Unit VI: Compensation Management: Structure

Human Resource Management 81
Unit VI: Compensation Management

Notes
Structure:
6.1 Introduction
6.2 Objectives of Compensation Management
6.3 Scope/ Aspects of Compensation Management
6.4 Principles of Compensation Management
6.5 Factors Affecting Compensation Designing and Management
6.6 Organisation of Compensation Management
6.7 Rewards: Monetary, and Non-monetary
6.8 Incentive Systems
6.9 Summary
6.10 Check Your Progress Questions
6.11 Further Readings
Objectives:
After reading this unit, you should be able to:
 Understand the meaning, objectives, scope, and principles of compensation
management and also the factors affecting compensation designing and
management
 Understand the meaning, aspects, characteristics and determinants of rewards
 Understand the types of rewards in detail
 Understand the concept and importance of incentives and also various
incentive plans
6.1 Introduction
Needless to mention, compensation management is one of the most important areas
of human resource management, because sound compensation policies, programmes
and their effective execution are essential to procure, maintain and develop the human
resource of the organisation so as to get effective results from it.
Compensation management involves the selection, designing, development and

direction of programmes designed to implement compensation or incentivation policy
through financial rewards. In compensation management, managers translate selected
policy into a wide range of compensation programmes, from the simplest hourly wage
or monthly salary to much more complex incentive wage plans and combinations of
wage and employee benefits and services. In other words, “compensation management
is a systematic procedure for establishing a sound compensation structure”
6.2 Objectives of Compensation Management

The main objectives of compensation management are as under to:
 Design, establish and maintain an equitable compensation structure and create

proper job differentials
 Boost the morale of the employees
 Keep the human resource motivated
Amity Directorate of Distance & Online Education

82 Human Resource Management
Notes  Eliminate the chances of favouritism
 Establish and maintain an equitable labour-cost structure
 Enable the employer to systematically plan and control pay roll costs
 Offer a sound basis for discussing the issue of wages
 Simplify collective bargaining
 Reduce chances of grievances and frictions over wage issues
 Attract and retain qualified human resource by ensuring adequate

compensation calculated on scientific and systematic bases.
6.3 Scope/ Aspects of Compensation Management

There are only four closely related aspects of wage administration, which are as
under:
i) Compensation Surveys - These are conducted to determine the general pay level
in the community and industry, thus providing an organisation a base for working
out its own compensation rates.
ii) Job Evaluation - As has been stated previously also, job evaluation helps
in establishing the relationships between wages on various jobs within the
organisation. Thus, with the help of compensation surveys and job evaluation, an
organisation would find it easier to set the ‘base’ of ‘minimum wage’ rates for every
job.
iii) Merit Rating - Most organisations prefer to establish a series of rates or steps. The
new-comer employee is offered the base rate or the starting grade for the job, but
with his gaining efficiency and seniority, he may be promoted through merit rating to
higher positions.
iv) Incentives - In incentive plans, an employee gets extra pay for extra performance,
in addition to regular wages for a job. In other words, the employee is entitled to a
base rate for a ‘normal’ amount of output as fixed by time study. But if the employee
produces more than the ‘normal’ output, he gets an extra incentive bonus.
There are many bonus plans available for employees. Besides, compensation
management also takes care of schemes like profit sharing, supplementary
payments or fringe benefits, wage changes and adjustments.
6.4 Principles of Compensation Management

Some of the basic principles of compensation management have been summarised
by Scott, Clothier, and Spriegel as follows:
 Job descriptions and ratings should be periodically checked to keep them updated
 Wage policies should be carefully developed, keeping in mind the interests of:
(a) the management as the representative of the owners, (b) the employees, (c)
the consumers, and (d) the local community.
 Wage policies should be clearly expressed in writing to ensure uniformity and

stability.
 It is management’s responsibility to ensure it that each employee knows what Notes

the wage policy is.
 Wage decisions should be checked against carefully formulated policies.
6.5 Factors Affecting Compensation, Designing And Management

While evolving compensation structures, the compensation management takes into
consideration not only the basic factors provided by job description and job evaluation
but also a number of other factors. Such factors are:
 Wage policy of the company
 Supply of and demand for labour
 Labour unions
 Productivity
 Ability to pay
 Prevailing market rates
 Cost of living
 Job enlargements
 Government
6.6 Organisation of Compensation Management

The organisation of compensation management may differ according to the nature
and size of an organisation. While smaller firms may employ only consultants to advise
managers on both policy and practice of compensation management, many large firms
may maintain special staff divisions to assist in compensation management.
6.7 Rewards: Monetary And Non-Monetary

You know well that rewards are usually paid to those employees who make
significant contribution towards promoting the interests of the organisation.
Aspects of Rewards
The following are the main aspects of rewards:
 Amount of Rewards
 Value of Rewards
 Timings of Rewards
 Likelihood of Reward
 Fairness of Reward
Characteristics of a Good Reward System

 It should comprise both ‘monetary’ and ‘non-monetary’ rewards. Such a system
takes better care of the needs of its employees.

Notes
 The frequency, timings and precision of rewards should be ideal.
 The plan should be well communicated to the employees concerned.
Determinants of Rewards
Rewards are usually merit-based, though, the term ‘merit’ is viewed differently by
different authors. However, rewards are normally determined by the following factors:
i) Mental and physical effort involved
ii) Output
iii) Skills possessed
iv) Seniority
v) Discretionary time (Completely programmed and procedurised jobs need little

decision making. Hence less rewarding)
vi) Job difficulty.
Structures/ Types of Rewards

There are two popular types of rewards:
Structure/ Types of Rewards
A) Intrinsic Rewards Extrinsic Rewards
(a) Monetary Rewards (b) Non-monetary rewards
(Fig. 6.1: Types of Rewards)
A) Intrinsic Rewards - Such rewards usually provide psychic satisfaction and may
include:
 Greater Responsibility
 Greater Authority
 Diversity of Activities
 Participation in Decision Making
 Job Autonomy
 Opportunities for Self-Development
 Job Satisfaction
B) Extrinsic Rewards - Such rewards can be further classified in the following two
categories:
(a) Monetary Rewards - Monetary Rewards can be sub-classified into two types:
Notes
(i) Performance - based rewards: Such rewards may consist of:
 Performance Bonus
 Piecework
 Merit Pay Plans
 Incentive Plans
 Commission
(ii) Membership - based rewards: These rewards comprise:
 Basic Salary
 Dearness Allowance
 House Rent Allowance
 Pay for time not worked like holidays, leave, etc.
 Welfare and Social Security Programmes
(b) Non-monetary Rewards - The following are the main forms of non-monetary
rewards:
breaks
Letters of
,
s
(Fig. 6.2: Non-Monetary Rewards)
G. B. Mohanty has identified the non-financial incentives related to effective work as

follows:
 Improved Attitude

 Supervisory Relationship
Notes
 Advancement and Security
 Supervision
 Job Satisfaction and Enrichment
 Praise and Blame
 Knowledge of Result and Experience of Progress
 Experience of Achievement
 Level of aspiration and nature of the goal
 Cooperation and competition
Rewards in Indian Industries

Rewards in Indian industries differ widely. For example, incentives and reward
schemes in Godfrey Philips India Ltd., Andheri, Mumbai include the following:
 Production Incentive
 Kaizen Teian (‘continuous improvement’ based on suggestions received from

employees)
 Promotion of employees
 Attendance Bonus
 Wage Policy
In the Aerial Delivery Research and Development Establishment (ADRDE), Agra,

rewards and incentive scheme include the following:
 Production Linked Incentive
 Prime Minister’s Shram Award
 Suggestion Schemes
 Performance Appraisal
 Transparency in Management
 Wage Policy
Thus, we see that performance appreciation, team rewards, suggestion schemes,

production incentives, transparency in management, participation in management,
tempting wage policies, etc., are some of the common rewards.
6.8 Incentive Systems

In order to enthuse and motivate employees to contribute their best, something in
addition to their compensation also needs to be done. Provision for incentives is based

on the same premise. Thus, incentive is anything that attracts a worker and stimulates
him to work. Though incentives can be both financial and non financial, but here our Notes
discussion relates to financial incentives (also known as ‘wage incentives’). According
to Venkata Ratnam and Srivastava, “A wage incentive scheme is a method of payment
for work of an acceptable quality produced over and above a specified quantity or
standard.” In most of the incentive plans, employees are assured of a guaranteed wage
and an extra payment for output over and above the standard output.
Incentive Plans
There are various types of Incentive Plans having their own features as depicted in
Figure 6.3
I. For Blue Collar Employees

The main incentive plans for blue collar employees are as follows:
A) Straight Piece Rate: The most basic incentive plan for any employee is the
straight piece rate, under which wages are determined by multiplying the
number of units produced by the piece rate for one unit. The incentive is that
more units you produce, more wages you will get.
B) Straight Piece Rate with Guaranteed Minimum Wage: Here, the minimum
guaranteed wage is fixed and if any employee produces more units over and
above the standard output, he will get wages on the basis of straight piece rate.
C) Differential Piece Rate System: It is a system in which employees are paid one
piece-rate wage for units produced upto a standard output and a higher piece-
rate wage for those who produce more than the standard. While F.W Taylor
suggested two different piece rates, Merrick proposed a wage incentive scheme
having four different piece rates. He also made a mention of guaranteed
minimum wage. Blue collar incentive plans, based on differential piece rate
system, can be divided into the following two groups:
a) Individual Incentive Plans

i) Halsey Premium Plan: This plan attempts to combine the merits of the time and
piece rates and eliminates their limitations. Under this plan, a certain quantity of
work as ‘standard output’ is fixed on the basis of an average worker’s result of past
efforts which is to be completed within a prescribed time. A worker, who completes
the work before that time, receives a reward according to the time saved in the form
of a portion of wages in addition to the usual wages.

For instance, if the time prescribed for a standard work output is 10 hours and
Notes this quantity of work is completed in 8 hours, the individual, under this plan, would
receive, in addition to hours at time rate, a portion (say 50%) of the two hours
saved. Suppose the time-rate is Rs. 1 per hour, the premium bonus under this plan
would be:
½ (Rate x Time saved)
½ (1 x 2) = Rs. 1
In total, the worker would receive
1 x 8 + 1= Rs. 9
The worker is guaranteed a time wage and is given a bonus at fixed rates for every
hour saved.
ii) Rowan Premium Plan: This plan differs from Halsey Plan only in regard to the
determination of bonus. In every other respect, both are the same. The worker is
guaranteed a minimum wage on the time basis and then a ‘standard time’ is fixed
for the completion of every work and if the worker completes the work in less time,
he is given a premium bonus of the time actually saved, in proportion to the total
time. The premium bonus under this plan would be thus equal to:
Time Saved dividend by Standard Time multiplied by (Time taken x Rate). Suppose
the Time Rate is Rs. 1 per hour, the ‘Standard Time’ is 10 hours, ‘Time Taken’ to
complete the work is 8 hours and thus ‘Time Saved’ is 2 hours. The premium bonus
under this plan would be:
(2÷10) × (8×1) = Rs. 1.60 (Premium bonus)
Thus, the wages and bonus together would be:
Rs. 8×1 = Rs. 8 + Rs. 1.60 = Rs. 9.60
The plan aims at ensuring the performance of the premium rate, which is often cut
by the employer, when the worker’s efficiency increases beyond a certain limit. It is
advocated that the low rates of premium bonus under the Halsey and Rowan Plans,
provide a really effective guarantee against any rate-cutting by the employer and,
therefore, the adjustment of remuneration to output on the whole is closer under
these systems than it would be under piece wages.
iii) The Gantt Task and Bonus Plan: This plan guarantees to the worker the
payment of ordinary time wages for all output below the standard established by
time and motion study. The worker, whose performance is above the standard,
is paid a large premium bonus - a bonus percentage multiplied by the value of
standard time.
Under this system, fixed time rates are guaranteed. Output standard and time
standards are prescribed for the performance of each job. Workers completing the
job within the standard time, or in less time, receive wages for the standard time
plus a bonus which ranges from 20% to 50% of the time allowed - and not time
saved. When a worker fails to turn out the required quantity of a product, he simply
gets his time rate, without any bonus. Thus, there are three stages of payment:
i) Below the standard performance, only the minimum guaranteed wage is to be paid

ii) At the standard performance, the wage plus 20% of time rate will be paid, as
bonus. Notes
iii) When the standard is exceeded, a higher piece rate is paid but there is no bonus.
This system is most profitable for workers whose efficiency is very high. The wages
rise proportionately as under ordinary piece wage system, and the bonus is allowed
on the increased wage. In addition to this, workers with low efficiency are not
penalized.
iv) Emersion Efficiency Plan: Under this system, the worker’s daily wage is
guaranteed. A standard time is established for a standard task. There is no sudden
rise in wages on achieving the standard performance. The remuneration based on
efficiency rises gradually. Efficiency is determined by the ratio between the standard
time fixed for performance and the actual time taken by the worker. Thus, if the
standard time is 8 hours and the actual time is 16 hours, his efficiency is 50%. He
who finishes the task in 8 hours has 100% efficiency. No bonus is paid to a worker,
unless he attains 67% efficiency, at which stage, he receives a nominal bonus. This
bonus goes on increasing. When he achieves 100% efficiency, the bonus comes to
20% of the guaranteed wage. At 120% efficiency, the worker will receive a bonus of
40% and at 140% efficiency, the bonus would be 60% of day wage.
v) Bedaux Plan or Points Plan: One distinctive feature of this plan is that the
benefit of the value of time saved is given both to the worker and to the foreman
in the ratio of worker, three-fourths, and foreman, one-fourth. As the cooperation
of the foreman is necessary to enable the worker to save time, some incentive
is provided even to the foreman. In this plan, the standard time for each job is
determined in terms of minutes which are called Bs. Supposing, the standard time
for a job is eight hours, it is expressed as 480 Bs. The standard Bs of various jobs
performed by a worker are calculated and compared with the actual time taken
by the worker. If the time taken by the worker is more than the standard time, the
worker gets wages for the actual time worked. If, on the other hand, the actual
time is less than the standard Bs, three-fourths of the wages of the time saved are
given to the workers as bonus and one-fourth to the foreman. Supposing a worker
performs three jobs in a week for which the standard time is 30 hours (1800 Bs),
if the workers takes 35 hours(2100 Bs) to do the job, he will be paid wages for 35
hours.
If he does the work within 25 hours(1500 Bs), the time saved, in terms of Bs, is 300
(5 hours). If the worker is paid Re.1 per hour, the total value of time saved is Rs. 5.
Of this, the worker will get Rs. 3.75 as bonus (three-fourths share) in addition to Rs.
25 on time basis and foreman is entitled for one-fourth share which would come to
Rs. 1.25
b) Group Incentive Plan

1. The Scalan Plan: This is a group plan. Here, the productivity of the entire work
force is taken into consideration. In this plan, bonus is paid at the rate of 1 per
cent for every 1 per cent increase in productivity. Benefit is given to all employees,
except the top management staff. Workers are not paid the full amount of bonus
earned by them in the same month. Instead, a certain percentage is set aside as
a “Reserve Fund” to take care of fluctuations. At the end of the year, the balance
remaining in the Reserve Fund is also distributed.
2. Priestman Plan: This is also a Group Incentive Plan. Here, bonus is paid, when
the output exceeds the standard output, or when the average output of a worker per
hour shows an increase, as compared to that of the previous year.

II. Incentive Plans for White Collar Workers

Notes White-collar workers are employees like salesmen, after sales service team,
accountants and agents. There are three types of payment:
A) Salaries Plan.
B) Commission Plan.
C)
Combination Plan.
These are briefly discussed here.
A. Salary Plan: In this case, employees are paid monthly salaries. Here, a
salesman, for example, knows what he gets at the end of the month and can
plan his expenditure accordingly. However, there is no incentive content.
All persons are paid the same amount, irrespective of their individual efforts.
It is useful for mediocre performers, because they are assured of their pay,
irrespective of their performance. Thus, there is a sense of security.
B. Commission Plan: In this case, the employee is paid for his efforts and
efforts only. It is mostly applied to salesmen. The advantage is that it is highly
motivating for high flying salesmen who can improve their earning considerably.
However, following are the disadvantages:
 Insecure, because the income fluctuates based on performance,
 There is no guaranteed wage,
 Salesmen often concentrate on soft-options and neglect hard-to-sell items.
 Salesmen focus on “money-earning”, instead of “company share” in the market.
C. Combination Plan: In this plan, employees are paid a fixed salary, in addition
to commission which is proportional to effort. In it, there is a sense of security
and less worries, besides better control on employees. In addition, employees
become more company-oriented.
The main disadvantages of this system are that salary is not related to
performance and there is less motivation for high fliers. An organisation can opt
for any one or more of the above incentive plans or devise its own incentive
plan, taking advantage of the various incentive plans mentioned above.
6.9 Summary
Mentioning that compensation management is one of the most important areas
of HRM, this unit identified the objectives, scope, principles, and factors affecting
compensation management. Thereafter, with the help of a chart, the organisational set
up of compensation management was also explained. Then, followed the discussion
on monetary and non-monetary benefits under which various aspects of rewards,
characteristics of a good reward system and determinants of rewards were spelt out.
While taking up structure/ types of rewards, these were divided into two categories:
(i) Intrinsic rewards, and (ii) Extrinsic rewards which were further sub-divided into two
categories- Monetary rewards and Non-Monetary rewards. Their types were discussed
in detail using charts, wherever necessary, to bring clarity to the issue. Some examples
of rewards usually given in Indian industries were also given.

Coming to incentive systems, it was pointed out that incentive is anything that attracts Notes
a worker and stimulates him to work to the best of his capabilities. Then, the various
incentive plans were discussed which had been grouped under two heads, viz., incentive
plans for blue collar employees, and incentive plans for white collar employees. These
two types of incentive plans were further subdivided and each was explained.

 What do you understand by the term ‘Compensation Management’? Also,
discuss factors affecting compensation designing and management.
 Identify the main monetary and non-monetary rewards.
 What is meant by ‘Incentive System’? What are the main incentive plans for
blue collar employees? Discuss in brief.
 What are the main incentive plans for white collar employees? Discuss in detail.
6.11Short Answer Questions

1. What is Compensation Management?
2. Identify the aspects of Compensation Management.
3. What is meant by intrinsic rewards?
4. What is meant by extrinsic rewards?
5. What is a wage incentive scheme?
6.12 Long Answer Questions

1. What are the main categories of non-monetary rewards? Discuss, in detail, on-
the-job rewards.
2. What are the main incentive plans for blue collar employees? Discuss each of
them in brief.
3. What are the main incentive plans for white collar employees? Also, point out
the disadvantages of commission plan.

 Dessler, G,1988, Human Resource Management, Prentice-Hall of India Private
Ltd., New Delhi.
 Ivancevich, J.M., 2006, Human Resource Management, Tata Mc Graw-Hill Pub.

Co. Ltd., New Delhi.
 Aswathappa, K., 2008, Human Resource Management, Tata Mc Graw-Hill, N.D.
 Armstrong, M., 2004, Human Resource Management Practice, Kogan Page

India, New Delhi.

Unit VII : Industrial Relations

Notes
Structure
7.1 Introduction
7.2 Industrial Disputes
7.3 Grievance Procedure
7.4 Discipline
7.5 Role of Trade Unions
7.6 Collective Bargaining
7.7 Summary
7.9 Further Reading
Objectives
After reading this unit, you should be able to:
 Understand the concept of industrial relations
 Understand the meaning, causes and effects of industrial disputes.
 Understand how the industrial disputes can be prevented and also know the
existing machinery for the settlement of industrial disputes.
 Understand the grievance redressal procedure.
 Understand the various aspects of discipline
 Understand the concept, functions and role of trade unions
 Understand the meaning, process and role of collective bargaining.
7.1 Introduction
The concept of industrial relations has generally developed as a consequence of the
industrial revolution. Formerly, the employer and his workmen had the relationship of
a master and his servant, which was very much personal in nature. Because of direct
touch between the two, there was little problem of labour relations.
But with the advent of industrialisation and large-scale production, direct contact
between the two started coming to an end and relations between employers and
employees started getting estranged. Too much oppression of the workers compelled
them to organise themselves and fight for their common cause through the forum of
their trade unions. Employers too, would not hesitate to go for lockouts. With all this,
there started an industrial war between employers and the workmen. Hence, people
started viewing the issue of industrial relations as the problem of relationship between
the employer and the workmen.
In the beginning, the government, which believed in the laissez faire policy, did not
intervene in industrial disputes, unless these resulted in prolonged strikes. Even in such
cases, usually the government was contended with appointing Committees of Enquiry.
But when the frequency and the intensity of industrial conflicts started assuming serious
proportions, the government had to intervene and thus became one more party in the
field of industrial relations. In this way, people started considering industrial relations as
the complex of inter-relations among workers, managers and the Government.
The problems of poor industrial relations have given rise to the problems of industrial
disputes, indiscipline, trade unions and so on. In case, adequate measures are taken
to: (i) prevent and settle industrial disputes appropriately, (ii) implement grievance
redressal procedure, (iii) make the trade unions play their role well, and (iv) use the
institutions of collective bargaining frequently and gainfully, the climate of industrial Notes
relations can be improved to the benefit of all concerned.
7.2 Industrial Disputes

According to Section 2 (k) of the Industrial Disputes Act, 1947, the term industrial
dispute means “any dispute or difference between employers and employers or
between employers and workmen, or between workmen and workmen, which is
connected with the employment or non-employment, or the terms of employment and
conditions of employment of any person”.
Causes of Industrial Disputes

The causes of industrial disputes have been classified in different ways. According
to one classification, causes of disputes can be categorised as follows:
A) Related to Income - like wages, dearness allowance, bonus, fixation of pay

scales, P. F., gratuity, pension, overtime, fines, etc.
B) Related to Employment - like holidays and leave, welfare facilities, social

security, dismissal, retrenchment, lay off, retirement, discharge, re-instatement,
grievance redressal procedure, safety measures, conditions of work, strikes,
lockouts, standing orders, etc.
C) Related to Technological Changes - like work load, rationalisation,

automation, computerisation, modernisation of plants, training and re-training,
rehabilitation, etc.
Effects of Industrial Disputes:

The negative effects of industrial disputes can be considered under the following
heads:
(a) On employees- loss of wages due to strikes and lock-outs, loss of bonus
and incentives, physical injuries if strikes are violent, adverse effects on their
families, especially on children.
(b) On employers- loss of production, increase in cost of production, less profits,

distrust, less expansion.
(c) On Government- loss in revenue due to less taxes on account of less

production and less sales, waste of resources in settling of certain disputes.
(d) On the community- shortage of goods and services, inadequate and irregular
supply of goods and services, higher prices, poor quality of goods.
(e) On shareholders- less dividend,
Thus, you can see that industrial disputes affect all the stakeholders adversely.
Therefore, industrial disputes should be prevented or amicably settled.
Preventive Measures
The following are the major steps taken in our country to prevent industrial disputes:
 Labour/ Labour Welfare Officers
 Works Committees
 Standing Orders
 Code of Discipline
 Code of Conduct
Notes  Workers’ Participation in Management
 Collective Bargaining
 Profit Sharing
 Labour Co-partnership
 Strong Trade Unions
 Improvement in economic and living conditions of workers
 Provision for labour welfare activities
 Provision for social security
 Grievance redressal mechanism
 Wage Policy of the Government and Wage Boards
 Bi-partite and Tri-partite Bodies
Machinery for Settlement of Industrial Disputes
A) Statutory Machinery:
The statutory machinery for the settlement of industrial disputes is contained in the
Industrial Disputes Act, 1947 (as amended from time to time), which, besides providing
for Works Committee (which, by and large, are of preventive nature. The statutory
machinery provides for:
I. Conciliatory Machinery:
i). Conciliation Officer (Section 4 of the Act)
ii). Board of Conciliation (Section 5 of the Act)
iii). Courts of Enquiry (Section 6 of the Act)
II. Adjunction Machinery:

i). Labour Courts (Section 7 of the Act)
ii). Industrial Tribunals [Section 7 (a) of the Act]
iii). National Tribunals [Section 7 (b) of the Act]
III. Compulsory Arbitration
I. Conciliatory Machinery:
(i) Conciliation Officer: Under Sec. 4 of the Act, the appropriate Government
may, by notification in the official gazette, appoint such number of persons as it
thinks fit to be Conciliation Officers for a specified area, or for specified industries
in a specified area, or for specified area, or for one or more specified areas, or for
specified industries in a specified area, or for one or more specified industries,
either permanently or for a limited period.
The primary function of a Conciliation Officer involves mediation in and promoting

the settlement of industrial disputes. This is the most popular system of bringing
about an agreement. Except the two parties to the dispute and the Conciliation
Officer, no third party is involved. It has been experienced that where adjudication
has failed, conciliation process has achieved remarkable success. The Conciliation
Officer is required to submit his report to the government within 14 days. If the
settlement is arrived at, it is signed by both the parties and the report is sent to
the appropriate government. In case of failure, the Conciliation Officer sends full
report of his efforts, steps taken, circumstances and reasons on account of which
settlement could not be reached, to the government. If on consideration of report,
the appropriate government feels convinced that there is a case for reference to a

Board of Conciliation, it may make such reference. The Conciliation Officer is not a Notes
judicial authority. He acts just like an administrator.
Compulsory Conciliation- Under the Industrial Disputes Act, 1947, (as amended
from time to time), it is compulsory for the government to refer all disputes in public
utility concerns for conciliation. The government can exercise this power, in the
case of other concerns also. However, compulsory conciliation is not liked, because
it leads to State interference. Besides, conciliation, by its very nature, is voluntary
and, therefore, should not be made compulsory. As far as voluntary conciliation is
concerned, it is rarely availed of in our country. Compulsory conciliation, though not
appreciated in the normal course, has helped in resolving many disputes.
(ii) Board of Conciliation (BOC): Where the appropriate government is of opinion

that any industrial disputes exists or is apprehended, it may at any time, by order
in writing, refer the disputes to a Board of Conciliation for promoting a settlement
thereof, under Section 5 of the Industrial Disputes Act, 1947 (as amended from time
to time). Usually, those cases which could not be settled at the Conciliation Officer’s
level, are referred to B.O.C.
The B.O.C consists of a Chairman and two or four other members as the
government may think fit, representing, in equal number, both the parties. If the
settlement is arrived at, the B.O.C. sends a report to the appropriate government
with a memorandum of settlement signed by both the parties. In case of no
settlement, a full report, stating reasons, etc., is submitted to the government.
The B.O.C is required to submit its report within two months from the date on which
the dispute is referred to it (can be further extended by the government, if it so
desires).
In case of failure, the government may refer the case to a Court of Enquiry.
(iii) Court of Enquiry: Under Section 6 of the Industrial Disputes Act, 1947 (as
amended from time to time), the appropriate government may, as the occasion
arises, by notification in the official gazette, constitute a Court of Enquiry for
enquiring into any matter appearing to be connected with or relevant to an industrial
dispute (specially the cases which B.O.C fails to resolve).
A Court of Enquiry may consist of one independent person or such independent

persons as the government may think fit. The court is required to submit its report
within a period of six months from the commencement of enquiry. In case of failure,
the government may refer the matter to the adjudication machinery (Labour Court/
Industrial Tribunal/ National Tribunal).
II. Adjudication Machinery

Industrial Disputes (Amendment and Miscellaneous Provisions) Act, passed in
August 1956, made certain long-felt changes in the Industrial Disputes (Appellate
Tribunal) Act, 1950 and thus, the previous system of tribunals has been substituted by
three-tire system (adjudication machinery) which consists of:
(i) Labour Court: Under Section 7 of the Industrial Disputes Act, the appropriate
government may constitute one or more labour courts for the adjudication of
industrial disputes relating to any matter specified in the II Schedule (e.g. illegality,
or otherwise, of a strike or lockout, the propriety, or legality, of any order passed
by the employer under the Standing Order, discharge or dismissal of a worker,
etc.) and for performing such other functions as may be assigned to them. A

Notes Labour Court shall consist of one person only—to be appointed by the appropriate
government. As far as the effectiveness of labour Courts is concerned, it can be
said that they are playing an important role in adjudication of the industrial disputes
referred to them. However, their functioning needs further streamlining.
(ii) Industrial Tribunals: Under section 7(b) of the Industrial Disputes Act, the
appropriate Government may constitute one or more Industrial Tribunals for
adjudication of industrial disputes relating to any matter, whether specified in the
IInd or IIIrd Schedule. III Schedule includes matters like wages, compensatory and
other allowances, hours of work, rest intervals, leave and holidays, bonus, provident
fund, gratuity, rationalization, retrenchment, etc.).
An Industrial Tribunal comprises one person to be appointed by the appropriate

government. As far as the effectiveness of Industrial Tribunal is concerned, they are
doing a good job though the workers have got certain grievances against them.
(iii) National Tribunals: Under Section 7(b) of the Industrial Disputes Act,
the Central Government may constitute one or more National Tribunals for
adjudication of industrial disputes which, in the opinion of the Central Government,
involve questions of national importance, or are of such a nature that industrial
establishments situated in more than one State are likely to be interested in, or
affected by such, disputes. A National Tribunal consists of only one person to be
appointed by the Central Government. National Tribunals constituted so far have
been effective to a great extent though they have complaints from both the workers
and employers from time to time regarding the judgements given by National
Tribunals.
III. Compulsory Arbitration

In case the device of voluntary arbitration is not utilised and the dispute has not
been referred to the adjudication missionary, the government may refer a dispute for
compulsory arbitration. In such a case, it becomes a statuary step. As in our country,
voluntary arbitration has not been able to make any mark, the government has been
making the use of compulsory arbitration quite frequently. The principle of compulsory
arbitration was incorporated in the Industrial Disputes Act. Under compulsory
arbitration, the government submits the case to an authority for arbitration, on its own or
on the request of either of the two parties, and enforces its award on the parties.
Compulsory arbitration, or adjudication, should be used sparingly and cautiously.

Otherwise, it may amount to an unjustified State imposition and may lead to complete
negation of the principle of democracy. It also leads to denial of the right of collective
bargaining. Hence, compulsory arbitration has been subjected to severe criticism,
though it may be good for the community at large. However, both the workers and
employers do not favour it at all. The Royal Commission on Labour and the eminent
writers like Sydney Webb and V.V.Giri, all have opposed compulsory arbitration.
B. Non-Statutory Measures
(i) Mediation: Mediation is an attempt to settle disputes with the help of an
outsider, who assists the parties in their negotiations. The mediator is usually an
eminent outsider or a non-governmental board, etc. It starts functioning at the
invitation of or, at least, consent of both the parties. A mediator does not enforce his
will or judgment, but simply tries to bring about a voluntary agreement. Though a
very useful method, but is not much availed of in our country.
(ii) Arbitration: Voluntary Arbitration- The amended Industrial Disputes Act

[Section 10(a)] provides that where any industrial dispute exists, or is apprehended,

and the employer and the workmen agree to refer the dispute for arbitration, they Notes
may, at any time before the dispute has been referred to a Labour Court/ Industrial
Tribunal/ National Tribunal, by a written agreement, signed by the parties, refer
the dispute for arbitration and the reference shall be made to such a person, as
specified in the arbitration agreement. Voluntary arbitration is considered to be
one of the best methods for settlement of industrial disputes, but unfortunately, this
machinery has not been very much utilised in our country. Still, it has served a very
good purpose in certain cases.
Thus, we find that the existing machinery for settlement of industrial disputes
has been effective to a great extent. However, it still needs certain improvements; for
example, there should be permanent machinery for the settlement of industrial disputes.
Voluntary arbitration, mediation and conciliation should be encouraged to play a
greater role in this regard. The proposed legislation is likely to take care of many of the
shortcomings in the existing system of settlement of industrial disputes.
7.3 Grievance Redressal

According to J.M. Jucius, “A grievance is any discontent or dissatisfaction, whether
expressed or not, whether valid or not, arising out of anything connected with the
company which an employee thinks, believes, or even feels, to be unfair, unjust or
inequitable.” This definition throws light on almost all the main aspects of a grievance.
Causes of Grievance
The causes of grievances may fall under any one or more than one of the following
categories:
(i) Concerning policies and practices of the management
(ii) Concerning working conditions
(iii) Concerning personality traits
(iv) Concerning a mismatch between a worker’s ability and the job.
Essentials of a Sound Grievance Redressal Procedure

A grievance redressal procedure can be considered sound if it has the following
features:
(i) It should be legally approved
(ii) It should be acceptable to all concerned
(iii) It should redress the grievances within the prescribed time framework
(iv) It should be easily understandable
(v) The officials handling grievance should have undergone training in this regard
(vi) Proper follow up for review of the procedure through feedback
Model Grievance Procedure

Keeping in view the importance of grievance redressal procedure to all concerned,
the National Commission on Labour has suggested a model grievance procedure for
speedy redressal of grievance which is self-explanatory in the following figure:

Notes the
and
the within
(Fig. 7.1 Model Grievance Procedure)
7.4 Discipline
Meaning and Definition

Discipline is a procedure that corrects or punishes a subordinate, because he or
she has violateda rule or proceduress. Discipline is, therefore, a force that prompts
employees to observe rules, regulations and procedures that are viewed to be
necessary for the effective functioning of the organisation. Discipline is said to be good,
when employees willingly adhere to rules and regulations of the organisation.
Foundations of a Fair Disciplinary Process

There are three foundations of a fair discipline process:
i) A set of clear rules and regulations
ii) A system of progressive penalties
iii) Existence of an appeal process.

Objectives of Discipline Notes

Discipline has the following objectives:
 To get voluntary acceptance of members to rules, regulations and policies of

the organisation, so that the objectives of the organisation are achieved surely,
certainly and economically
 To develop the feeling of adjustment, so that they work according to the

demands of the situation
 To provide direction, right of leadership and getting cooperation
 To arouse the feeling of endurance and mutual co-operation among the workers
and the management
 To inculcate the feeling of respect for human beings and human relations and
create a conducive atmosphere for that
 To increase the morale and efficiency of the organisation, so that it can give
maximum production at minimum cost.
Types of Discipline
According to Dale, “Discipline is to regulate the human behaviour through reward
or punishment”. Thus, this definition stresses upon two types of discipline - positive
discipline, and negative discipline.
i) Positive Discipline, or Self-imposed Discipline - It is such an arrangement,

wherein a worker is motivated to work himself and he is eager to obey and
abide by the rules.
ii) Negative Discipline - This approach to discipline is just opposite to positive

discipline. This stresses more on punishment than on cooperation. For the
establishment of discipline, the accused worker is issued a warning, or
made to fear that he may be punished or is actually given a punishment. Its
objective is to establish discipline through fear, or actual punishment. Here,
he is immediately punished for not doing, wrongly doing, or doing against
instructions. Workers are told the nature and quantity of punishment well in
advance.
Causes of Indiscipline
The causes of indiscipline in industries can be divided into two groups:
a) Internal Causes
Internal causes of indiscipline are as follows:

(i) Lack of Effective Leadership
(ii) Lack of personal Development Opportunities
(iii) Defective Supervision
(iv) Biased Attitude
(v) Lack of Code of Conduct
(vi) Apathy towards Grievances
(vii) Divide and Rule Policy
(viii) Personal Factors
(ix) Victimisation and Excessive Pressure
b) External Causes
External causes of indiscipline relate to the factors outside the organisation itself.
Notes Various non-economic, social and political factors cause indiscipline in industries
as a whole. For example, if the whole country is passing through violence and
disturbance, the industry’s discipline may also be affected.
Disciplinary Process
Although there is no specific procedure to be followed for taking disciplinary action,
yet the following steps be taken into consideration:
i) Issue of Show Cause Notice

ii) Conducting Preliminary Investigation
iii) Collecting Facts
iv) Determination of the Penalty, if any, to be imposed
v) Application of the Penalty
vi) Follow up of the Disciplinary Action
Guide to Disciplinary action:

While taking actions against indiscipline, the following factors should be kept in view:
i) Disciplinary action should be taken in private

ii) An application of a penalty should always carry with it a constructive element
iii) Disciplinary action should be administered by the immediate supervisor
iv) Promptness is important in taking disciplinary action
v) Need of consistency in the administration of disciplinary action
vi) A person should never be disciplined in the presence of his own subordinates
vii) Normal attitude towards the employee after disciplinary action
Thus, we find that when the management is not satisfied with the behaviour of an
individual, its ultimate aim is to bring about a change in his behaviour, which may be
more consistent with organisation’s requirements. Penalties and punishments constitute
only one means of effecting the desired change and, therefore, should be used as
sparingly as possible. The attitude of the supervisor and other managerial personnel
should be one of counseling and understanding, rather than ‘police and punish’.
7.5 Trade Unions

According to Section 2 (h) of Trade Union Act, 1926, a trade union means, “any
combination, whether temporary or permanent, formed primarily for the purpose of: (a)
regulating the relations (a) between workmen and employers, or (2) between workmen
and workmen, or (3) between employers and employers; or (b) for imposing restrictive
conditions on the conduct of any trade or business, and includes any federation
of two or more trade unions.” Broadly speaking, good trade unions are supposed to
protect and promote the interests of their members and also work for the betterment
of the firms they belong to as also of the community and the nation as a whole. Under
the Trade Union Act, 1926, any seven or more persons can form their trade union
and apply for its registration, though registration is not mandatory. However, if not
registered, the trade unions cannot avail the privileges of a registered trade union.
Similarly, the recognition of a trade union by the employers is also not mandatory,
though there is a voluntary Code of Discipline, and legislation in some States regarding
recognition of trade unions by the respective employers. Some of the major problems of
trade unions in our country include: multiplicity of trade unions, politicalisation of trade
unions, poor finances, inter - union and intra - union rivalries, outside leadership, lack
of provision for mandatory recognition by employers, inefficient and selfish leaders, etc.
Functions of Trade Unions

The functions of trade unions can be classified under the following five categories:

i) Militant/ Fighting/ Intra - mural Functions: These functions include protecting
and promoting the interest of worker, e.g., rise in wages, security of job, more Notes
fringe benefits, etc., through negotiations, collective bargaining, etc. If this fails,
unions resort to direct action like strikes, gheraos, violence, etc.
ii) Fraternal or Extra - mural Functions: These may comprise monetary or non
monetary help to workers during the periods of strikes and lockouts, or medical,
recreational and housing facilities, etc.
iii) Political Functions: These functions include affiliating a union to a political

party, contesting elections and too ambitious, if possible.
iv) Social Functions: These functions may consist of carrying out social service
activities like educating the people.
v) Ancillary Function: Such functions may include welfare activities, publication

and research, communication, etc.
Role of Trade Unions

A Trade Union can play a number of roles, like:
(i) Protector and promoter of the interest of employees
(ii) Counselor of the employees
(iii) Legal Advisor of the employees
(iv) Peace Promoter
(v) Spokesperson of the employees
(vi) Liaison maker
(vii) Change agent
(viii) Conciliator/ Negotiator
(ix) Disseminator of information
(x) Motivator
(xi) Facilitator
(xii) Miscellaneous
Thus, you find that if trade unions play the desired role, they can bring about a lot of
transformation and improvement in the organisation.
7.6 Collective Bargaining: Role And Process

Collective bargaining, an essential element of industrial democracy, is a ‘two party’
procedure for arriving at a commonly agreed solution. According to the Encyclopedia
of Social Sciences, collective bargaining is “a process of discussion and negotiation
between two parties, one or both of whom is a group of persons acting in concert. The
resulting ‘bargain’ is an understanding as to the terms and conditions under which a
continuing service is to be performed… More specifically, collective bargaining is a
procedure by which employers and a group of employees agree upon the conditions
of work”. The word “collective” merely indicates that the representatives are trying to
negotiate an agreement for a group of persons. “Bargaining” is the process of meeting,
presenting demands, discussing, presenting counter-offers, haggling, cajoling,
threatening, and a whole host of other activities which go into the negotiation of an

agreement. The term “Collective Bargaining”, therefore, denotes collective negotiations

Notes of a contract between management’s representatives, on one side, and those of the
workers, on the other. The phrase collective bargaining was coined by Sydney and
Beatrice Webb, and Great Britain is said to be the “home of collective bargaining”,
which had its first systematic application in the early nineteenth century.
Process of Collective Bargaining

Collective bargaining comprises two stages: (1) the negotiation stage, and (2) the
stage of contract administration.
Process of Collective Bargaining
A) Negotiation Stage
a) Identification of Problems
b) Preparation for Negotiations

i) Selection/ Constitution of Negotiating Teams
ii) Bargaining Power
iii) Data Collection
c) Negotiations of Agreement
i) Haggling bargaining
ii) Boulwarism bargaining
iii) Continuous bargaining
d) The collective Bargaining Agreement

e) Follow-up
B) Contractual, Administration
a) Negotiation Stage
The negotiation stage involves the following steps:
a) Identification of the Problem - It is very important for both the parties to be

clear about the problem before entering into negotiations, because the nature
of the problem affects the entire process of negotiations. Hence, the problem is
to be identified in its true perspective, i.e., whether the problem to be discussed
is of urgent nature and whether it, at all, requires collective bargaining. The
selection of representatives, the number of representatives, period of collective
agreement, etc., are all affected by the problems.
b) Preparation for Negotiations - After having identified the problem, the next
step in the process of collective bargaining is the preparation for negotiations,
which may be initiated at the instance of either party. The preparation involves
the following:
i) Selection/ Constitution of Negotiating Teams - On the company’s side,

the negotiating team may comprise the HR manager, production manager
and the company’s legal advisor. Normally, the chairman of the company
is kept out of the negotiation team, so as to keep the two bargaining teams

on an equal footing. The team representing the company acts in unison,
i.e., either it accepts or it rejects. On the workers’ side, where there is a Notes
single trade union, the negotiating team comprises the office-bearers of the
union. In case there are more than one trade union, the management faces
a difficulty in deciding whom to accept as the bargaining agent.
It is not necessary for the number of representatives on the employers’ side and
the workers’ side to be equal.
It will be good if the members of the negotiating team possess the following
qualities/ attributes:
 Skills to identify and analyse problems
 Right attitudes
 Credibility
 Thorough knowledge of working conditions, production norms and other
concerned factors
 Skill in adopting tactics
ii) Bargaining Power - It is obvious that before starting the negotiations, each
side in the collective bargaining weighs its bargaining power and determines
the maximum concession which it can offer to the other side. This depends
on the estimated cost of the work stoppage (strike or lock-out) to the side
concerned and also on its estimate of the other side’s cost arising out of
the stoppage.
iii) Data Collection - Both sides devote a great deal of time in collecting
necessary data on a large number of issues like wages and salary, seniority,
over-time allowance, cost of living, productivity trends, retirement and fringe
benefits, policies and practices of trade unions and managements, hours
of work, leave and holidays and other relevant information on area-cum-
industry practices, as also on the nature of agreements signed in other
organisations. Such agreements signed elsewhere play a very important
role in negotiations. Usually, the management collects the information on the
above-mentioned items from different management associations, surveys
conducted by research staff, government and other dependable bodies. On
the other hand, trade unions collect the data from their central organisation/
federations, surveys and reports conducted/ published by other competent
agencies.
c) Negotiation of Agreement - Normally, the chief negotiator representing the

management side directs and presides over the process. He presents the
problem, points out its nature and intensity, and the views of both the sides.
Thereafter, the representatives of both sides are allowed to present their
views and negotiate. There can be the following three types of negotiating
procedures:
i) Haggling bargaining is the orthodox procedure of labour negotiations. This

can be of two types: (i) the piecemeal approach, in which issues are settled
one by one independently and ticked away; and (ii) the total approach in
which no issue is settled independently. Each issue is discussed and laid
aside as others are brought forward; but each issue remains open until
suddenly the whole complex is ready to crystallise into a total agreement
because it is assumed that all issues are interrelated and inter-dependent.

Notes ii) Boulwarism bargaining was originated by Lemuel Boulwarem, formerly

Vice President of the General Electric Company. In it, the company makes its
first offer a full and final one instead of starting low and letting it be dragged
up to the final offer it perhaps had in mind from the start. Besides, in Boul-
warism bargaining, the company representatives in addition to meeting the
union representatives, conduct an extensive communication programme
to sell its offer directly to the employees and request them to make their
views known to their union officials so as to create an impression among
the employees that the company is doing it on its own, and not under the
pressure of the union.
iii) Continuous bargaining - this approach calls for parties to explore partic-
ularly difficult bargaining problems in joint meetings, over a long period of
time, sometimes throughout the life of each contract.
In the process of negotiations, each party tries to find strong and weak points in
the other’s defence and by and by differences are narrowed down and finally after
some manoeuvring, an agreement is reached. However, it will be desirable, if the
following points are kept in mind in the bargaining process:
 Parity of bargaining strength in the two parties

 Problems-solving attitude
 Good beginning
 Continuance of talks
d) The Collective Bargaining Agreement - The negotiations ultimately result in

the finalisation of the collective agreement, or labour contract. The collective
agreement is the written statement of terms and conditions mutually agreed
during collective bargaining. Such agreement may comprise a preamble, a
series of clauses and appendices, listing job classifications, wage rates and
other relevant details. While in certain countries like India, such agreements
assume the form of legal contracts, in some other countries like Britain, such
agreements are purely voluntary in nature, with no legal force.
As per the Indian Institute of Personnel Management, Kolkata, the following

should be included in a collective agreement:
(i) The purpose of the agreement, its scope and the definition of important
terms;
(ii) The rights and responsibilities of the management and of the trade union;
(iii) Wages, bonus, production norms, leave, retirement, and other benefits and
terms and conditions of service;
(iv) Grievance redressal procedure;
(v) Means and machinery for the settlement of possible future disputes; and
(vi) A termination clause.
In some countries, where national law and practice so permit, the collective
agreement may also include clauses on preferential recruitment for trade union
members. These are known as ‘closed shop’ (employer under an obligation to
employ only union members); ‘union shop’ (employer may employ a non-union
worker but the worker so employed must join the union within a specified period
after employment); and ‘maintenance of membership shop’ (workers are given
by the employer the options to become members within a certain period after
employment. Of course, those who choose to be the members are not allowed Notes
to leave the union without losing their jobs).
(e) Follow-up Action - It is desirable to get the ‘collective agreement’ printed

and circulated among the employees so that they may also know the details.
Meetings of supervisors should also be convened so as to apprise them of the
content of the agreement, so that they may implement it effectively.
b) Contract Administration
Having signed the collective agreement, both the parties, i.e., the trade union and
the management, are required to honour it in letter and spirit because the progress in
collective bargaining is not measured by the mere signing of an agreement; it is rather
measured by the effective administration of the collective agreement. It is, therefore,
necessary that both the sides should explain the terms and implications of the contract
to employees and supervisors so as to ensure that day-to-day working relationship
between workers and the management is guided by the contract signed by the two
parties.
However, it is not unusual to come across that the process of collective bargaining
vitiated by the atmosphere of distrust, conflict, mutual acrimony, third party
interventions, legal disputes, etc.
Causes for Limited Success of Collective Bargaining in India

The following are main causes for the limited success of collective bargaining in
India:
i) Weak and multiplicity of trade unions

ii) Lack of strong efforts from the side of the Government
iii) Easy accessibility of adjudication
iv) Inference of political parties
v) Lack of encouragement for collective bargaining from the management.
Thus, we observe that collective bargaining in India is gradually extending its area
and, given proper impetus, it is capable of leading the country to industrial peace
and prosperity. It follows, therefore, that those requisites, which are essential for the
promotion of collective bargaining and have not yet either been provided at all or have
been provided inadequately, should be developed and provided, as mentioned earlier
also, if industrial peace and prosperity are to be achieved.
Role of Collective Bargaining

The institution of collective bargaining has come to stay in our country and has
started playing a vital role for quite some time. It can play the following roles:
(i) Mutual trust promoter between the workers and the management.
(ii) Promoter of industrial peace.
(iii) Preventor of industrial conflicts
(iv) Negotiator/ bargainer
(v) Ensurer of justice to workers.
(vi) Spokesperson of the workers.
(vii) Believer in the policy of ‘ give and take’
(viii) Others
Thus you see that collective bargaining is a powerful tool in the hands of both
the employees and the management, which can be instrumental in protecting and
promoting the interest of all the stakeholders in the organisation.

Notes 7.7 Summary

This unit dealt with some of the important aspects of ‘industrial relations’ which is a
product of interaction between the employees, employer and the government. First, the
problem of ‘industrial disputes’ was taken up. After defining the term as per Industrial
Disputes Act, 1947, the causes and effects of industrial disputes were discussed.
After discussing the steps undertaken to prevent industrial disputes, the existing
machinery for settlement of industrial disputes in our country was discussed. The issue
of grievance redressal was discussed pointing out the causes, essentials of a sound
grievance procedure, and explaining the model grievance redressal procedure with the
help of a chart.
Then comes the issue of maintaining discipline in organisations. Under this area, the
meaning of discipline, foundations of a fair disciplinary process, objectives and types of
discipline were discussed. The causes of indiscipline were also highlighted, followed by
a discussion on disciplinary process and guidelines to disciplinary action.
Coming to trade unions, besides the role of trade unions, the functions of trade
unions was discussed under four heads, viz., Militant functions, Fraternal functions,
Political functions and Social functions.
The process of collective bargaining was discussed under two heads, viz., (i)
Negotiation stage, and (ii) Contractual Administration. The Role of Collective Bargaining
was also been discussed.

 Define the term ‘Industrial Dispute’. What are the causes and effects of
industrial disputes? Discuss in detail.
 Identify the steps taken in our country to prevent industrial disputes. Also
discuss, in brief, the existing machinery for the settlement of industrial disputes
in our country.
 Write a brief note on Model Grievance Redressal Procedure.
 What are the functions and role of trade unions in our country? Discuss in
detail.
 Discuss, in brief, the process and role of collective bargaining.
7.9 Short Answer Questions

1. What is an industrial dispute?
2. Identify the categories of causes of industrial disputes.
3. What does the conciliatory machinery of settling industrial disputes consist of?
4. What is a grievance?
5. What are the main types of discipline?
7.10 Long Answer Questions

1. Discuss the statutory machinery for settlement of industrial disputes, as
provided for under the Industrial Disputes Act, 1947 (as amended up to date).
2. What steps have been taken in our country to curb the growth of industrial
disputes? Notes
3. What are the functions of Trade Unions? Discuss categories-wise.

 Ivancevich, J.M., 2006, Human Resource Management, Tata Mc Graw-Hill Pub.
Co. Ltd., New Delhi.
 Momappa, A., Industrial Relations, Tata Mc Graw-Hill Pub. Co. Ltd., New Delhi.
 Sharma, D.C. and Sharma R.C., 1988, Personnel Management and Industrial
Relations, S.J. Publications, Meerut.
 Rao, P.S., 2007, Essentials of Human Resource Management and Industrial

Relations, Himalaya Publishing House, Delhi.
 Jyothi, P. and Venkatesh,D.N., 2006, Human Resource Management, Oxford

University Press, New Delhi.
 Aswathappa, K., 2008, Human Resource Management , Tata Mc Graw-Hill,

New Delhi.

Unit VI: Compensation Management: Structure

Uploaded by

Copyright:

Available Formats

You might also like

Unit VI: Compensation Management: Structure

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Unit VI: Compensation Management: Structure

Uploaded by

Copyright:

Available Formats

Human Resource Management 81

Unit VI: Compensation Management

Compensation management involves the selection, designing, development and

6.2 Objectives of Compensation Management

 Design, establish and maintain an equitable compensation structure and create

 Boost the morale of the employees

 Keep the human resource motivated

Amity Directorate of Distance & Online Education

Notes  Eliminate the chances of favouritism

 Establish and maintain an equitable labour-cost structure

 Offer a sound basis for discussing the issue of wages

 Simplify collective bargaining

 Reduce chances of grievances and frictions over wage issues

 Attract and retain qualified human resource by ensuring adequate

6.3 Scope/ Aspects of Compensation Management

6.4 Principles of Compensation Management

 Wage policies should be clearly expressed in writing to ensure uniformity and

 It is management’s responsibility to ensure it that each employee knows what Notes

 Wage decisions should be checked against carefully formulated policies.

6.5 Factors Affecting Compensation, Designing And Management

 Wage policy of the company

 Supply of and demand for labour

 Prevailing market rates

6.6 Organisation of Compensation Management

6.7 Rewards: Monetary And Non-Monetary

Characteristics of a Good Reward System

takes better care of the needs of its employees.

 The plan should be well communicated to the employees concerned.

i) Mental and physical effort involved

iii) Skills possessed

v) Discretionary time (Completely programmed and procedurised jobs need little

vi) Job difficulty.

Structures/ Types of Rewards

A) Intrinsic Rewards Extrinsic Rewards

(a) Monetary Rewards (b) Non-monetary rewards

(Fig. 6.1: Types of Rewards)

 Participation in Decision Making

 Opportunities for Self-Development

 Merit Pay Plans

(ii) Membership - based rewards: These rewards comprise:

 House Rent Allowance

 Pay for time not worked like holidays, leave, etc.

 Welfare and Social Security Programmes

(Fig. 6.2: Non-Monetary Rewards)

G. B. Mohanty has identified the non-financial incentives related to effective work as

Amity Directorate of Distance & Online Education

 Job Satisfaction and Enrichment

 Praise and Blame

 Knowledge of Result and Experience of Progress

 Level of aspiration and nature of the goal

 Cooperation and competition

Rewards in Indian Industries

 Kaizen Teian (‘continuous improvement’ based on suggestions received from

In the Aerial Delivery Research and Development Establishment (ADRDE), Agra,

 Production Linked Incentive

 Prime Minister’s Shram Award

Thus, we see that performance appreciation, team rewards, suggestion schemes,