Question No. 4 - MMPC 002 - Human Resources Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC 002 - Human Resources Management

MMPC-002/TMA/JULY/2022

Question No. 4. Why training, mentoring, compensation and reward management of an organization ensures effective human resource development? Explain with the help of recent trends in the corporate world. 

TRAINING AS AN EFFECTIVE HUMAN RESOURCE DEVELOPMENT

Training is essential because technology is developing continuously and at a fast rate. Systems and practices get outdated soon due to new discoveries in technology, including technical, managerial and behavioural aspects. Organisations that do not develop mechanisms to catch up with and use the growing technology soon become stale. However, developing individuals in the organisation can contribute to its effectiveness of the organisation.

There are some other reasons also for which this training becomes necessary. Explained below are various factors, giving rise to the need for training. 

 Employment of inexperienced and new labour requires detailed instructions for effective performance on the job. 

 People have not to work, but work effectively with the minimum of supervision, minimum of cost, waste and spoilage, and to produce quality goods and services. 

 Increasing use of fast changing techniques in production and other operations requires training into newer methods for the operatives. 

 Old employees need refresher training to enable them to keep abreast of changing techniques and the use of sophisticated tools and equipment. 

 Training is necessary when a person has to move from one job to another be3cause of transfer, promotion or demotion. 

Such development, however, should be monitored so as to be purposeful. Without proper monitoring, development is likely to increase the frustration of employees if when, once their skills are developed, and expectations raised, they are not given opportunities for the application of such skills. A good training sub-system would help greatly in monitoring the directions in which employees should develop in the best interest of the organisation. A good training system also ensures that employees develop in directions congruent with their career plans.

Hence, a well-planned and well-executed training programme should result in: 

• reduction in wastes and spoilage;
• improvement in methods of work; 
• reduction in learning time; 
• reduction in supervisory burden; 
• reduction in machine breakage and maintenance cost; 
• reduction in accident rate; 
• improvement in quality of products; 
• improvement in production rate; 
• improvement of morale and reduction in grievances; 
• improvement of efficiency and productivity; 
• reduction in manpower obsolescence; 
• enabling the organization to provide increased financial incentives, opportunity for internal promotion and raising of pay rates; 
• wider awareness among participants, enlarges skill; and 
• personal growth. 

MENTORING IN EFFECTIVE HUMAN RESOURCE DEVELOPMENT

Mentoring can either be the result of a 3rd party program instituted by your company or organization, or it can develop organically. Both types are beneficial, but organic mentor/mentee relationships tend to be somewhat less formal. There's likely to be a level of informality in every mentor/mentee relationship, and that's completely fine.
A mentee should be able to let their guard down, confide in their mentor, and not have to worry about office politics. In fact, office politics could easily be a topic of conversation. That being said, mentor/mentee confidentiality can be a little tricky. There's no law saying a mentor has to keep everything their mentee says confidential, but it's extremely bad practice to betray trust within the relationship. A good mentee should be aware of what information is appropriate to share, and a good mentor should remain professional with the information they're given. 

Today's workforce is very focused on career growth and professional development. From interns to senior executives, the majority see networking and learning opportunities as a huge benefit - often more important than social events and traditional office perks. This is especially true as we move to a much more virtual workforce where building relationships in the office is getting a lot harder. By implementing a mentoring program you can attract more skilled talent, and stand out from the competition. Not only is it a benefit in itself, it shows your company cares about its people and is focused on improving and providing value as they grow in their career. On the flip side, mentoring your current employees helps to ensure they're happy, stay with you longer, and gain the skills/knowledge that will allow them to be transferred within the company in order to meet your organization's needs.
Mentoring is beneficial to practically any industry, and any level of employee. For recruiting new talent, it can even be a great selling feature - especially with a younger workforce who is eager to learn, grow, and build their network. Mentoring is a great tool that can strengthen your workforce, and your company.

COMPENSATION IN EFFECTIVE HUMAN RESOURCE DEVELOPMENT

The compensation function contributes to the organisational effectiveness in four basic ways: 

1) Compensation can serve to attract qualified applicants to the organisation. Other things being equal, an organisation offering a higher level of pay can attract a larger number of qualified applicants than its competing units. 

2) Compensation helps to retain competent employees in the organisation. Although retaining competent workers is contingent on many factors, compensation policies help by maintaining a fair internal pay structure and by providing attractive benefits. Turnover is thus reduced, along with costs associated with recruiting, selecting, and training replacements. 

3) Compensation serves as an incentive to motivate employees to put forth their best efforts. Manufacturing and sales organizations, for example, use monetary incentives to attain higher levels of production or sales without hiring additional employees. When employees put forth their best efforts, average productivity of labour increases. With increased productivity, fewer employees are needed to achieve the same level of output. Thus, labour costs are reduced and organisational profitability is increased. 

4) Minimising the costs of compensation can also contribute to organisational effectiveness since compensation is a significant cost for most employers. In brief, compensation is provided for two reasons, namely; as a reward for past service to the enterprise, and as stimulus to increased performance in the future.

In modern business, executives hold the most pivotal place in an organisation. They play a major part in looking after the economic health of the company. As they are important for the success, growth and profitability of an organisation, they have to be compensated properly. To make the executives happy to the extent possible, companies have been giving in recent years, bigger and more frequent rises in salaries. The cumulative effect is that executive compensation cost is today a sizeable cost and rising cost. Companies have started looking at executive compensation more systematically and more proactively so that they can expect better performance from the executives.

REWARD MANAGEMENT IN EFFECTIVE HUMAN RESOURCE DEVELOPMENT

One of the important attributes of work organisation is its ability to give rewards to their members. Pay, promotions, fringe benefits, and status symbols are perhaps the most important rewards. Because these rewards are important, the way they are distributed have a profound effect on the quality of work life as well as on the effectiveness of organisations.

There are several principles for setting up an effective reward system in an organisation: 

• Give value to the reward system. Employees must have a preference for the types of rewards being offered. Many employees prefer cash awards and plaques. 
• Some employees like to see their name in the company newsletter. Others like the public recognition surrounding award ceremonies. 
• Make the reward system simple to understand. Elaborate procedures for evaluating performance, filling out forms, and review by several levels of management lead to confusion. The system must be easy to understand if it is to be used effectively. 
• Lay down performance standards within the control of the team. 
• Make the reward system fair and effective. 
• Ensure participation in the reward system. 
• Involve people in the reward process and empower them to do the needful. 

Most organisations use different types of rewards. Examples of recognition and rewards include money, plaques, trophies, certificates or citations, public recognition, official perquisites, special assignments, parties or celebrations or other meaningful considerations. The most common are wages or salary, incentive systems, benefits and perquisites, and awards. For majority of people, the most important reward for work is the pay they receive. For one thing, an effectively planned and administered pay system can improve motivation and performance.

Money may not actually motivate people. Surprisingly, there is no clear evidence that increased earnings will necessarily lead to higher performance. A great deal of research has been done on what determines whether an individual will be satisfied with the rewards he or she receives from a situation. The following five conclusions can be reached about what determines satisfaction with rewards:

1) Satisfaction with reward is a function of both how much is received and how much the individual feels should be received. When individuals receive less than they feel they should receive, they are dissatisfied. When they receive more than they feel they should, they tend to feel guilty and uncomfortable. 

2) People‟s feelings of satisfaction are influenced by comparisons with what happens to others. These comparisons are made both inside and outside the organisations they work in, and are usually made with similar people. Individuals tend to rate their inputs higher than others. 

3) In addition to obvious extrinsic rewards individuals receive (e.g., pay, promotion, status symbols), they also may experience internal feelings that are rewarding to them. These include feelings of competence, achievement, personal growth, and self-esteem. The overall job satisfaction of most people is determined both by how they feel about their intrinsic rewards and how they feel about their extrinsic rewards. 

4) People differ widely in the rewards they desire and how much important the different rewards are to them. One group feels money is the most important, while another group feels interesting work and job content is. Both groups, of course, are able to find examples to support their point of view. 

5) Many extrinsic rewards are important and satisfying only because they lead to other rewards, or because of their symbolic value. 

An effective reward system should link reward to performance. Workers who work hard and produce more or give better quality results should receive greater rewards than poor performers. Also, criteria for receiving rewards should be clear and employees should know whether they are going to receive rewards for quality performance, innovation, effort or attendance. Management must ensure that workers perceive distribution of rewards as equitable. Furthermore, for organisations to attract, motivate and retain qualified and competent employees, they must offer rewards comparable to their competitors.