 The fourth principal HRM function, maintenance of

human resources, encompasses HRM activities related

to employee benefits, safety and health, and worker-
management relations.

 It is concerned with protecting and promoting

employees while at work. For this purpose, benefits
such as housing, medical, educational, transport
facilities, etc. are provided to the employees.

 Several social security measures such as provident

fund, pension, gratuity, group insurance, etc. are also
arranged.
 Compensation and Benefits is rewarding the employee
for the services rendered by them for the benefit of
the organization.

 It is a set of programs aimed at achieving the following

objectives:
a. Compensation aids in attracting capable employees
to the organization.
b. It also helps motivate employees towards superior
performance.
c. Compensation also helps in retaining the employees
and their services over an extended period of time.
 Compensation function involves determination of
wages and salaries matching with contribution
made by employees to organisational goals.

 In other words, this function ensures equitable and

fair remuneration for employees in the
organisation.

 It consists of activities such as job evaluation,

wage and salary administration, bonus, incentives,
etc.
A. External factors
1. Condition of labor market
 Labor demand and labor supply
 If the labor supply is less than the demand, there
will be pressure on wage rate and subsequently
wages will rise.
 The compensation should match the market rate.
2.Legal factors
 Country’s specific rules and regulation largely
determine the pay structure.
 In Nepalese context, Labor Act 1991 and Labor
Regulation 2050 have made provision to form
minimum remuneration fixation committee to
determine wages.
3. Union Influences
 Strong presence of unions and the role of collective
bargaining in fixation of wages at the national level
influences pay structure.
4. Cost of living
 As inflation increases wages must also increases to
maintain the standard of living of employees.
5. Area wage rate
 Wages rate may differ -geography to geography due to
the changes in labor supply and demand.
 Employers’ Compensation strategy(rigid or flexible)
 Worth of a Job
 Employees Relative Worth
 Employers Ability to Pay
 anincentive is any factor (financial or non-
financial) that provides a motive for a particular
course of action, or counts as a reason for
preferring one choice to the alternatives.

 Anincentive is something that motivates an

individual to perform an action.
 Grievances are employee’s perception of unfair treatment
on the job. They lead to feelings of dissatisfaction.

 They mainly result from differences in employee

expectations and managerial practices relating to
conditions of employment.

 A "grievance" means a dispute concerning terms

and conditions of the employment arising from any
administrative decision which the employee claims is
in violation of rights under, or a failure to apply.
 Handling an employee complaint or grievance can be
one of the most challenging duties an HR manager will
have to undertake.

 Be a good listener: Never interrupt when an employee

is talking, even if you disagree with the opinions
expressed. Complaints often dissolve and resolve
themselves when people simply have a chance to talk
about them.

 Ask questions: Your questions should indicate interest

and a desire for more information.

 Do not argue: Present any information you have in a

persuasive manner rather than an argumentative one.
Arguing builds resistance and can make employees
more determined to have their way regardless of the
facts.
 Make sure you understand: Some people have difficulty expressing
themselves – and can have even more problems if they are stressed or
emotional.

 Treat all employees with respect: If you attempt to make an employee

feel foolish, you will destroy the lines of communication and trust. Let
others save face and retreat gracefully.

 Gather the facts: If you are unable to make a decision during the
meeting, investigate what the team member has said, check the situation,
refer to employment agreements or other relevant documents and, where
appropriate, consult with higher management before making a final
decision.

 Make a decision: Once you make a decision (even if it is unpopular), stick

to it firmly unless new evidence that deserves consideration is presented.

 Explain your decision: If your decision is distasteful to the employee in

question, take the time to explain it and answer any questions. Employees
might not agree and might appeal your decision, but they will respect you
for your stand.

 Thank the employee: Express your appreciation for the employee’s

willingness to communicate openly about problems. This will encourages
more open communication in the future.
 Causes of Grievance
 Following are the cause of grievance;
 Promotion
 continuity of service
 compensation
 disciplinary action
 fines
 increments
 leave
 medical benefits
 nature of job
 payment
 acting promotion
 recovery of dues
 safety appliances
 transfer
 victimization
 condition of work
 Employee Discipline

 All managers have to deal with some employees/workers who

frequently remain absent from the jobs, drink on the job, are
insubordinate, steal Company, property, show habitual tardiness,
fight and commit other serious offences on the job.

 These problems lead to disciplinary actions to control such

undesirable behaviours at work. There are a number of definitions
and views regarding discipline in an organization.

 According to Dessler, “A procedure (discipline) that corrects or

punishes a subordinate a rule or procedure has been violated.”

 According to Beach, ‘’Discipline involves the conditioning or

moulding of behaviours by applying rewards or penalties.”

 “The term ‘discipline’ refers to a condition in the organization
when employees conduct themselves in accordance with the
organizational rules and standards of accountable.”
 The main purpose of discipline is to encourage
employees to behave in the way that makes sense
at work.

 As outlined above to enforce discipline, managers

can use either reward (constructive) or
punishment (punitive). The most effective
discipline is to provide opportunity to the
employee for moulding his or her behaviour
permanently.

 However punishment is a short-term approach of

moulding employees’ undesirable behaviour
because they may repeat that behaviour again and
again and create employee relation problems at
work.
 Disciplinary Actions
 It include six progressive steps
 Simple oral warning: An effective manager starts his or her
reprimand process by making a simple oral warning.
 When any violation is noticed the manager starts action by
describing the rules and regulations and his expectation together
with informal oral warning.
 At the same time, the manager provides an opportunity to the
employee to suggest ways of improving the current behaviour.
 If the manager thinks that the problem is solved with the
behaviour of the employee corrected, he or she assures the top
management regarding the understanding of rules by the
concerned employee.

 Written warning: This is activated where there is a repetition of
the offences following oral warning, or where the offence is more
serious.
 This is a formal disciplining process in which a written warning
letter is given and a copy of it will be filed in the employee's
personal file for a record.
 In this letter, a description of the nature of violation, its effect
and the result of such violation are described to warn the
concerned employee.

 Suspension: If and when previous written warnings
have not been effective a suspension notice is given to
the employee concerned.
 The time for suspension depends on the degree of
violation. Depending on the nature of violation and its
effect on the organization’s performance and image'
the suspension may be for a week or for a year without
pay.
 Some organizations skip suspension for fear of negative
consequences for both the employee and company.

Demotion: It is an alternative of a dismissal. Many
organizations avoid dismissal of employees because of
its probable effect on the behaviour of co-workers.
 In such a case, the manager prefers to demote the
concerned employee if suspension has not been
effective.
 Pay out: This is another alternative of a dismissal.
Organizations do not want to lose an employee who is
experienced.
 Especially in the case of those employees who are
scare in the labour market, it is better to think in ways
other than dismissal.
 Pay cut although de-motivating for the employee
concerned is an appropriate way to reprimand an
employee to correct his or her behaviour on the job.

Dismissal: As a final resort, dismissal is used when an
employee fails to comply with other disciplinary
actions.
 However, for a gross misconduct where the offence is
very serious (eg theft, fraud, fighting and other serious
negligence), following an investigation, the employee
may be dismissed with going through the other steps.