depend upon the demand and supply of labor.

Marginal productivity Theory:

This is an improved from of a demand and supply theory. Wages are determined by the
value of the net product of the marginal unit of labor employed.

6Q: Write the advantage and limitations of job Evaluation method?

Ans:

Advantages job Evaluation method:

1. Job Evaluation is logical and objective method of ranking jobs relatively to each other.
It may thus help in removing inequities in existing wage structure and in maintaining
sound and consistent wage differences in a plan t or an industry.

2. The method replaces accidental factors occurring in less systematic procedures of

wage bargaining by more impersonal and objective standard s, thus establishing a
clearer basis for negotiation.

3. The method may lead to greater uniformity in wage rates and simplicity the process of
wage administration.

4. Information collected in a process of job description and analysis can be used for
improvement of selection, training, transfer and promotion, procedures on basis of
comparative job requirement.

Limitations job Evaluation method:

1. Though there are many ways of applying job evaluation in a flexible manner, rapid
changes in technology and in the supply of and demand for particular skills, create
problems of adjustment the may need further study.

2. When job evaluation results in substantial changes in the existing wage structure, the
possibility of implementing these changes in relatively short period may be restricted
by the financial limits within which the firm has to operate.

3. When there are a large proportion of incentive workers, it may be difficult to maintain a
reasonable and acceptance structure of relative earnings.
4. The process of job rating is, to some extent because some of the factors and degree
can be measured with accuracy.

5. Job evaluation takes a long time to complete, requires specialized technical personal
and is quite expensive.