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Ms-27 dec 2008

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MS-27   Dec-2008


1. Enumerate wage theories. Explain any two of them with suitable examples. Briefly discuss limitations of economic theories.

2. What are the micro level considerations for evolving a compensation policy ? Explain with suitable example.

3. What are the objectives of Allowances and benefits ? Briefly describe various fringe benefits.

4. Discuss the types of performance linked reward schemes. Critically analyse the steps in designing a performance linked reward scheme.

5. Write short notes on any three of the following :

(a) Tax planning

(b) Equal pay for equal work

(c) Compensation policy

(d) Collective bargaining as a method of wage fixation

G) Voluntary Retirement Scheme (VRS)

6. Read both Case 1 and Case 2 giaen below and answer the questions given at the end of each ease.


A financial institution has just decided to open a branch at Bhimunipatnam, an exclusive resort located about 20 miles from Waltair, a large city. There is no bank at present in Bhimunipatnam. The financial institution is anxious to determine the appropriate wage for the clerical staff it expects to hire. Clerks in the city office at Waltair receive a starting wage of Rs. 1,000 per month. As a matter of company policy these wages rates have been set at mid point of the range

for financial institutions in Waltair.

     A survey at local business at Bhimunipatnam indicates that the'going rate' for

qualified clerical personnel varies between Rs.1200 - Rs.1,400 a month. This higher rate in Bhimunipatnam may be attributed, in par! to the substantially higher cost of living in this resort town the limited number of young people seeking employment and the fact that there are no other financial institutions in Bhimunipatnam. Banks in Waltair have traditionally paid lower wages than other businesses, on the ground that banks offer better working conditions and higher prestige.

Questions :

(a) What amount, should the financial institution fix as personnel ?

b) What factors should be considered in making the decision ?

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