Assignment-2

Human Resource Management

Q1. Define compensation and theories related to it and impact of external and internal equities in compensation system.

Ans. Compensation is the total cash and non-cash payments that you give to an employee in exchange for the work they do for your business. It is typically one of
the biggest expenses for businesses with employees. Compensation is more than an employee’s regular paid wages. It also includes many other types of wages and
benefits.
Types of compensation include:

Base pay (hourly or salary wages), Sales commission, Overtime wages, Tip income, Bonus pay, Recognition or merit pay, Benefits (insurances, standard vacation
policy , retirement),Stock options, Other non-cash benefits.

Theories related to compensation are following-

1. Reinforcement and Expectancy Theory: This theory is based on the assumption that, the reward-earning behavior is likely to be repeated, i.e. an employee
would do the same thing again for which he was acknowledged once.
Similarly, in the case of Expectancy Theory, given by Vroom, the employee is motivated to do a particular thing for which he is sure or is expected that
performance will be followed by a definite reward or an outcome.

2. Equity Theory: According to this theory, there should be equity or the uniformity in the pay structure of an employee’s remuneration. If the employee
feels he is not being paid fairly for the amount of work he does in a day will result in lower productivity, increased turnover and high absenteeism. The
remuneration system should comply with three types of equity:

2.1 Internal Equity: The employee perceives the fairness in different pay for different jobs based on the nature of work involved, i.e. he must feel that pay
differentials among the jobs are fair.

2.2 External Equity: The employee should feel the fairness in what they are being paid is in line with what other players in the same industry are paying to
their employees for the same kind of job.

2.3: Individual Equity: The employee perceives the pay differentials among the individuals who are performing the same kind of a job and within the same
organization. Usually, an individual with more experience gets high remuneration as compared to the fresher irrespective of the nature of a job.

3. Agency Theory: This theory states that both the employer and the employee are the stakeholders of the company, and the remuneration paid to the
employee is the agency cost. The employee will try to get an increased agency cost whereas the employer will try to minimize it. Hence, the remuneration
should be decided in such a way that the interest of both the parties can be aligned.

Thus, these theories posit that the compensation in the form of salary or wages can be decided on the basis of the outcome or the behavior of an employee.
Impact of internal and external equities in compensation-
Three element of equity can be distinguished as external, internal and individual.

 External equity refers to comparison of similar jobs in different organizations.

 Internal equity refers to the relationship among the jobs within a single organization.
 Individual equity refers to comparison among the individual in the same job with the same organization

1. Internal equity- To measure the value of jobs in relation to organizational objectives rewards are usually based on important components to make one
job worth more than other these aspects called compensable factors. Most frequently used job evaluation methods are: Jo ranking, Job grading, the
points method and Factor comparison

2. External equity-There is no absolute way to rate pay for a job.Setting pay rates, organization seek to integrate the external information with what they have
learnt through internal evaluation of jobs this process is called pricing the wage structure. Wage and salary surveys, Identifying key jobs, selecting
organization to survey, collecting data, Pay level policy.
3. Individual equity-Wage grades are established and all the jobs within the grade are paid identically. Designing pay ranges, Establishing pay ranges ,broad
branding, Above and below range employees,Setting individual pay, Seniority ,Merit pay ,Skilled based pay.

Q2. Define ethical codes, principles and features of the codes, objectives and functioning of codes.
Ans. Ethics is a branch of philosophy that involves systemizing, defining and recommending concept of right and wrong conductor.

A code of practice is adopted by a profession or by a governmental or non-governmental organization to regulate that profession. A code of practice may be
styled as a code of professional responsibility, which will discuss difficult issues, difficult decisions that will often need to be made, and provide a clear
account of what behavior is considered "ethical" or "correct" or "right" in the circumstances. In a membership context, failure to comply with a code of practice
can result in expulsion from the professional organization.

Principles of Ethics Divided into five fundamental principles that form the foundation of the ADA Code:

Patient Autonomy, Nonmaleficence, Beneficence, Justice, Veracity

1. Patient Autonomy- capable patient must be allowed to accept refuse, recommend medical intervention, and respect the patient’s rights to self-
determination and confidentiality. Professionals have a duty to treat the patient according to the patient’s desires, protect the patient’s confidentiality, and
include involving patients in treatment decisions.
2. Nonmaleficence-care providers must not harm the patient, every treatment have risk but weightage should be considered.
3. Beneficence- care provider should act in best interest of the patient from both side. Some situation different in opinion.
4. Justice- healthcare resources should be distributed in a fair way among the members of the society.
5. Veracity- capable patient must be provided complete truth about his/her medical condition, every information should give to the patient and all the truth
regarding his condition.
Features of ethical codes are following-

1. Code of conduct(do’s and don’t’s)

2. Moral and social values
3. Protection of social groups
4. Provides basic framework
5. Voluntary
6. Requires education and guidance
7. Relative term(cultural social religion beliefs)ethical to some and not to some
8. New concepts

Objectives of ethical codes-

1. Stop business malpractices

2. Improve customer confidence
3. Survival of business
4. Safe guarding customers rights
5. Protecting employees and share holders
6. Developes good relations
7. Creats good images
8. Smooth functioning
9. Consumer movement
10. Consumer satisfaction
11. Importance of labour
12. Healthy competition

Ethics codes can be distinguished according to two principle categories: the group enacting the code, and the functions of the code within that group

 Professional: applying only to members of a certain profession

 Organizational: applying only to members or a certain class of members of the association formally enacting code
 Practice-specific: applying to anyone involved in a certain voluntary practice (1)
Functions of Codes of Ethics:

1. Inspiration and Guidance-Codes provide a positive stimulus for ethical conduct and helpful guidance and advice concerning the main obligations of the
members of the group to which it applies. Generally, a code will begin with broad commitments. The remaining functions of the code contribute to the
development and interpretation of these commitments.
2. Support-Codes give positive support to those seeking to act ethically. A publicly proclaimed code allows a person who is under pressure to act unethically
to say: “I am bound by the code of ethics of my profession, which states that…” This provides a level of group cooperation in taking stands on moral issues.
Moreover, codes can potentially serve as legal support in courts of law for those seeking to meet work-related moral obligations.
3. Deterrence and Discipline-Codes can serve as the formal basis for investigating unethical conduct. Where such investigation is possible, prudence
becomes a motive for acting ethically.
4. Education and Mutual Understanding-Codes can be used in the classroom and elsewhere to prompt discussion and reflection on moral issues and to
encourage a shared understanding among professionals, the public, and government organizations concerning the special moral responsibilities of
individuals in professions, organizations, and/or a specific practice
5. Contributions to Public Image-Codes can present a positive image to the public of an ethically guided profession, organization, or practice. Where the
image is warranted, it can help members more effectively serve the public. It can also win greater powers of self-regulation for the group itself, while
lessening the demand for more government regulation. The reputation of a profession, organization, or practice, like the reputation of an individual or a
corporation, is essential in sustaining the trust of the public.
6. Shared Standards-The diversity of moral viewpoints among individual practitioners makes it essential that a profession, organization, or practice establish
explicit standards, in a particular minimum standard beyond what law, market, morality, and public opinion would otherwise require. In this way, the public
is assured of a good conduct and professionals, organizations, and other practitioners are provided a fair playing field in which to compete.

Isha Sharma

Roll no.-5

MHA Sem-4