Management Consulting/Human resource management


QUESTION: 1. Investment, Financing and Dividend decisions are interrelated.  Evaluate this statement.

2. There is nothing like an optimum capital structure for a firm" - critically examine this statement.

ANSWER: 1.Investment, Financing and Dividend decisions are interrelated." Evaluate this statement.

Inter-relationship Between Investment , Financing
And Dividend:

Three major functions of finance department are :
_ Financing Decision: This function is mainly concerned with determination of optimum capital structure of the company keeping in mind cost , control and risk. It is also known as Procurement of Fund.

_ Investment Decision: It is also known as Effective
Utilization of Fund. In this respect finance department has to identify the investment opportunities and to choice the best
one , after a proper evaluation.

_ Dividend Decision: The finance manager is also
concerned with the decisions to pay or declare dividend. He assists the top management to decide the portion of profit to\ be declared as dividend.

So far the objective is concerned , the above stated three functions are same i.e. maximizing shareholders wealth. As their objectives are same the decisions are interrelated. A company having profitable investment opportunities , generally prefer lower dividend pay out ratio. On the other
hand having a good investment means profit of the company would be more and more dividend can be paid to shareholders. Similarly , finance
function and investment functions are also highly correlated. Cost of capital plays a major role whether to accept or not an investment
opportunities. Financing decisions also dependent on amount of to be retained in the profit.
So , we can conclude that investment , financing and dividend decisions are interrelated and are to be taken jointly keeping in view their joint effect on
the shareholders wealth.
Financial decisions in any business can be essentially divided into two categories; those pertaining to raising of finance and those pertaining to using the finance. The former are known as financing decisions and the latter investment decisions. These are also termed as capital structure and capital budgeting decisions, or source mix and operating decisions, respectively.
When internally generated funds, namely profits are inadequate for the purposes of business, the management necessarily has to raise funds from outside, which may be either in the form of debt or equity. On the other hand, when profits generated in the course of business are sufficiently large, a part of it may be retained for the purposes of the business and the rest distributed away as dividends.
The decision on how much of the profits are to be retained and how much are to be paid out as dividends depends on several factors, such as the need for funds in business, the expectations of the shareholders, availability of investment opportunities to the business, alternative investment opportunities for the shareholders and so on. Ideally, a management should not retain the profits if it cannot reinvest the profits at a rate higher than what the shareholders can earn elsewhere.
If under such a situation a management retains any profit, the market price of the company’s shares would go down, so that the shareholders wealth will reduce. This will be counter to the corporate financial objective. For the same reason, a management should not distribute dividends if it could earn for its shareholders more than what they could earn elsewhere.
In practice, even when funds are required in the business for various purposes, the management may be constrained to pay out at least some dividends, to meet the shareholders’ expectations. There is a whole lot of theory which describes the impact of dividend payments on the wealth of the shareholders.
Besides financing, the other major preoccupation of the management is to invest the money raised. Clearly, investment would make sense only if a management could earn from a project (say a manufacturing activity) a return, which is in excess of the return expected by the stakeholders, namely the shareholders and the lenders of money on their investments. In general; however, opportunities for investment in the environment may be infinite.
Of these opportunities, the management must be able to identify those opportunities which will yield a positive net present value. i.e. projects whose present value of future expected cash inflows are in excess of the initial investment. Only such a course of action will increase the wealth of the shareholders.
Again, in case the management had access to unlimited amount of funds from the capital market (at least conceptually if not practically) it would be able to accept all the projects with positive net present value, so long as the projects were not mutually exclusive. This; however, is rarely the case; in reality a management often works under funds constraints. Under such a situation, one cannot accept all the projects yielding positive NPVs. Clearly some kind of categorization or ranking or projects is called for, so that the best among them within the constraint of funds available for investment could be accepted. Given the NPV rule and the corporate objective, the best project would be the one with the highest NPV. In general, the cash flows represented by a project are discounted by the weighted average cost of capital of the company in order to arrive at the NPV of the project. Uncertainty of future cash flows adds to the complexity of the investment decisions.

2."There is nothing like an optimum capital structure for a firm" - Critically examine this statement

The Optimal Capital structure is that Capital Structure at
which the weighted Average cost of capital (Ko) is Minimum.
It is that combination of Equity and Debt at which the
total cost of capital is minimum.

There is nothing called optimal capital structure. optimal capital structure for a company refers to the composition of debt and equity, where the firm cost of capital is the lowest and value of the firm the highest. Optima capital structure for one company can not be same for the other company as well as the firms differ from each other in their basic characteristics. Even if the firm have same basic characteristics, they differ in Human resource, skill set etc.
Under different theory, things differ a lot. Perhaps there's no optimal capital structure in pecking-order theory but in reality most companies set a target debt-to-equity (D/E) ratio. Anyway, let's focus on trade-off theory first.

Trade-off theory argues that there's an optimal amount of debt of each firm. At this level of debt, firms can take the most advantage of debts. Debts can be tax shie
ld so that they can save money for firms to reinvest in other projects so as to earn more profits. However, debts can be quite dangerous because highly leveraged firms may face bankruptcy and financial distress costs (no matter they're direct or indirect) may increase the cost of debt of the company. Therefore, there must be a level of debt that make the benefits of debt and potential danger of debt offset each other. In another word, the marginal revenue of debt equals the marginal cost of debt. But remember, the real cases are not as easy as we put here.

When a firm procures funds from investors or owners, there will be an explicit or implicit promise to pay return to them. The return is paid in terms of interest which is compulsory paid to all investors and owners, but the return paid to owners in the form of dividends is optional. The dividend decision by any firm, like the investment and financing decisions is also taken for maximization of market price of the share.
The term dividend refers to that the portion of profit (after tax) which is distributed among owners/shareholders of the firm and the profit which is not distributed is called as retained earnings –

Dividend Payout Ratio is determined by the dividend policy adopted by the company, and it is implemented to decide about the percentage of profits to be distributed by the firm to its owners/shareholders. Dividend is always depends on the total profit that a firm acquired after taxes. There are a few factors that affect the Dividend policy of a company they are
Liquidity 2. Growth Plans 3. Control
Dividend Payout Ratio is also called as DP Ratio which is a mathematical value as
DP Ratio = Dividend paid to the Shareholders / Net Profit after tax.

Capital Structural Theories
Capital structural theories are designed with a concept of valuation of the firm; it is the earnings of the firm and the investments made by the firm. Capital Structural Theories also used to find the dividend payout for its owners/shareholders. Cost of the capital, investment and return on investment (ROI) are a part of dividend policy.
The relationship between leverage cost of capital and the value of the firm can be analyzed in different ways. Factors determining Capital Structure are minimization of risk, control, flexibility and the profitability of the firm. A firm's capital structure is a combination of the firm's liabilities (debts) and the assets (equity and profits).
For Example: A firm with 100 billion as capital structure has 40 billion from equity (shareholders and owners) and the 60 million as debt (Loans and Funding), then the firm is said to be 40% - equity financed and 60% - debt financed.
With cost valuation of the firm determined using capital structure and the net operating profit using EBIT analysis we can determine the dividend payout for owners and shareholders for the firm.
Every firm has a dividend payout policy and it was always analyzed after the capital structure methods. There are some managerial implications that can be analyzed under capital structure theories for dividend policy, saying that dividend policies are always affected by the capital structural theories.

There are two types of Capital Structural Theories
Non-Traditional Theories
Traditional Theories
Non-Traditional Capital Structural Theories
Net Income (NI) approach is to determine the relationship between leverage, cost of capital and the value of the firm. As suggested by Durand, this theory states that there is a relationship between the capital structure and the value of the firm, therefore the firm can affect its value by increasing or decreasing the debt proportion in the overall finance mix.
Debt financing proportion is also considered in this approach, and then determines the distribution of funds as dividends.
Three variables are taken into consideration,
E - Value of Equity
O - Constant Value and
D - Value of Debt
For all levels of debt financing the O is constant and E and D are variable values, If D is less than E then there is an increase in the value of the firm.
Under NI approach, the firm will have the maximum value capital at a point where constant (O) is minimized. With a judicious use of debt and equity, a firm can achieve optimal capital structure.

Traditional Theories
Net Operating Income (NOI) approach is just an opposite of NI approach. According to the NOI approach, the market value of the firm depends upon the net operating income or profit and the overall cost of capital.
NOI approach is based on the argument that the market values the firm as a whole for a given risk complexion. Thus, for a given value of the firm remain the same irrespective of the capital composition and instead on the overall cost of capital.
Mathematically Net Operating Income (NOI) is
Value of the Firm = Earnings before Tax / Cost of Equity Capital
Net Operating Income approach says that an increase in debt proportion of the capital source will always result in increase of the equity proportion of the firm.
Modigliani-Miller Model
Modigliani-Miller model which was presented in the year of 1958 on the relationship of leverage, cost of capital and the value of the firm. This is widely used capital structure method to analyze the value of the firm.
They have shown that the financial leverage doesn't matter and the cost of capital and the value of the firm are independent of the capital structure. Modigliani-Miller methods show that there is nothing which may be called as Optimal Capital Structure - to get high valuation of the firm.
Modigliani-Miller model is based on following assumptions:
The capital markets are perfect and complete information is available to all the investors free of cost. The implication of this assumption is that investors can borrow and lend funds at the same rate and can move quickly from one security to another,
Securities are infinitely divisible; Investors are rational and well informed about the risk-return of all the securities.
Modigliani-Miller model says that the total value of the firm is equal to the capitalized value of the operating earnings of the firm. The capitalization is to be made at a rate appropriate to the risk class of the firm.
Managerial implications that can be drawn from capital structure theories for dividend policy?
Dividends are given to owners/shareholders only when the firm is having profits after tax. In order to make a dividend policy the firm should have a capital structure theory that will determine the value of the firm and the operating income.
In dividend decisions, a finance manager should decide one or more of the following:
Should the profits be ploughed back to finance the investment decisions
Whether any dividend be paid?
How much dividends to be paid?
When these dividends be paid?
In what form the dividends are paid?

Growth Plans, are involved in capital structural theories in which a certain amount will be allocated for the growth plans. A finance manager should draw a plan according for the dividend policy.
For Example: The firm has $10 million as equity capital and $6 million as debt capital and the firm made a profit (after tax) of $2 million, and the fund allocated to the growth plan was $1 million.
For suppose there are 10,000 shareholders in the company and as per capital structural theories some amount will be allocated for the liquidity that is five hundred thousand and the remaining amount should be distributed as Dividends. In this case each shareholder or the owner will receive $50 as dividend.
Legal and Procedural Considerations: When the firm issues shares to public, the firm should issue a share information brochure which contains the details of dividends and extra bonus -according to company laws.
Capital structural theories say that if a firm is in profit and it is looking to expand the business, the profit can be rolled over to the investment option.
In this case there will be no dividends or bonuses issued to the shareholders or the owners.
For Example: Low-payout consequences, which is done when the cash gets accumulated the financial manager may be tempted to take on more projects that do don't meet the minimum rate of return investments.

If a firm has $1 million as operating income with 1000 shareholders and firms adopts to take new projects with the profit. Then this may cause unrelated relationship balances between the shareholders and the management of the firm.
Payment of Dividend & Raising of fresh Capital: Finance manager has task to do the both the works i.e. payment of dividend to the shareholder's and owner's and also raising the fresh capital. Modigliani-Miller Model proves that this can be done, and every investor should be known with these details.
Modigliani-Miller Model has shown that the dividend payment will not have any effect on the value of the firm. If firm pays the dividends resulting in increase in the market value of the share and the firm. The effect on the value of the firm will be neutralized by the decrease in the terminal value of the share.
For Example: A firm has 1, 00,000 shares outstanding and is planning to declare a dividend of $5 at the end of current financial year. The present value of the share is $100. The cost of equity capital E may be taken at 10%. The expected market price at the end of the year may be under two options.
Dividend of $5 is paid
Dividend is not paid
If the dividend of $5 is paid (The value of D = 5)
P - Present value of the share (P = 100)
E - Cost of equity (E = 10)
P1 - Expected Market Price of the Share

As per Modigliani-Miller Model
P1 = P (1+E)-D
P1 = 100(1+10) - 5
P1 = 105
So, the market price of the share is expected to be $105, if the firm pays dividend of $5.
If dividend of $5 is not paid (The value of D = 0)
P1 = P (1+E)-D
P1 = 100 (1+10) - 0
P1 = 110
So, the market price of the share is expected to be $110, if the firm does not pay the dividend of 5$.
Stability of Dividends: Another important implication of dividend policy is the stability of dividends that is how stable and regular the dividends are paying out. It is said that generally the shareholders favor stable dividends and those dividends which have prospects of steady upward growth.
So, while designing a dividend policy for the firm, it is also to be considered as to whether the firm will have a consistency in dividend payments or the dividends will fluctuate from one year to another.
Firms should maintain constant DP ratio (Dividend Payout Ratio)
A firm may have a policy of distributing a fixed percentage of earnings as dividends to its shareholders. The higher the profits will result in higher absolute dividends while lower the earnings will result in lower absolute amount of dividends.
For Example: A firm having the dividends payout ratio of 60% will distribute 6 hundred thousand dollars for a profit of $ 1million and it will distribute $ 2, 40,000 only if the profits are $ 4, 00,000 and so on...
Thus, the percentage of the dividend rate or dividend per share may fluctuate from year to year depending upon the earnings of the firm.
Optimal Capital Structure: Even though Modigliani-Miller Model says that there is nothing like Optimal Capital Structure, but the non-traditional methods say that a firm can attain profits only by implementing Optimal Capital Structure.
Some firms adopt this capital structure to minimize the risk, flexibility on the investments and the profitability.
The finance manager should be able to identify that optimal point (profit point) for the firm precisely, but not to attempt to track the optimal range for the capital structure.
Optimal Capital Structure differs from different firms, Existing Firm and a New Firm.
For Example: Existing Firm may require additional capital funds for meeting the requirements of growth, expansion, and diversification or even for working capital management. The decision for a particular source of funds is to be taken in the totality of capital structure, i.e. in the light of the resultant capital structure after the proposed issue of capital or debt.

The Capital Structure of the new firm is designed in the initial stages of the firm and the financial manager has to take care if many considerations, the present capital structure be designed in the light of a future target capital structure. Future plans, growth and diversifications strategies should be considered and factored in the analysis, so optimal capital structure greatly influences the dividend policy of any firm, depending upon there capital structure.
Broadly speaking the dividend policy can be determined by two basic analyses required to find the valuation of the proposed capital structure of the firm, i.e. one from the point of view of profitability and another from view of liquidity.
Capital structure will always determine the profits of the firm and the development of the firm. Equity and Debt capital are well managed by the capital structure of the firm. A well designed capital structure will have a very good impact on the dividend policy of the company.

---------- FOLLOW-UP ----------

QUESTION: Human Resource Management

Q:Should central and state governments tbe able to legislate minimum wages rather than adopting a laissez-faire attitude that would allow employers operating on a slim profit margin to pay only what they could afford?  Discuss.

Q:Design a process for promoting internal candidates.  How does the process differ from the one used for selecting external applicants.  State its impact on the satisfaction level of employees.

2. Design a process for promoting internal candidates. How does the process differ from the one used for selecting external applicants. State its impact on the satisfaction level of employees.

The  two  processes   are  totally  different.
-purposes  are  different.
-objectives  are  different.
-process  are  different.
-procedures   are  different.
-outcomes  are  different.
-policies  are  different.
It is the policy of   ABC  to foster the advancement of its
employees. This policy enhances the upward mobility of staff members through range  of jobs
and complements the present business practices at the ABC which allow for
personnel development.
The policy is based on the recognition that in the course of meeting  ABC
objectives, the duties and functions of an employee may change in complexity and
responsibility. Promotions therefore, are based on status changes that involve increasing
responsibility levels. The added benefits of promotion serve as an incentive for better
work performance, enhance morale and create a sense of individual achievement and
recognition. While good past performance enhances the validity of the promotion, it
should not, of itself, be the primary nor sole reason for recommending a candidate for
promotion. Consistent with prior practice, all positions above ............. will be filled
through  ABC ’s search and screen procedures. Exceptions may be requested through the
appropriate  '' SENIOR  MANAGMENT ; the business, organizational, fiscal and legal implications of
the request must be fully explained and justified.
Employment opportunities at ABC  may occur because an incumbent has been given
expanded duties, responsibilities and authority, progressing, for example, through a
recognized family of titles , or has moved to a different
position vacated as a result of another incumbent having been promoted, transferred,
discharged, or retired. The promotion of a staff person at the ABC  does not
typically involve an additional budget line being added to the promotion department’s
budget. Along with the increased responsibilities, the promoted person will receive an
increase in salary, sufficient direction to begin the new position, and a new job

Persons seeking to promote staff members in their respective areas are reminded to pay
particular attention to past annual performance evaluations. These documents indicate
prior performance levels and accomplishments in the department, illustrating, for
example, how effectively the tasks assigned were completed.

The formal policy statement follows this section. A committee appointed by the
CEO  to monitor the use, effectiveness and institutional impact of the policy will
review the policy one year after its initial implementation.

It is  ABC ’s goal to ensure maximum opportunity for promotion from within, consistent
with the commitment to institutional needs and institutional excellence, affirmative
action, equal opportunity and applicable contractual agreements.
1. It is recognized that a promotion may occur through the following ways:
(1) A reclassification of the individual’s existing position as a result of
the individual performing duties at a higher degree of responsibility
and complexity than the current classification calls for. This requires
an audit of the position through the job evaluation process.
(2) The filling of an existing higher level vacancy by a promotable
individual at a lower classification. Both processes must include a
current job description and a new job description of the individual
being promoted. Accordingly, it is ABC  policy to provide
internal employment to qualified candidates through
intradepartmental and interdepartmental promotion whenever
possible. The criteria used when considering employees’
qualifications for promotion must be fair and unbiased, and all
ABC  employment policy requirements must be fully met and
documented. Employees are to be considered for promotion
regardless of age, sex, race, color, national origin or physical

For the purpose of this policy statement, a promotion is defined as advancement to a
different position which has increased responsibilities and adjustment to a higher salary
level. All ABC  employees who have successfully completed the probationary period
specified by conditions of employment or contract are eligible to be considered for
promotion. They are encouraged to review all job vacancies circulated to each
department and posted in the  HR  office on a regular   basis.

MANAGERS   should also be aware that promotable candidates need not only satisfy the
qualifications as specified in the job description and  the qualities, skills or knowledge
of the incumbent.

I. Posting
MANAGERS   should encourage all support staff member within their areas of responsi-
bility in the pursuit of career advancement and should ensure that all qualified internal
applicants, especially women and minorities, are duly considered for vacancies in their
unit before recruiting outside candidates. Accordingly, to promote internal mobility, a
procedure for waiving job posting requirements and/or external advertisement has been
For positions , the following criteria must be met:
(1) The positions are in the same department, and one position genuinely
prepares the incumbent for the next. This allows for upward movement
within the same or related family of job groups where skills are easily
(2) The incumbent has already demonstrated the ability to perform the higher
job, but in no event will the incumbent be promoted to positions higher
than 3 grade ranges.

(3) The incumbent has met any special requirements such as a course or a
(4) An employee on layoff status is to be rehired.
[5]The department must be able to demonstrate a satisfactory past record in
the hiring and promotion or women or minorities; or
(6) the unique and specialized requirements of the open position justify
promotion individuals possessing the special qualification to meet those
To request a waiver of search for a position, a “Waiver Request” form must be submitted
by the hiring department to the  HR  outlining the circumstances
giving rise to the request relevant to the established criteria. The request should also
include the race, ethnicity, sex and qualifications of the person selected for promotion.
The “Waiver Request” must be signed by the  HR/CEO, BRANCH  MANAGER  prior to processing the Position
Requisition Form.
All interdepartmental promotions will be posted if the intradepartmental search has not
been successful.

1. Responsibilities of Appropriate Director, or Department Chairperson
A completed Personnel Action Form is signed by the Department Chair,  and
HR  Office and submitted to the Director of Personnel. The “current status” of the
candidate and the recommended “new status” should be stipulated under the remarks
section. Accompanying the Personnel Action Form should be the following documents:

(1.1) A memorandum justifying the reasons for the recommendation. If the
promotion exists either through the filling of a vacancy or through a
reclassification, all relevant data chronicling the person’s most recent
evaluation(s) and the criteria being evaluated should be included. Also
included should be a statement of functional and organizational changes
within the department impacting the position; other data such as, but not
limited to: proof of graduation from certificate, baccalaureate or master’s
program; completion of job related service training courses which enhance
current job knowledge and skills.
(1.2) A current job description of the candidate.
( ) A copy of the vacant position or a statement outlining the new duties and
responsibilities to be evaluated.
2. Responsibilities of the  HR
The HR  shall review all aspects of the promotion with respect to
payroll, salary, benefits, seniority change, range/step movements, change in union
membership, effective start date and the organizational structure created by these
movements. If a position is to be reclassified, the  HR   conducts a  job
evaluation, determines the new range and develops the new job description and title for
the position. Upon completion of this review, the  HR  signs the Personnel
Action Form and forwards all materials to the Director of Affirmative Action.
3. Responsibilities of the  Director
The Director  will then review the credentials, job classifications,
and organizational composition of the affected department to insure that the promotion
satisfies Affirmative Action program goals and guidelines. The review must insure that,
whenever possible, the employment status of minorities and women will be enhanced,
and that these individuals will not be subject to unfair standards, tests or considerations
with respect to the criteria used to make selections. Upon completion of the analysis, the
Director signs the Personnel Action Form and forwards all materials to the
4. Responsibilities of the  HR/ POLICY  COMMITTEE
The  reviews all the data compiled to determine the appropriateness of the
promotion with respect to the short and long term staffing needs of the department and
university as well as the budget implications. The determination of the committee will be
communicated to the candidate, department and  CEO.
5. Effective Date of Promotion
A promotion resulting from a reclassification becomes effective retroactive to the date of
receipt of the Personnel Action Form to the HR.


1.Scope of Responsibilities : The postholder should carry organisational responsibility significantly beyond that expected of the 'average' .

2.Scale of Responsibilities : The postholder should be responsible for a major operational role and the responsibilities must reflect on  the  experience .

3. Depth of Experience : The person concerned should have developed expertise in substantial  organisational responsibilities carried over a period of time, and continuing.

4. Wider Contribution : The postholder must make a significant positive contribution to the advancement of
department wide initiatives and systems in the relevant sphere of activity.

5. Excellence : The postholder must be able to demonstrate excellence, in the relevant sphere of activity.

6. POTENTIAL : should have  been  assessed  for  the  necessary  potential.

7.PERFORMANCE : should  be  appraised  for  performance,
         for  qualitative /  quantitative.

8.EXPERIENCE: possess  the  required experience.

9.EXPERIENCE : any  exceptional  experience  for  the  position.

10.EDUCATION : the minimum  educational qualifications  required.

11.EDUCATION : any exceptional educational qualification.

12.NEW INITIATIVES : new  initiatives  undertaken.

13.NEW  INNOVATIONS: new  innovations generated.

14.RESPONSIVENESS: to  emergency  issues.

15.EFFECTIVENESS/ QUALITY: in problem solving/decision  making.

Recruitment   policy

Recruitment Policy of XYZ

Identifying the competitive and reasonable resources by establishing attractive packages and congenial
environment for different levels and stimulating the right people to come and opt

I.   Objective:
•   To streamline the Recruitment process,
•   To ensure that we always hire the RIGHT people at RIGHT role at RIGHT time, and
•   Also to thrive a strong Employer Branding to attract the best talents available in the Industry

II.   Scope:
Covers all the vacant positions across the functions, levels and hierarchy. To enable HR to initiate the hiring process at any point of time during the year, the respective HOD / functional / Regional heads need to follow the below-mentioned steps –
•   Fill-up a ‘Manpower Requisition Form (MRF)’ (Refer Annexure I)

•   Get the MRF approved by the concerned approving authorities

•   Forward the approved MRF to HR

III.   Recruitment Quality Norm:
In today’s knowledge driven business scenario, People are perceived as the most valuable assets of an organization and the optimum utilization of the skill, knowledge, attitude, they posses, are directly instrumental to the growth of any organization.

  Therefore, while recruiting a candidate for any role, position, level, function, it should always be ensured that there is no compromise in the quality of people, we hire.

Besides checking the presence of role-specific key competencies & the behavioral attributes required to perform a job, few basic eligibility criteria should be considered, even before a candidate is called for the Initial rounds of Interviews -

•   Academic Qualification: Minimum Graduate (Recognized university) for all positions and there should not be any unjustified gaps in education.

•   Psychometric / General Intelligence test: All the short-listed candidates should be run through a Psychometric / General Intelligence test and candidates qualifying this test, would be eligible for the next rounds of tests / interviews.

•   Reference check: Reference check is MUST for all recruitments across the country and HR should always ensure that Reference check is done before extending the offer to a selected candidate.

a.   Candidates selected after rounds of tests/Interviews would be asked to provide the names & contact details of at least 3 persons as his/her Professional References, and

b.   HR would contact these references and the comments & remarks of the referees would be documented and preserved for future records.

c.   HR in some of the critical cases may also carry out an Independent Reference Check through the respective Placement consultants (who had sourced the CV of the concerned candidate), who would check with at least 2 referees (one each from 2 different organizations) whom the concerned candidate had worked with in the past.

IV.   Internal Recruitment:

•   As a conscious focus of the organization to nurture high potential talents by providing them suitable career growth opportunities within the organization, efforts would always be made to fill in specific vacancies from it’s existing human resource pool.

•   The entire process would be done through Internal Job Posting (IJP) and communication including the job profile, candidate profile, eligibility (who can apply), application deadline etc. would be made available by HR

•   Employees possessing necessary skills, knowledge, and experience matching with those required for the job may apply through the appropriate communication channels as prescribed in the IJP.

V.   Recruitment Sources:

To ensure a steady in-flow of quality candidates for all the existing vacant positions, with an aim to select the best within a stringent recruitment deadline, HR would always focus to develop a robust database of CVs searched from the following sources –
•   Existing CV data base ( Created & maintained by HR)
•   Vacancy Advertisement in Newspapers
•   e-Recruitment Portals( CV data base access and regular job postings)
•   Market Intelligence, Personal Network and Head hunting
•   Hiring Consultants ( Mostly for Senior and middle level critical positions)

VI.    Hiring consultants:
Considering the large volume of recruitments to be done within a small span of time, it is necessary to identify and engage Professional hiring consultants to help HR to source quality candidates for middle & senior level positions.
A.   Process guidelines (To engage a new Hiring Consultant):
•   HR would identify the Consultants in all the regions, based on their current client’s distribution, database size, past performance records & industry feedback.
•   Regional heads at branch/regional level can also identify a Consultant and the details need to be sent to HR for further discussion & approval.
•   HR will negotiate the Terms & Conditions with all the identified consultants and will get a one-time approval (from the Director) before rolling out the formal agreement with them.

B.   Quality Expectations from the Hiring Consultants:
•   Minimum Turn-around time (TAT): Once a requirement is placed, the consultant should forward at least 6 CVs within the next 72 hrs.
•   Strong Conversion Rate (6:4:2): Out of the 6 CVs forwarded by a consultant, 4 have to be short-listed (after initial screening by HR) and at least 2 of them have to be selected.

An Annual Evaluation of the services provided by the existing consultants across the country would be done to create a list of preferred consultants, who would be treated as priority CV sources for critical positions in future.

VI.   Compensation Proposals, Negotiation & issuing the offer letters:

•   HR prepares the compensation proposals based on the below-mentioned critical attributes and gets those approved in writing by the Director before extending to the candidates -

i.   Academic & Professional qualification of the respective candidates
ii.   Experience Profile
iii.   Existing Compensation & benefits
iv.   Market synergy
v.   Internal Role-wise compensation study to maintain the equity

•   HR extends the proposals to the candidates who get selected after final round of Interviews and negotiates to close those.

•   Once the candidates agree to the proposals &n intimate their acceptance, HR sends out the formal offer letter, duly approved & signed by the concerned authority.

•   Offer letter check list -

HR should make sure that all the below-listed documents are received & checked thoroughly before issuing the formal offer letters –

i.   Approved Manpower Requisition form (MRF)
ii.   Resume (hardcopy) of the candidate
iii.   Interview Assessment sheet (Filled up with specific recommendations by the concerned Interviewers)
iv.   Reference checks details (documented in the specified format)
v.   Compensation Proposal (Existing package & the proposed plan, duly approved by the concerned Authority)

VIII   Recruitment Cycle Time:

To bring in more dynamism and effectiveness in the recruitment process, HR would follow a   specific project deadline of 30days (from the day it had received the approved Manpower Requisition) to hire a new employee.  

The process specific schedule break-up is mentioned below –

Phase   Activities   Time frame
I   Role Identification, JD, competency mapping & CV Sourcing   12ays
II   Initial HR screening / short-listing   2 days

  Organizing the Preliminary Interviews   4 days
  Organizing the Final Interviews   4 days
  De-briefing sessions to take the final decisions   2 days
III   Preparing the Salary Proposal, Negotiate with the selected candidates & offer closure   6 days






[COPY/MEDIA PLAN]          except  for senior positions [ head hunting]


EXTERNAL APPLICANT          except for tech [ outsourcing ]
ONLINE APPLICANT          and senior positions [ head hunting]  




-SELECTION BOARD          only for  senior positions
STEP  10

-PSYCHOLOGICAL     procedural element for all positions except senior position          
-PERSONALITY          procedural element for all positions except senior position          
-ABILITY          procedural element for all positions  except senior position          
-APTITUDE          procedural element for all positions except senior position          
-PSYCHOMETRIC          procedural element for all positions          
STEP  11

TESTING [ TECHNICAL ]        only for  tech. positions
STEP  12

ASSESSMENT CENTRE        only  for   senior  positions          
STEP  13

OBTAINING REFERENCE        procedural element for all positions
STEP  14

CHECKING REFERENCE        procedural element for all positions
STEP  15

MAKING DECISION          procedural element for all positions    

STEP  16

OFFERING  EMPLOYMENT    procedural element for all positions
STEP   17

PREPARING EMPLOYMENT       procedural element for all positions    
STEP  18

-HR  sends  out  letters  to  the  unsuccessful  candidates.
STEP  19


STEP  20

STEP  21

STEP  22


STEP  23

STEP  24

STEP  25





Organizations are said to be efficient when they derive maximum output from the available resources. Although an organization possesses many of the assets but human resource is considered to be the most valuable asset of any organization. Non-human resources become effective for an organization only with the help of labor force (human resource). In the present world of globalization, a competent work force is believed to be a competitive edge for any firm. To be successful in the corporate world, the companies need to have a highly motivated, loyal and satisfied workforce. This is achieved through a thorough understanding and application of all the ingredients necessary for enhancing the satisfaction level of employees. The business of today faces a thread of uncertainty and changes. To overcome the fear of employees turnover the organizations are working hard to retain their valuable employees. An important factor for enhancing the job satisfaction of employees can be promotion. Employees are supposed to be satisfied with their work when they consider themselves to be a productive part of the organization. Employees can derive such satisfaction when organizations realize their worth by promoting them to a place of greater authority and control.

Job satisfaction is an approach that demonstrates that what a person feels about all the aspects of its job .Job satisfaction carries a dual nature ).
Firstly, a thorough study of personal traits leads to job satisfaction such as age, gender, race, educational level etc..
Secondly, job satisfaction is affected by the environment prevailing in the work place. More the number of motivated and satisfied employees in an organization better are the chances of the organization to achieve its goal and attain ultimate profitability
A satisfied employee is more committed and can be retained on the organization for a longer period, thus enhancing the productivity of the company.
Job satisfaction leads to life satisfaction of the individuals.Researches have shown that a person who is a satisfied employee and stays motivated at the work place has higher probability of performing his other roles as a member of the society, which is interacting with other members of the society in various capacities. Promotion is said to be happened when an employee makes a shift in the upward direction in organizational hierarchy and moves to a place of greater responsibility
Promotion can make a significant increase in the salary of an employee as well as in the span of authority and control. It will help the competitors to identify the most productive employees in the business world at the same time the employees are being recognized by their own organization. The employees themselves feel to be an effective contributor and thus will be more satisfied with their job.
Promotion can be used as an incentive tool. It is a way of rewarding the employees for meeting the organizational goals thus it serves as a mean of synchronizing organizational goals with personal goals .
the deciding factor for the position of any individual in the hierarchy is his talent, higher the level of talent in any individual higher will be his position in the hierarchy. Promotion has its importance due to the fact that it carries with it a significant change in the wage package of an employee .Thus, a raise in salary indicates the value of promotion . Promotion follows a defined set pattern which is outlined in the employment bond . In this highly competitive corporate world, promotion can help the competing firms to trace the most productive participant of one organization to be worth hiring for another organization . In such a way the promotion highlights am employee in the external environment and realizes his worth in the internal environment.
promotion enhances the yield of an organization when an employee climbs a promotion ladder on the basis of his seniority and resultantly he gets an increased wage rate.
Greater the chances of promotion higher will be the job satisfaction of employees. Apart from job satisfaction, the employee satisfaction is determined by satisfaction with promotion. When employees perceive that there are golden chances for promotion they feel satisfied for the respective place in the organization .

4. Should central and state governments be able to legislate minimum wages rather than adopting a laissez-faire attitude that would allow employers operating on a slim profit margin to pay only what they could afford? Discuss.

Minimum wage.
•   The Minimum Wages Act
   This act provides for fixing minimum rates of wages.
   Wages shall mean all remuneration payable to an employed person on the fulfillment of the contract employment and includes HRA.
   It Includes
(i) a basic rate of wages and special allowance call the cost of living allowance
(ii) a basic rate with or without cost of living allowance plus any concession on the supply of essential commodities.
   It excludes
(i) The value of rent free accommodation, supply of light, water, medical .....
(ii) Contributions paid by the employer towards the PF or any scheme of social insurance
(iii) Travelling allowance / Travelling concession
(iv) Gratuity
   The appropriate government may fix-:
        A minimum rate of wages for time work ("a minimum time rate").
        A minimum rates of wages for piece work ("a minimum piece rate").
        A minimum rate of wages on a time work basis ("a guaranteed time rate")
        A minimum rate of overtime work done (“a overtime rate")
•     The Minimum Wages Act
   The inspectorate staff of the Labour Department takes action on complaints received from workmen/Unions.
   The penalty for violation of is fine of R.500/- or imprisonment upto a period of six months or both.
   If a worker gets less payment, he can also file a claim before the Competent Authority appointed under the Act, which are Deputy Labour Commissioners for the respective districts.
   The authority can impose penalty up to 10 times the difference in minimum wages that was due and paid



The minimum wage is the lowest wage an employer is allowed to pay. Although a federal minimum wage is set, the individual states can choose to use the federal wage or make their own laws.. There are advantages to offering a minimum wage.
Helps Families
that nearly 40 percent of the minimum wage earners in the United States are working parents. To go even further, nearly 33 percent of the minimum wage earners are married couple raising children. Without a minimum wage, these workers may be forced to work for less money.
Reduces Tax Burden
A person making at least minimum wage is not using as many public services as someone on unemployment, . An unemployed worker is given welfare, rent assistance and food stamps in many states. With minimum wage, the need for public assistance is lowered and this reduces the tax burden on the community and the state.
Employment Incentive
A minimum wage gives an unemployed person incentive to take a job because he knows what his minimum pay will be, according to economics website Economics Help. An unemployed person can compare the money he gets from public assistance and compare it to the minimum wage to determine the financial incentive to taking a job.
Business Budgets
Without a minimum wage, it can be difficult for small businesses to budget their money. With a minimum wage in place, a small business owner knows what he will be expected to pay per hour and he can create new jobs with his company based on this budgeting information.
Common Reference
The minimum wage makes the hiring process easier for young or unskilled workers and employers. The worker knows upfront what kind of wage she can expect, and the employer does not have to go through the process of negotiating a wage with a new employee.


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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


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