Question No. 2 - MMPC 03 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC 03 - Business Environment

MMPC-003/TMA/JULY/2022

Question No. 2. What do you understand by business ethics? Discuss the importance of business ethics and the ethical issues involved in business.  

Business ethics are a kind of applied ethics. It is the application of moral or ethical norms to business. The term ethics has its origin from the Greek word ‘ethos’, which means character or custom- the distinguishing character, sentiment, moral nature, or guiding beliefs of a person, group, or institution. Ethics are a set of principles or standards of human conduct that govern the behaviour of individuals or organisations. Ethics can be defined as the discipline dealing with moral duties and obligations, and explanation regarding what is good or not good for others and for us. Ethics is the study of moral decisions that are made by us in the course of performance of our duties. Ethics is the study of characteristics of morals and it also deals with moral choices that are made in relationship with others. Business ethics comprises the principles and standards that guide behaviour in the conduct of business. Businesses must balance their desire to maximize profits against needs of its stakeholders. Maintaining this balance often requires trade-offs. To address these unique aspects of businesses, rules, articulated and implicit, are developed to guide the businesses to earn profits without harming individuals or society as a whole.

Now, let us understand why Corporate Ethics matter to business. Ethics matter because ethical conduct is the right conduct. However, in the absence of a time-culture, and context-neutral definition of ‘right’, it is very difficult to develop a code of conduct on this basis alone. It basically says that businesses avoid many risks and gain reputation by acting in an ethical manner. A good ethics process, operationalised in such a way that all decision making procedures and structures support it on a day-to-day basis, will give an organisation the best chance possible for finding out about potential problems early so that they can be dealt with before they become a disaster. There are also market advantages to be gained from an ethical reputation.

Ways in which Ethics are Important - Major scandals such as WorldCom, Enron, Lehman Brothers etc., in the US and Satyam in India tell us why ethical business practices are becoming increasingly important. There are several reasons why ethics are important to business:

• To understand reasons behind increasing influence of corporates in society. 
• To ensure that no harm is done to society. 
• To meet ethical expectations more effectively. 
• To enable companies to identify employee and customer concerns at an early stage.
• To improve the quality of a firm’s relationships with its key stakeholders. 

The government is interested in ensuring ethical business practices to ensure a basic level of integrity in the market place. This promotes international competitiveness of the economy and improves a country’s image concerning ease of doing business. Even domestically, predictable levels of ethical behaviour ensures that costs of business such as transaction costs, hedging and insurance etc., are kept to a minimum.

Unethical behaviour imposes costs on the government and taxpayers. Bad behaviour by a few impacts on all businesses and might also have an adverse impact on the country’s international competitiveness. Ethics can help improve decision making by providing managers with the appropriate knowledge and tools that allow them to correctly identify, diagnose, analyse, and provide solutions to the ethical problems and dilemmas they are confronted with.

Ethics help in analysing the reasons behind this, and the ways in which such problems might be dealt with by managers, and regulators in improving business ethics. Business ethics can provide us with the ability to assess the benefits and problems associated with different ways of managing ethics in organisations. Business ethics also equips us with knowledge that goes beyond the traditional boundaries of business studies.

ETHICAL ISSUES IN BUSINESS 

You have understood that business has various motives. Some of the motives are: wealth motive, profit motive, societal benefit and overall benefit of shareholders and stakeholders. The dilemma remains between striking the balance between profits and ethics. The organisations practice ethics as it bolsters their goodwill and reputation of being fair, honest and integral both at the business and the corporate level thereby, fortifying their image. Organisations expect the employees at all levels carry this legacy of identity with utmost care. Ethics provide the framework within which the organisation makes ethical investment. Ethical investment is followed in management of investment portfolio which consists of company shares. Profit is an inherent motive of business. But various economic thinkers have propagated various business motives varying from profitability, wealth, utility maximization, etc. But there are differences of opinion too. On the one hand there is the ideology of Karl Marx, according to which it is unethical to do business to accumulate wealth. On the other hand, Mahatma Gandhi believed in business but preached trusteeship according to which a businessman should look after the welfare of his employees.

Let us discuss this further with examples from various companies. In the early 1980s the Indian automobile industry had two leading brands namely the Ambassador from HM and the FIAT. The Japanese entered with Suzuki and Maruti became a household name. Subsequently we saw a lot of foreign brands like the Daewoo, Hyundai, General Motors, Toyota, etc. entering the fray. Each of these multi-national companies had their own management style and ethic orientation. Few worked on vendor relations, Research and Development aiming at cost reduction, while others worked on advertising and creating a robust distribution network. Within all this high level marketing impact the Indica model from the national brand Tata was launched. Though the model didn’t compete much with the elite MNC brands but it was able to create a significant presence for the customers who believed in Tata’s ethical philosophy. So a low advertised product also garnered a market share as the word of mouth from the customers spread fast thereby creating a brand identity for Tata.

The advantages of being ethical: 

1. Preferred by prospective employees and creation of quality talent pool. 

2. Less number of employees leaving the organisation i.e lower attrition rate. 

3. Less number of employee strike or labour unrest. 

4. Corporate goodwill enables bargaining power which results in cost reduction 

- increase in production

- achieving economies of scale

- more revenue and profits

- longer business viability. 

Question no. 1 - MMPC 03 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC 03 - Business Environment

MMPC-003/TMA/JULY/2022

Question No. 1. Define inflation. What are the different methods of measuring inflation and what are the effects of inflation.   

One of the most daunting task before economists is to define Inflation as there are multitudes of problems in penning down one definition. Therefore there is no universal definition for this problem. Many economists have given different definition like according to Coulborn, Inflation can be understood as a situation whereby “too much money chases too few goods”. A situation in which the value of money falls and price rises is inflation according to Crowther. These and other definitions have one or another deficiency. Economists are unanimous that inflation refers to a ‘persistent’ and ‘appreciable’ rise in the general price level. However, the word persistent and appreciable are not clearly defined so there is space for ambiguity. For example, whether the rate of price rise by 1 %, 5 % or 30 % is considerable or there is some other rate which is deemed to be considerable. The issue of inflation is of utmost importance because it is both boon as well as bane. A rise in prices is necessary for producers to induce them to supply more in the market. But higher prices lead to more burden on the consumer pocket and it may also create many political and social problems. So, what an economy needs is a moderate rate of inflation. This takes us to another question, what is a moderate rate of inflation? The answer to this question varies from country to country depending on the level of development. For instance, in the case of India, a committee set up by the Reserve Bank of India (RBI) to review the monetary system which is popularly known as Chakravarty Committee (1985) recommended that 4 percent rate of Inflation is desirable for India’s economic growth.

Different Methods of Measuring Inflation 

There are two common methods of measuring inflation.

Effects of Inflation 

Inflation affects almost all the economic agents of the economy be it consumer, producer or government. The favourable or unfavourable effect depends upon the rate of inflation. In this section, you will understand how does it impact the distribution of income and wealth, producers, wage earners, borrowers and lenders and some other segments of the economy. 

Impact on Income Distribution 

How will inflation affect income and wealth distribution depends upon the prices of the output which the producer produces and the prices of the inputs like labour and land. If output prices rise more than input prices, then income will be distributed in the favour of the producer or the profit earner or the employer. The plausible explanation is when the price of output rises, it translates to higher revenue and profit of the producer. So the revenue-wage gap increases and the larger share of the national income goes to the employer. The overall impact is that firm/producer who was already rich they get even richer and the poor (especially labour) get poorer.

 

Deterioration in the Value of Money 

Inflation erodes the purchasing power of money. It implies that the real wages or real income decline with a rise in prices. For example, let us suppose that the price of good X was Rs 10 per piece and you have Rs 500 as your money income. So if you spend your entire income on good X, you could buy 50 units/pieces. Now keeping other things constant the price of good X rise to Rs 20 per piece. Now the same Rs 500 can fetch you only 25 units of X good. So the currency denomination remains the same but its purchasing power reduces. You can buy fewer goods with the same income. This type of effect is most harmful to daily wage earners, persons with fixed income and employees working in the unorganised sector, as they do not have any safeguard against this price rise.

Impact on Borrowers and Lenders 

It is the borrowers who tend to gain due to inflation and lenders lose. Now suppose you are a borrower and you borrow money at the prevailing rate of inflation. Now when you repay the same amount to your lender no doubt you are paying the same amount with the rate of interest but the real value of money has reduced. More specifically you pay less in terms of purchasing power or goods and services. So you(borrower) gain and your lender losses.

 

Methods of Taming Inflation 

Monetary policy is one of the policy option and direct method of controlling inflation. Reserve Bank of India makes use of monetary policy to regulate the supply of credit in the market.

MMPC 03 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC 03 - Business Environment

MMPC-003/TMA/JULY/2022

Note: Attempt all the questions and submit this assignment to the coordinator of your study centre. Last date of submission for July 2022 session is 31st October, 2022 and for January 2023 session is 30th April, 2023. 

Question No. 1. Define inflation. What are the different methods of measuring inflation and what are the effects of inflation.                                 CLICK HERE

Question No. 2. What do you understand by business ethics? Discuss the importance of business ethics and the ethical issues involved in business.                               CLICK HERE

Question No. 3. Discuss the structure of capital market in detail.                               CLICK HERE

Question No. 4. Describe the key players in the agricultural sector and discuss the role and importance of agricultural marketing.                               CLICK HERE

Question No. 5. What are the main components of Balance of Payments (BoP)? Discuss the factors affecting the BoP.                               CLICK HERE

Question No. 6. Write notes on the following:                               CLICK HERE

a) Measures to reduce barriers to foreign trade. 

b) Impact of technological environment on international business.

Question No. 5 - 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. 5. What is career development? Explain the process of career development citing examples.

Career is viewed as a sequence of position occupied by a person during the course of his lifetime. Career may also be viewed as amalgam of changes in value, attitude and motivation that occur, as a person grows older. The implicit assumption is that an invididual can make a different in his career over time and can adjust in ways that would help him to enhance and optimize the potential for his own career development. Career development is important because it would help the individual to explore, choose and strive to derive satisfaction with one‟s career object. Through career development, a person evaluates his or her own abilities and interests, considers alternative career opportunities, establishes career goals, and plans practical developmental activities.

On the part of employees, they should manage their own careers like entrepreneurs managing a small business. They should think of themselves as self-employed. They should freely participate in career planning activities and must try to get as much as possible out of the opportunities provided. The successful career will be built on maintaining flexibility and keeping skills and knowledge up to date. Career development essentially involves the functions of career planning and succession planning. Both these functions are carried out by HR department. Keeping in view the organisational goals and capabilities of individual employees subsequent sections would cover the functions of career planning and succession planning in detail.

CAREER DEVELOPMENT PROCESS

There are two components of career planning and development: 

A) Career Development Programme, and 

B) Career Planning Process and Activities

A) Career Development Programme This involves three activities: 

a) Assisting employees in assessing their own internal career needs. 

Internal Career Assessment: Since a person's career is extremely important element of life, each person is to make his or her decision in this regard. However, the HR manager may assist an employee's decision-making process by providing as much information as possible to the employee showing what type of work would suit him or her most, considering his or her other interest, skill, aptitude, and performance in the work that he or she is already doing. For rendering such help some big organisations provide formal assessment centre/workshops where small groups of employees are subjected to psychological testing, simulation exercises and depth interviewing. The objective of such programmes is not that of selecting future promotees, but rather to help indivuduals to do their own planning. 

b) Developing and publicising available career opportunities in the organisation. 

Career Opportunities: Knowing that employees have definite career needs, there naturally follows the obligation of specifically charting career paths through the organisation and informing the employees. For identifying the career paths the technique of job analysis may help in discovering multiple lines of advancement to several jobs in different areas. 

c) Aligning employee needs and abilities with career opportunities. 

Employee's Needs and Opportunities: When employees have assessed their needs and have become aware of organisational career opportunities the remaining problem is one of alignment. For aligning or matching the career needs of employees to opportunities offered by the organisation, special training and development techniques such as special assignment, planned position rotation, and supervisory coaching, are used. The HR department of some organisations have also some system of recording and tracking moves through the organisation, and maintain an organisation chart that highlights age, seniority and promotion status.

 B) Career Planning Process and Activities 

The process of career planning involves a number of activities or steps to be undertaken as mentioned below: 

a) Preparation of HR inventory of the organisation, 

Organisation's HR Inventory: Such an inventory is an essential prerequisite for any successful career planning within the organisation. This inventory should be so prepared as to provide the following information: 

• Organisational set up and its different levels. 

• The existing number of persons employed in the organisation. For this, manning tables are prepared showing the nature of positions at different levels of the organisation and the number of persons manning those jobs. Sometimes the age of persons holding the jobs are also mentioned in the table to show when they are likely to retire and when the vacancy thus caused may be required to be filled. 

• Types of existing employees, their status, duties, qualifications, age, aptitude, ability to shoulder added responsibility and their acceptability to their colleagues. 

• Whether the existing manpower is short or in surplus to requirements. If there is a shortage, how many more persons are required, and for what positions. 

Number of persons required in the near future, say in the next one to five years, to meet the needs arising from expansion or diversification of work or natural wastage of manpower. The latter includes death, permanent disability, superannuation and retirement, discharge, dismissal, voluntary resignation, or abandonment of the jobs. Collection of all the above information may amount to manpower planning, and involve preparation of manpower budget showing present and immediate future needs. 

b) Building career paths or ladders for various categories of employees, 

Employee's Potential for Career Planning: After determining the career path, the next logical step is to find out the suitable employees who may have the necessary ability and potential for climbing up the ladder and are willing to be promoted and to take up higher responsibilities. For this the management control technique of Performance Appraisal and Merit Rating is utilised. Periodical evaluation and merit rating of employees is also necessary for proper planning of manpower and career of employees in the organisation. This can be possible only by knowing how much and what types of human resources are available, and the potential of employees whose career is to be planned.

c) Locating or identifying employees with necessary potential for career planning, 

Formulation and Implementation of Training and Development Plans and Programmes: For making the career planning a success it is essential that the training and development programmes should be so planned and designed that they meet the needs of both the management and employees. The participants of these programmes should be the employees who are willing to be trained and developed further to make their career in the organisation. Methods of training and nature of skill and knowledge to be imparted may be different for different types of employees. The emphasis may be on improving technical skills of skilled workers and on acquiring and improving leadership qualities, human and conceptual skills for senior supervisors, executives and managers. 

d) Formulation and implementation of suitable plans for training and development of 

Age Balance and Career Paths: One widespread difficulty in career planning may arise from the need to accommodate people in the same level of supervisory and managerial hierarchy, some of whom are young direct recruits and others are promotees who are almost always considerably older. The latter, because of their limited education or formal professional qualification, cannot expect to move up very high; the former as they are better educated and trained have aspirations for rapid vertical mobility. Promotion and direct recruitment at every level must, therefore, be so planned as to ensure a fair share to either group. Intense jealousies, rivalries or groupism may develop if this aspect of personnel administration is neglected. Very quick promotions which create promotion blocks should also be avoided if the employees are not to feel stagnated or demotivated at early stages of their careers, and think of leaving the organisation for better prospects. Such a situation can be avoided if promotions are properly spaced. 

e) persons for different steps of the career ladder or paths, and 

Review of Career Development Plans in Action: Career planning is a continuous activity. In fact it is a process. For effective career planning, a periodical review process should be followed so that the employee may know in which direction the organisation is moving, what changes are likely to take place and what resources and skills he or she needs to adapt to the changing organisational requirements. Even for the organisation, annual evaluation is desirable to know an employee's performance, limitations, goals and aspirations, and to know whether the career plan in action is serving the corporate objective i.e. effective utilisation of human resources by matching employee abilities to the demands of the job and his or her needs to the rewards of the job. Some of the questions that could be asked while evaluating the career plan might be:

• Was the classification of the existing employees correct? 

• Are the job descriptions proper? 

• Is there any employee unsuited to his or her job? 

• Are the future manpower projections still valid? 

• Is the team pulling on well as a whole? 

• Are the training and development programmes adequately devised to enable the employee to climb up the career ladder and fit into higher positions?  

Answers to all these and other questions can be found either by holding brainstorming sessions or by undertaking a survey of career planning activities and their impact on the working of the organisation.

f) Maintaining age balance while taking employees up the career path and review of career development plan in action, etc.

Career Counselling: Career planning may also involve counselling individuals on their possible career paths, and what they must do to achieve promotions. The need for such counselling arises when employees plan their own careers, and develop or train themselves for career progression in the organisation. This does not mean revealing the number of determined steps in a long range plan of the organisation. Even if it were possible, it would be inappropriate to raise expectations which might not be fulfilled or induce complacency about the future. In counselling, the wisest approach is to provide a scenario of the opportunities that might become available. The main aim should be to help the individual concerned to develop oneself by giving him or her some idea of the direction in which he or she ought to be heading. Some other objectives of career counselling are as follows:

• Enabling individuals to study the immediate and personal world in which they live. 

• Providing a normal mature person with guidelines to help him or her understand oneself more clearly and develop his or her thinking and outlook. 

• Achieving and enjoying greater personal satisfaction, pleasure and happiness. 

• Understanding the forces and dynamics operating in a system. 

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.