EMPLOYEE COMPENSATION MANAGEMENT

ASSIGNMENT –I
1. (a) Minimum wage.
(b) Wage boards.
(c) Time rate.
(d) Incentive.
(e) Job evaluation.
(f) Blue collar worker.
2. Critically examine wage policy of India.
3. What are the determinants of wages?
4. Assess the working of pay commission in India.
ASSIGNMENT –II
5. State the recent trends in managerial compensation in India.
6. How are wages related to productivity?
7. Explain different methods of wage payment.
8. Case study
Of all its HR programs, those relating to pay for performance and incentives are LearnlnMotion.com’s
most fully developed. For one thing, the venture capital firm that funded it was very explicit about
reserving at east 10% of the company’s stock for employee incentives.
The agreement with the venture capital firm also included very explicit terms and conditions
regarding LearnlnMotions stock option plan. The venture fund agreement included among its 500 or
so pages the specific written agreement that LearnlnMotion.com would have to send to each of its
employees, laying out the details of the company’s stock option plan. While there was some flexibility
the stock option plan details came down, in a nutshell, to this (1) Employees would get stock options
(the right to buy shares of LearnlnMotion.com stock) at a price equal to 15% less than the venture
capital fund paid for those shares when it funded LearnlnMotion.com; (2) the shares will have a
vesting schedule of 36 months, with one-third of the shares vesting once the employee lies completed
12 full months of employment with the company, and one-third vesting upon successful completion of
each of the following two full 12 months of employment (3) If an employee leaves the company for any
reason prior to his or her first full 12 months with me firm, the person is eligible for no stock options
(4) if the person has stock options and leaves the firm for any reason, he or she must exercise the
options within 90 days of the date of leaving the firm, or lose the right to exercise them.
The actual number of options an employee gets depends on the person’s bargaining power and on how
much Jennifer and Mel think the person brings to the company : The options granted generally
ranged from options to buy 10,000 shares for some employees, up to 50,000 shares for other employees,
but this has not raised any questions to date, When a new employee signs on, he or she receives a
letter of offer. This provides minimal details regarding the option plan; after the person has completed
the 90 day introductory period, he or she receives the five-page document describing the stock option
plan, which Jennifer or Mel, as well as the employee, signs.
Beyond that, the only incentive plan is the one for the two salespeople. In addition to their respective
salaries, both salespeople receive about 20% of any sales they bring in whether those sales are from
advertising banners or course listing fees. It’s not clear to Jennifer and Mel whether this incentive is
effective. Each salesperson gets a base regardless of what he or she sells (one gets about $ 50,000, the
other about $ 35,000). However, sales have simply not come up to the levels anticipated. Jennifer and
Mel are not sure why. It could be that Internet advertising dried up after March 2000. It could be that
their own business model is no good, and there’s not enough demand for their company’s services.
They may be charging too much or too little. It could be that the salespeople can’t do the job due to in
adequate skills or inadequate training. Or, of course, it could be the incentive plan. ("Or it could be all
of the above," as Mel some what dejectedly said late one Friday evening.) They want to try to figure
out what the problem is. They want you, their man agement consultants, to help them figure out what
to do Here’s what they want you to do for them.
Questions :
(a) Up to this point we’ve awarded only a tiny fraction of the total stock options available for
distribution. Should we give anyone or everyone additional options? Why or why not?
(b) Should we put other employees on a pay-for-performance plan that somehow links their monthly
or yearly pay to how well the company is doing sales-wise? Why or why not?
If so, how should we do it?

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