UNIT IV EMPLOYEE COMPENSATION

Compensation plan – Reward – Motivation – Career Development - Mentor – Protégé

relationships.

COMPENSATION
DEFINITION:
Flippo (1984) defined compensation as the adequate and equitable remuneration of personnel for
their contributions to the organizational objectives.

COMPENSATION PLANNING
Compensation planning is the development of a compensation strategy that supports a
company's business strategy, operating objectives, and employee needs. Compensation planning
also incorporates how employees are paid, how and when they're eligible for raises and bonuses,
and more.

STRUCTURE AND COMPONENTS OF COMPENSATION

1. Wages and Salary:
➢ Wages and salary are generally paid on monthly basis, though many times, wages are paid
on hourly or daily basis, whereas in the case of salary, the number of hours worked is not
at all considered.
➢ Wages and salary are subject to annual increments. They differ from job to job, depending
upon the nature of the job.

2. Incentives:
➢ Incentives which are also called ‘payments by results’ are paid to the employees in
addition to wages and salaries. Incentives depend upon productivity or efficiency of the
workers, sales effected, profit earned or cost reduction efforts.
➢ Incentives schemes may be classified as
(i) individual incentive schemes
(ii) group incentive schemes.

1. Fringe Benefits:
Fringe benefits which are given to employee include such benefits as provident fund,
gratuity, medical care, hospital allowance, accident relief, health insurance, canteen benefits,
recreation, leave-travel allowance, etc.

1. Perquisites:
Perquisites are the allowances given executives and other higher-level officers.
They include such allowances as company car, club membership, paid holidays, stock
option schemes, foreign travel benefits etc.

2. Non-Monetary Benefits:
➢ Non-monetary benefits include such benefits which are given in kind and not in terms of
money.
➢ They include such benefits as recognition of merit, issue of merit certificates, job
responsibilities, growth prospects, competent supervision, comfortable working
conditions, job-sharing, flexi-time etc

Objectives Of Compensation Management

The basic objective of compensation management can be briefly termed as meeting the needs of
both employees and the organization.

1. Acquire Qualified Personnel – Compensation needs to be high enough to attract applicants.

Pay levels must respond to supply and demand of workers in the labour market since employers
compete for workers.

2. Retain Present Employees – Employees may quit when compensation levels are not
competitive resulting in higher turnover.

3. Ensure Equity – Compensation Management trives for internal and external equity which
requires that pay is related to relative worth of jobs and is comparable to the workers getting in
other firms.

4. Reward Desired Behaviors – Pay should reinforce desired behaviour and act as an incentive
for those behaviours to occur in the future.

5. Control Costs – A rational compensation system helps the organization obtain and retain
workers at reasonable cost.

6. Comply with Legal Regulations – A sound wage and salary system considers the legal
challenges imposed by the Government and ensures the employers compliance.

7. Facilitate Understanding – The Human Resource specialists, operating managers and

employees should easily understand the compensation management.

8. Further Administrative Efficiency – Wages and Salary programmes should be designed to

be managed efficiently, making optimal use of HRIS.

PRINCIPLES OF COMPENSATION

1. Ability to pay – Organization should pay their employees as per their financial capacity and
capability. If an organization pays more than its ability, then the organization may get bankrupt.
2. Internal and external equity – Organization must compensate their employees according to
their qualification, experience, skills, knowledge, job responsibilities and performance. This

is called internal equity.

Organizations must pay their employees a compensation which is at least comparable to their
competitors or industry standards. This is called external equity.

3. Performance orientation – Compensation should be in commensuration with individual

and organizational performance. Performance linkage is essential for creating a performance
driven work culture.

4. Non-discriminatory – Organizations must pay their employees without any discrimination

on the ground of race, religion, gender, nationality and ethnicity.

5. Legal Compliance – Organizations must pay as per the relevant laws of the land. For
example, in India, the Minimum Wages Act, 1948.

6. Simplicity and Flexibility – Compensation system should be simple to design,

understand and administer. Compensation plans and policies must be flexible to adapt with
ease to the changing profile of the workforce.

7. Foster employee development – Compensation should be such so as to motivate employees

to acquire, sharpen and develop their skills and competencies in conjunction with changing
technology, innovations and organizational requirements.

FACTORS AFFECTING COMPENSATION

The factors affecting employee compensation can be categorized into: -

I. External Factors.
II. Internal Factors.

I. External Determinants of Compensation:

1. Labour Market Conditions:

The forces of demand and supply of human resources, no doubt, play a role in
compensation decision.
Employees with rare skill sets and expertise gained through experience command higher
wage and salary than the ones with ordinary skills abundantly available in the job market.

2. Economic Conditions:
Organizations having state-of-the-art technology in place, excellent productivity records,
higher operational efficiency, a pool of skilled manpower, etc., can be better pay masters.
Thus, compensation is the consequence of the level of competitiveness. prevailing in a
given industry.

3. Prevailing Wage Level:

Most of the organizations fix their pay in keeping with the level for similar jobs in the
industry.

They frequently conduct wage survey and accordingly seek to keep their wage level for
different jobs.

4. Government Control:
Government through various legislative enactments such as Minimum Wages Act, 1948,
Payment of Wage Act, 1936, Equal Remuneration Act, 1976, Payment of Bonus Act, 1965,
dealing with Provident Funds, Gratuity, Companies Act, etc.,
Have a bearing on compensation decisions. Therefore, firms have to decide on salaries
and wages in the light of the relevant Acts.

5. Cost of Living:
Increase in the cost of living, raise the cost of goods and services. It varies from area to
area within a country and from country to country. The changes in compensation are based on
consumer price index which measures the average change in the price of basic necessities like
food, clothing, fuel, medical service, etc., over a period of time.

6. Union’s Influence:
The collective bargaining strength of the trade unions also influence the wage levels.
Trade unions enjoy an upper hand in certain industries like banking, insurance, transport and
other public utilities.
7. Globalization:
It has ushered in an era of higher compensation level in many sectors of the economy. The
entry of multinational corporations and big corporates have triggered a massive change in the
compensation structure of companies across sectors.

8. Cross Sector Mobility:

Contemporary companies find it difficult to benchmark the salaries of their staff with
others in the industry thanks to mobility of talent across the sectors. For example, hospitality
sector employees are hired by airlines, BPOs, healthcare companies and telecom companies.

II. Internal Determinants of Compensation:

1. Compensation Policy of the Organization:

Firm’s policy regarding pay i.e., attitude to be an industry leader in pay or desire to pay
the market rate determines its pay structure. The former can attract better talent and achieve lower
cost per unit of labour than the ones that pay competitive pay.

2. Employer’s Affordability:
Those organizations which earn high profit and have a larger market share, a large
business conglomerate and multinational companies can afford to pay higher pay than others.
Besides, company’s ability to pay higher pay is impaired by sector- specific economic recession
and acute competition.

3. Worth of a Job:
Organizations base their pay level on the worth of a job. The wages and salaries tend to be
higher for jobs involving exercise of brain power, responsibility laden jobs, creativity- oriented
jobs, technical jobs.

4. Employee’s Worth:
In some organizations, time rates are granted to all employees irrespective of
performance. In such cases, employees are rewarded for their mere physical presence on the job
rather than for their performance.

TYPES OF COMPENSATION

Compensation can be classified into two categories:

1. Financial Compensation
2. Non-Financial Compensation

1. Financial Compensation:
• Financial compensation is most popular and important compensation that is given in the
form of money.

• It is the most important motivational factor that satisfies employees’ basic needs like food,
clothing, etc.
It is further categorized into two parts:

I. Direct Compensation:
Direct compensation means compensating employees by paying them money in the
following forms:
a.Wages-Wages means remuneration paid in cash for the work performed by an employee.
b.Bonus- Bonus means extra cash paid to an employee for exceeding his performance or on
completion of specified project or target.

Other financial incentives that are directly given to employees in the form of cash.

II. Indirect Compensation (Fringe Benefits):

• Dessler refers to indirect compensation as the indirect financial and non- financial payments
employees receive for continuing their employment with the company which are an
important part of every employee’s compensation.
• Other terms such as fringe benefits, employee services, supplementary compensation and
supplementary pay are used.

Types of Indirect Compensation:

a. Social Security:
• This is a federally administered insurance system.

• According to law, both employer and employee must pay into the system, and a certain
percentage of the employee’s salary is paid up to a maximum limit.

b. Workers’ Compensation:
• It is meant to protect employees from loss of income and to cover extra expenses associated
with job-related injuries or illness.
• The laws generally provide for replacement of lost income, medical expenses, rehabilitation
of some sort of death benefits to survivors, and lump-sum disability payments.

c. Retirement Plans:
• Retirement and pension plans, which provide a source of income to people who have
retired, represent money paid for past services.
• Private plans can be funded entirely by the organization or jointly by the organization and
the employee during the time of employment.
a. Paidholidays
These comprise Christmas Day, New Year’s Day, Independence Day, Labour Day, etc.

One relatively new concept is the floating holiday, which is observe at the
discretion of the employee or the employer.

Another relatively new concept is referred to as personal time-offor personal days.

b. Paid Vacations:

a. Typically, an employee must meet a

certain length-of-service requirement before becoming eligible for paid
vacation.

b. The time allowed for paid vacations generally depends on the

employee’s length of service.

c. Other Benefits:
a. Organizations may offer a wide range of additional benefits, including food
services, exercise facilities, health and first-aid services, financial and legal
advice, and purchase discounts.
Type # 2. Non-Financial Compensation:
Non-financial compensation refers to compensating employee not in form of money but
in some other forms that stimulate employees’ morale and also improve his performance.

It can be in the following forms:

I. Job security

II. Recognition

III. Participation

IV. Pride in job

V. Delegation of responsibility

Compensation Management – 4 Main Functions

(1) The Equity Function

➢ It is the first and foremost important function of compensation which ensures that
the employees are fairly paid and that their worth is appropriately compared.
➢ This function ensures that more difficult jobs are paid more and that they are fairly
compensated in comparison to similar jobs inthe market.

(2) The Welfare Function

➢ This function is to take care of their psychological and social need satisfaction.
➢ The employees worry about the family, and the liability should be reduced and
their self-esteem needs should be met to allow them to work without tension or
unwanted stresses.

(3) The Motivation Function

➢ The motivational function is to encourage an employee to take further challenges,
perform better and develop oneself for superior positions.
➢ This function, therefore, takes care of career plans and training and development
activities.

(4) The Retention Function

➢ Today, human resources are being considered as a valuable asset to the organization
and because of retaining and developing the knowledge bank, the retention of
employees has become an important function of compensation management.

THE COMPENSATION PROCESS

1. Organisation’s Strategy
 ➢ Organisation’s overall strategy, though not a step of
compensation management is the starting point in the total human resource
management process including compensation management.

➢ Companies operating in different types of market/products having varying level

of maturity, adopt different strategies and matching compensation strategy and blend
of different compensation methods.

2. Compensation Policy

➢ Compensation policy is derived from organisational strategy and its policy on overall
human resource management.

➢ In order to make compensation management to work effectively, the organisation

should clearly specify its compensation policy, which must include the basis for
determining base compensation, incentives and benefits and various types of
perquisites to various levels of employees.

➢ The policy should be linked with the organisational philosophy on human resources
and strategy. Besides, many external factors which impinge on the policy must also
be taken care of Job Analysis and Evaluation.

3. Analysis of Contingent Factors

➢ Compensation plan is always formulated in the light of various factors, both external
and internal, which affect the operation of human resource management system.

➢ Various external factors are conditions of human resource market, cost of living, level
of economic development, social factors, pressure of trade unions and various labour
laws dealing with compensation management.

➢ Various internal factors are organisation’s ability to pay and employees’ related factors
such as work performance, seniority, skills, etc. These factors may be analysed
through wage/salary survey.

4. Design and Implementation of Compensation Plan

➢ After going through the above steps, the organisation may be able to design its
compensation plan incorporating base compensation with provision of wage/salary
increase over the period of time, various incentive plans, benefits and perquisites.
➢ Sometimes, these are determined by external party, for example, pay commissions for
Government employees as well as for public sector enterprises.

➢ After designing the compensation plan, it is implemented. Implementation of

compensation plan requires its communication to employees and putting this into
practice.

5. Evaluation and Review

➢ A compensation plan is not a rigid and fixed one but is dynamic since it is affected by a
 variety of factors which are dynamic.

➢ Therefore, compensation management should have a provision for evaluating and

reviewing the compensation plan.

➢ After implementation of the plan, it will generate results either in terms of intervening
variables like employee satisfaction and morale or in terms of end-result variable like
increase of productivity.

INCENTIVES

According to Milton L. Rock, incentives are defined as ‘variable rewards granted

according to variations in the achievement of specific results.

TYPES OF INCENTIVES

1. Financial incentives:
Some extra cash is offered for extra efficiency. For example, profit sharing plan and group
incentive plans.

2. non-financial incentives:
When rewards or prizes are provided by the organization to motivate the employees it is
known as non-financial incentives.

3. Monetary and non-monetary incentives:

Many times, employees are rewarded with monetary and non- monetary incentives that
include promotion, seniority, recognition for merits, or even designation as permanent
employee.

Time based incentive plans

I. Halsey Incentive Plan:

➢ In this method a standard time is fixed for the completion of the job. A minimum
base-wage is guaranteed to every worker.

➢ If a worker completes his job in just the standard time, he will not be given any
incentive. If a worker performs his job in less than standard time, he is given
incentive. The incentive will be equal to 50% of the time saved by the worker.

W=TR+(S-T) R%

Were

W=Total Wages
S=Standard time
T=Time taken to complete the job

%=Percentage of wages of time saved to be given as incentiveR=Rate;

For example, if rate hour is Rs.3 standard time for completion of job is10 hours.

A worker completes the job in 8 hours, his total wages will be:
W= 8x 3+ (10-8)3×1/2

= Rs.27

In the above example, worker is given an incentive of 50% (1/2) of timesaved.

II. Rowan Plan:
➢ This plan is quite similar to Halsey plan. It differs only in terms of calculation of
incentive for time saved.

➢ The worker gets the guaranteed minimum wages. The incentive for completing the
job in time lesser than standard time is paid on the basis of a ratio, which is time
saved over standard time per unit standard time.

Incentive is calculated as:

Incentive or Bonus=S-1/SX
T x R Total wages=T x R+ incentive
=T x R(S-T)/S x T x R

Where,
W=Total wages
S=Standard time
T=Time taken to complete the jobR=Rate;
For example, if rate per hour is Rs.3and standard time for completion of job is 10 hours.

A worker completes the job in 8 hours, his total wages will be:
W=8×3+ (10-8)/10x 8x 3=Rs.28.4

III. Emerson’s Efficiency Plan:

➢ In this plan, a minimum wage is guaranteed to every worker on time basis and
incentive is given on the basis of efficiency.
➢ Efficiency is determined by the ratio of time taken to standard time. Payment of
bonus/incentive is related to efficiency of the workers. Incentive will be given to
those workers who attains more than 2/3rd i.e., 66.67% of efficiency.
➢ No incentive will be given at 66.67% efficiency. At 100% efficiency
incentive is 20% of the hourly rate.
➢ For efficiency exceeding 100%, 1% incentive/bonus is paid for every 1% increase
in efficiency.

Output-Based Plans:

I. Taylor’s Differential Piece Rate System:

 ➢ This system was introduced by Taylor, the father of scientific management. The
main characteristics of this system are that two rates of wage one lower and one
higher are fixed.

➢ A lower rate for those workers who are not able to attain the standard output within
the standard time; and a higher rate for those who are in a position to produce the
standard output within or less than the standard time.

➢ For example, if standard production in 8 hours is fixed at 10 units. The lower piece
rate is Rs.3 and higher piece rate is Rs.3.5. If a worker produces 9 units, his wages
= 9 x 3 = Rs.27. In case a worker produces 10 units, his wages = 10 x 3.5 = Rs.35.

II. Merrick’s Multiple Piece Rate Plan:

To overcome the limitations of Taylor’s differential piece rate system, Merrick suggested a
modified plan in which, three-piece rates are applied for workers with different levels of
performance.

III. Gantt’s Task and Bonus Plan:

This plan is based on careful study of a job. The main feature of this plan is that it combines
time rate, piece rate and bonus. A standard time is fixed for doing a particular job. Worker’s
actual performance is compared with the standard time and his efficiency is determined.

Type # 2. Group Incentive Plans:

A group incentive plan scheme is designed to promote effective teamwork, as the bonus is
dependent on the performance and outputof the team as a whole
Some of the group incentive plans are:

I. Priestman’s Plan.

II. Scanlon’s Plan.

I. Priestman’s Plan:
➢ In this plan workers are not considered individually but collectively. This system
considers the productivity of all workers as a whole. Bonus is paid in proportion in
excess of standard output per week.

➢ For example, if in 2009 the output per worker per unit time is 10 units and in year
2010 the output per worker per unit time comes out to be 12 units, the wages in
2010 will be 20% more than in 2009. The drawback of this system is that
individual efficiency is not considered.

II. Scanlon’s Plan:

➢ A Scanlon plan is a type of gain sharing plan that pays a bonus to employees when
they improve their performance or productivity by a certain amount as measured
against a previously established standard.

➢ A typical Scanlon plan includes an employee suggestion program, a committee

system, and a formula-based bonus system. A Scanlon plan focuses attention on
the variables over which the organization and its employees have some control.
FRINGE BENEFITS

According to the Employer’s Federation of India, Fringe benefits include payments for
non-working time, profits and bonus, legally sanctioned payments on social security schemes,
workmen’s compensation, welfareness, and the contributions made by employer under such
voluntary schemes as cater for the post- retirement.
OBJECTIVES

1. To recruit and retain the talented personnel in the organisation.

2. To maintain sound industrial relations and avoid unrest in theorganisation.
3. To identify unsatisfied needs of the employees and convert those into satisfying needs
by utilizing appropriate steps.
4. To protect social security of the employees during old age by providing
provident fund, gratuity and pension.
5. To develop a sense of belongingness among employees of the organisation.
6. To comply various legislations related with fringe benefits which are formulated by
central and state Government.
7. To ensure cooperation, loyalty and faithfulness among employees of the organisation.
8. To develop Brand Image of the organisation in the eyes of public.

REWARD

DEFINITION:

➢ The achievement and benefit received by employees for their job

performance in an organization are known as reward.

➢ Thus, economic and non-economic benefits provided by organization to employees

for their job performance regardless of their expectation is known as reward.

TYPES OF REWARDS

1. Intrinsic and Extrinsic Rewards:

➢ Intrinsic rewards are the satisfactions one gets from the job itself. These include
pride in one’s work, feeling of accomplishment, being a part of team job
enrichment, shorterwork-weeks, job rotation etc.
➢ Extrinsic rewords include money, promotions and fringe benefits, or a
write up in the company magazine.

2. Financial and Non-financial Rewards:

➢ Financial rewards may be direct-through wages, bonuses, profit sharing etc., or
indirect-through supportive benefits like pension schemes, leave encashment,
purchase discounts etc.
➢ Non-financial incentives make life on the job as more attractive.

3. Performance Based and Membership Based Rewards: Performance based rewards

 may be piece rate pay plans, commissions etc., while membership-based rewards may be
profit sharing, increase in dearness allowances, seniority based or time bound promotions etc.

a. Attraction and Retention:

➢ Organization’s that give the highest rewards tend to attract and retain more people.
This indicates that the better reward system can give a higher satisfaction level to
employee.

➢ The higher satisfaction level will lead to a longer length of service and reduce
organizational turnover rate.

b. Motivation of Performance:

➢ When certain conditions exist, reward systems have been demonstrated to motivate
performance.

➢ The reward system must be directly

link to the effective performance. Staffs should be rewarded
according to their needs.

c. Create Positive Organizational Culture:

Reward system can help the firm to create a positive culture. Depend on the way that reward
systems are developed, administered, and managed, the organizational culture will be affected
according to these factors.

d. Improve on Skills and Knowledge:

➢ The reward system can encourage employees continuously improve their skill
sets.
➢ The firm can pay employees based on their skill levels. Staffs will be motivated to
attend extra courses and improve their skill sets in order to receive more benefit.

e. Reinforce and Define Organizational Structure:

➢ The reward system can reinforce and define the organizational structure.

➢ The firm might not foresee the impact of reward system on firm’s
structure changes.

MOTIVATION

According to Mac Farland

“Motivation refers to the way in which urge, drives, desires aspiration, or needs that direct or
control or explain the behaviour of human beings.

TYPES OF MOTIVATION
The different types of motivation in people are:

1. Intrinsic:
➢ This type comes from within a person to do a task or achieve a particular goal. It is
a feeling of being self-driven and achieving objectives for oneself.
 ➢ Intrinsic motivation is driven by motives like social acceptance, eating food, desires
to achieve goals, biological needs etc.
2. Extrinsic:
➢ This type drives an individual due to external forces or parameters. Some other
person or organization motivates the individual to work hard to achieve certain
goals or tasks.
➢ Extrinsic motivation is driven by motives like financial bonus, rewards,
appreciation, promotion, punishment, demotion etc.
3. Positive:
➢ This type drives an individual by offering positive accolades and rewards for
performing a task.
➢ In this type of motivation, the individual is rewarded by monetary benefits,
promotions etc which drives an individual towork hard.
4. Negative:
It is where fear and threat are used as a parameter to get the work done. In this type of
motivation, individuals are threatened with things like demotion, reducing benefits,
withdrawing merits etc.

MOTIVATION THEORIES

1. Maslow’s hierarchy of needs

Abraham Maslow postulated that a person will be motivated when his needs are fulfilled. The
need starts from the lowest level basic needs and keeps moving up as a lower-level need is
fulfilled. Below is the hierarchy of needs:

• Physiological: Physical survival necessities such as food, water,and shelter.

• Safety: Protection from threats, deprivation, and other dangers.

• Social (belongingness and love): The need for association, affiliation,

friendship, and so on.
• Self-esteem: The need for respect and recognition.

• Self-actualization: The opportunity for personal development, learning, and

fun/creative/challenging work. Self-actualization is the highest-level need to which a
human being can aspire.

2. McGregor’s theory X and theory Y

Douglas McGregor formulated two distinct views of human being based on participation of
workers.

The first is basically negative, labelled as Theory X, and the other is basically positive,
labelled as Theory Y. Both kinds of people exist.
Based on their nature they need to be managed accordingly.
 • Theory X: The traditional view of the work force holds that workers are
inherently lazy, self-centred, and lacking
ambition. Therefore, an appropriate management style is strong, top-down control.
• Theory Y: This view postulates that workers are inherently motivated and eager to
accept responsibility. An appropriate management style is to focus on creating a
productive work environment coupled with positive rewards and reinforcement.

3. McClelland’s theory of needs

McClelland affirms that we all have three motivating drivers, and it does not depend on our
gender or age. One of these drives will be dominant in our behaviour. The dominant drive
depends on our lifeexperiences.

The three motivators are:

• Achievement: a need to accomplish and demonstrate own competence People with a

high need for achievement prefer tasks that provide for personal responsibility and
results based on their own efforts. They also prefer quick acknowledgement oftheir
progress.
• Affiliation: a need for love, belonging and social acceptance People with a high need
for affiliation are motivated by being liked and accepted by others. They tend to
participate in social gatherings and may be uncomfortable with conflict.
• Power: a need for control own work or the work of others People with a high need for
power desire situations in which they exercise power and influence over others. They
aspire for positions with status and authority and tend to be more concerned about
their level of influence than about effective work performance.
4. Alderfer’s Existence-Relatedness-Growth (ERG) Model

These three needs are those of Existence, Relatedness and Growth. The E, R and G is
the initials for these needs.
(i) Existence Needs:
➢ These needs are roughly comparable to the physiological and safety needs of
Maslow’s model and are satisfied primarily by material incentives.
➢ They include all physiological needs of Maslow’s model and such safety needs which
financial and physical conditions rather than interpersonal relations satisfy.
➢ These include the needs for sustenance, shelter and physical and psychological
safety from threats to people’s existence andwell-being.

(ii) Relatedness Needs:

➢ Relatedness needs roughly correspond to social and esteem needs in Maslow’s
hierarchy.
➢ These needs are satisfied by personal relationships and social interaction with
others.
➢ It involves open communication and honest exchange of thoughts and
feelings with other organizational members.

(iii) Growth Needs:

➢ These are the needs to develop and grow and reach the full potential that a
person is capable of reaching.
➢ They are similar to Maslow’s self-actualization needs.
➢ These needs are fulfilled by strong personal involvement in the organizational
 environment and by accepting new opportunities and challenges.

5. Hertzberg’s two factor theory

Hertzberg classified the needs into two broad categories namely hygiene factors and
motivating factors.

➢ Hygiene factors are needed to make sure that an employee is notdissatisfied.

➢ Motivation factors are needed for ensuring employee's satisfaction and employee’s
motivation for higher performance.

➢ Mere presence of hygiene factors does not guarantee motivation, and presence of
motivation factors in the absence of hygiene factors also does not work.

6. Vroom’s Expectancy Model:

➢ The expectancy model is based upon the belief that motivation is determined by the
nature of the reward people expect to get as a result of their job performance.
➢ The underlying assumption is that a man is a rational being and will try to maximize
his perceived value of such rewards.
There are three important elements in the model.
i. Expectancy:
➢ This is a person’s perception of the likelihood that a particular outcome

will result from a particular behaviour or action.

➢ This likelihood is probabilistic in
nature and describes the relationship between an act and
its outcome.
ii. Instrumentality:
➢ This factor relates to a person’s
belief and expectation that his performance will lead to
a particular desired reward.
➢ It is the degree of association of first level outcome of a particular effort to the second
level outcome which is the ultimate reward
iii. Valence:
➢ Valence is the value a person assigns to his desired reward. He may not be willing to
work hard to improve performance if the reward for such improved performance is
not what he desires.
➢ It is not the actual value of the reward but the perceptual value of the reward in the
mind of the worker that is important.
Motivational Force (M) = Expectancy (E) x Instrumentality (I) xValence (V). or M
 = (E x I x V)

7. GOAL SETTING THEORY

➢ The Goal Setting theory is characterized by two attributes, namely: goal

difficulty and goal specificity.
➢ Goal difficulty is the degree or extent by which the goal becomes challenging and
requires effort. On the other hand, in terms of goal specificity, goal content can be
vague (“work on this”) or specific. It is recommended that a goal be specific,
moderately difficult and one that the employees is motivated to achieve.

8. ADAM EQUITY THEORY

➢ Definition of equity: An individual will consider that he is treated fairly if he
perceives the ratio of his inputs to his outcomes to be equivalent to those around him.
➢ Thus, all else being equal, it would be acceptable for a more senior colleague to
receive higher compensation, since the value of his experience (and input) is higher.
➢ The way people base their experience with satisfaction for their job is to make
comparisons with themselves to people they workwith.

9. REINFORCEMENT THEORY

➢ In 1911, psychologist Edward Thorndike formulated the law effect: Behaviour

that is followed by positive consequences probably will be repeated.
➢ This powerful law of behaviour laid the foundation for country investigations into
the effects of the positive consequences, called rein forcers that motivate
behaviour.
➢ Organizational behaviour modification attempts to people’s actions. Four key
consequences of behaviour either encourage or discourage people’s behaviour.

Positive Reinforcement: -
Applying a valued consequence that increases the likelihood that the person will repeat the
behaviour that led to it. Examples of positive reinforcers include compliments, letters of
commendation, favourable performance evaluations, and pay raises
Negative Reinforcement: -

➢ Removing or withholding an undesirable consequence.

➢ For example, a manager takes an employee (or a school takes a student) off
probation because of improved performance.
Employee Retention
▪ Employee Retention
▪ Employee Retention Strategies
Punishment: -
 ➢ Administering an aversive consequence.
➢ Examples include criticizing or shouting at an employee, assigning an
unappealing task, and sending a worker homewithout pay.

CARRER MANAGEMENT
Career management is a process that enables the employees to better understand their career
skills, develop and give direction to it and to use those skills and interests most effectively
both within and outside the organisation.
Elements of Career Management

The three elements common to most career management programmes are the following:

1. Career Planning:

Career planning is a deliberate process of becoming aware of opportunities,

constraints, choices and consequences identifying career related goals and
programming work, education and related development experiences to provide the
direction, timing and sequence of steps to attain a specific career goal

2. Career Pathing:

➢ Based on the career expectations identified in the process of career planning, possible
career paths are mapped out for employees.
➢ Career paths set out a sequence of posts to which employees can be promoted,
transferred and rotated.

3. Career Development:
➢ Career development refers to a planned effort to link the individual’s career needs with
the organization’s workforce requirements.
➢ It could furthermore be seen as a process for helping individuals plan their careers in
concert with an organization’s business requirements and strategic direction.

STAGES OF CAREER DEVELPOMENT

1. Exploration:
➢ The exploratory stage is the period of transition from college to work, that is, the
period immediately prior to employment.
➢ It is usually the period of one’s early 20 s and ends by mid-20 s. It is a stage of self-
exploration and making preliminary choices.
2. Establishment:
➢ This career stage begins when one starts seeking for work. It includes getting
one’s first job.
➢ Hence, during this stage, one is likely to commit mistakes; one has also the
opportunities to learn from such mistakes and may also assume greater
responsibilities.

3. Mid-Career:
➢ During this stage, the performance may increase or decrease or may remain constant.
➢ While some employees may reach their goals at the early stage and may achieve
greater heights, some may be able just to maintain their performance.
➢ While the former may be called ‘climbers’, the later ones are not very ambitious
 though competent otherwise.
4. Late Career:
➢ This stage is usually a pleasant one because during this stage, the employee neither
tries to learn new things nor tries to improve his/her performance over that of
previous years.
➢ He/she takes advantage of and depends on his/her reputation and enjoys playing the
role of an elderly statesperson.
5. Decline:
Since it is the final stage of one’s career, it ends in the retirement of the employee after
putting up decades of service full of continuous achievements and success stories. As
such, it is viewed as a hard stage.

DEVELOPMENT OF MENTOR-PROTÉGÉ RELATIONSHIP DEFINITION:

The relationship between an experienced employer and a junior employee in which the
experienced person helps the junior person with effective socialization by sharing information
gained through experience with the organization.

Requirements for effective mentor-protégé relationship:

1. The status & characteristics of the mentor:

Mentors should be seniors in status, experience, age, skills, knowledge.

2. Protégé: Junior employees should have the zeal to learn from their senior employees
regarding their career, social and psychological aspect.

3. The relationship: It is based on mutual dependence & mutual trust.

4. The activities:

➢ Developing the potentials of the protégé. Improving protégésperformance

➢ Interlinking formal learning & practices Guide, support, providingfeedback

5. Developing higher skills:

It should encourage their juniors towards high task performance by reducing weakness &
strength of the protégés.

6. Response of the protégé:

Proteges should learn carefully regarding career opportunities, personalgoals.

Phases of Mentor-Protégé Relationship:

According to Kram, there are four

phases of mentor-protégé relationship, namely, initiation,
cultivation, separation and redefinition.
1. Initiation:
A period of six months to a year during which time the relationship gets started and begins to
have importance for both.
2. Cultivation:
A period of two to five years during which time career and psychological functions provided
expand to a maximum.

3. Separation:
A period of six months to two years after a significant change in the structural role relationship
and/or in the emotional experience of therelationship.
4. Redefinition:
An indefinite period after the separation phase, during which time the relationship is ended or
taken on significantly different characteristics, making it more peer like relationship.

MENTORING

Mentoring is a relationship between two people with the goal of professional and personal
development. The "mentor" is usually an experienced individual who shares knowledge,
experience, and advice with a less experienced person, or "mentee."
TYPES OF MENTORING

1. One-on-One Mentoring
➢ In one-on-one mentoring programs, participants are matched via a formal program or
they self-select who they want to be paired with over the course of a certain time
period.

➢ This type of mentoring is more focused on relationship-building and individual skill-

building.

2. Situational Mentoring

If you want your mentees to learn a specific skill or trade, you may want to pair them with a
mentor to coach them as they learn
3. Developmental and Career Mentoring
This type of mentoring is long term and typically entails managers and directors who mentor
their employees as they progress in their careers over the course of a few years.

4. Reverse Mentoring
➢ When new hires possess skills and knowledge, they can also mentor their bosses
and co-workers.

➢ This type of mentoring encourages knowledge sharing across your organization.

5. Group-Based Mentoring
➢ It is possible to pair more than one mentee to a mentor, especially for
situational mentoring scenarios.

➢ With group-based mentoring, group members can help keep one another on track and
are also able to meet with their mentors one-on-one when needed.
6. Peer-Based Mentoring
 ➢ Sometimes with group-based mentoring, a mentor may not even be needed at all.
➢ To build and maintain effective mentorship programs at your organization, consider
implementing one or more of the types ofprograms listed above.

Benefits of being a Mentee

• Gain practical advice, encouragement and support

• Learn from the experiences of others
• Increase your social and academic confidence
• Become more empowered to make decisions
• Develop your communication, study and personal skills
• Develop strategies for dealing with both personal and academicissues
• Identify goals and establish a sense of direction
• Gain valuable insight into the next stage of your universitycareer
• Make new friends across year groups

Benefits of being a Mentor

• Improve communication and personal skills

• Develop leadership and management qualities
• Reinforce your own study skills and knowledge of your subject(s)
• Increase your confidence and motivation
• Engage in a volunteering opportunity, valued by employers
• Enhance your CV
• Increase your circle of friends
• Gain recognition for your skills and experience
• Benefit from a sense of fulfilment and personal growth

Mentor Barriers

1. Competing demands
2. Time restraints
3. Power differential

4. Competency of conflicting roles

5. Lack of understanding of mentor role
6. Personality
7. Boundaries
Mentee Barriers

1) Concern about underachieving

2) Unrealistic expectations of mentors
3) Power differential
4) Availability/scheduling
5) Personality
Institutional Barriers
1) Training
2) Lack of acknowledgement / recognition
3) Lack of incentive for participants
4) Time
5) Lack of formal training
6) Poor planning
7) Self-identified vs. assigned mentors