HUMAN RESOURCE MANAGEMENT MBA EXAM ANSWER

HUMAN RESOURCE MANAGEMENT MBA EXAM ANSWER 

Human Resource Management

Total Marks – 80

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

Q.1 (a) Write a short note on human element and productivity. 08

Productivity, in economics, measures output per unit of input, such as labor, capital or any other resource – and is typically calculated for the economy as a whole, as a ratio of gross domestic product (GDP) to hours worked. Labor productivity may be further broken down by sector to examine trends in labor growth, wage levels and technological improvement. Corporate profits and shareholder returns are directly linked to productivity growth.

At the corporate level, where productivity is a measure of the efficiency of a company's production process, it is calculated by measuring the number of units produced relative to employee labour hours or by measuring a company's net sales relative to employee labour hours.

Productivity is the key source of economic growth and competitiveness. A country’s ability to improve its standard of living depends almost entirely on its ability to raise its output per worker, i.e., producing more goods and services for a given number of hours of work. Economists use productivity growth to model the productive capacity of economies and determine their capacity utilization rates. This, in turn, is used to forecast business cycles and predict future levels of GDP growth. In addition, production capacity and utilization are used to assess demand and inflationary pressures.

The most commonly reported productivity measure is labor productivity published by the Bureau of Labour Statistics. This is based on the ratio of GDP to total hours worked in the economy. Labor productivity growth comes from increases in the amount of capital available to each worker (capital deepening), the education and experience of the workforce (labor composition) and improvements in technology (multi-factor productivity growth).

However, productivity is not necessarily an indicator of the health of an economy at a given point in time. For example, in the 2009 recession in the United States, output and hours worked were both falling while productivity was growing — because hours worked were falling faster than output. Because gains in productivity can occur both in recessions and in expansions — as it did in the late 1990s — one needs to take the economic context into account when analyzing productivity data.

There are many factors that affect a country’s productivity, such as investment in plant and equipment, innovation, improvements in supply chain logistics, education, enterprise and competition. The  Solow residual, which is usually referred to as total factor productivity, measures the portion of an economy’s output growth that cannot be attributed to the accumulation of capital and labor. It is interpreted as the contribution to economic growth made by managerial, technological, strategic and financial innovations. Also known as multi-factor productivity (MFP), this measure of economic performance compares the number of goods and services produced to the number of combined inputs used to produce those goods and services. Inputs can include labor, capital, energy, materials and purchased services.

When productivity fails to grow significantly, it limits potential gains in wages, corporate profits and living standards. Investment in an economy is equal to the level of savings because investment has to be financed from saving. Low savings rates can lead to lower investment rates and lower growth rates for labor productivity and real wages. This is why it is feared that the low saving rates in the U.S. could hurt productivity growth in the future.

Since the global financial crisis, the growth in labor productivity has collapsed in every advanced economy. It is one of the main reasons why GDP growth has been so sluggish since then. In the U.S., labor productivity growth fell to an annualized rate of 1.1% between 2007 and 2017, compared to at an average of 2.5% in nearly every economic recovery since 1948. This has been blamed on the declining quality of labor, diminishing returns from technological innovation and the global debt over hang, which has led to increased taxation, which has in turn suppressed demand and capital expenditure.

A big question is what role quantitative easing and zero interest rate policies (ZIRP) have played in encouraging consumption at the expense of saving and investment. Companies have been spending money on short-term investments and share buybacks, rather than investing in long-term capital. One solution, besides better education, training and research, is to promote capital investment. And the best way to do that, say economists, is to reform corporate taxation, which should increase investment in manufacturing. This, of course, is the goal of president Trum’s tax reform plan.

(b) Explain the mass law theory for human need. 08

Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.

Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and belonging, esteem and self-actualization.

Deficiency needs vs. growth needs

This five-stage model can be divided into deficiency needs and growth needs. The first four levels are often referred to as deficiency needs (D-needs), and the top level is known as growth or being needs (B-needs).

Deficiency needs arise due to deprivation and are said to motivate people when they are unmet. Also, the motivation to fulfill such needs will become stronger the longer the duration they are denied. For example, the longer a person goes without food, the more hungry they will become.

Maslow (1943) initially stated that individuals must satisfy lower level deficit needs before progressing on to meet higher level growth needs. However, he later clarified that satisfaction of a needs is not an “all-or-none” phenomenon, admitting that his earlier statements may have given “the false impression that a need must be satisfied 100 percent before the next need emerges” (1987, p. 69).

When a deficit need has been 'more or less' satisfied it will go away, and our activities become habitually directed towards meeting the next set of needs that we have yet to satisfy. These then become our salient needs. However, growth needs continue to be felt and may even become stronger once they have been engaged.

Growth needs do not stem from a lack of something, but rather from a desire to grow as a person. Once these growth needs have been reasonably satisfied, one may be able to reach the highest level called self-actualization.

Every person is capable and has the desire to move up the hierarchy toward a level of self-actualization. Unfortunately, progress is often disrupted by a failure to meet lower level needs. Life experiences, including divorce and loss of a job, may cause an individual to fluctuate between levels of the hierarchy.

Therefore, not everyone will move through the hierarchy in a uni-directional manner but may move back and forth between the different types of needs.

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The original hierarchy of needsfive-stage model includes:

Maslow (1943, 1954) stated that people are motivated to achieve certain needs and that some needs take precedence over others. Our most basic need is for physical survival, and this will be the first thing that motivates our behavior. Once that level is fulfilled the next level up is what motivates us, and so on.

1. Physiological needs - these are biological requirements for human survival, e.g. air, food, drink, shelter, clothing, warmth, sex, sleep.

If these needs are not satisfied the human body cannot function optimally. Maslow considered physiological needs the most important as all the other needs become secondary until these needs are met.

2. Safety needs - protection from elements, security, order, law, stability, freedom from fear.

3. Love and belongingness needs - after physiological and safety needs have been fulfilled, the third level of human needs is social and involves feelings of belongingness. The need for interpersonal relationships motivates behavior

Examples include friendship, intimacy, trust, and acceptance, receiving and giving affection and love. Affiliating, being part of a group (family, friends, work).

4. Esteem needs - which Maslow classified into two categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige).

Maslow indicated that the need for respect or reputation is most important for children and adolescents and precedes real self-esteem or dignity.

5. Self-actualization needs - realizing personal potential, self-fulfillment, seeking personal growth and peak experiences. A desire “to become everything one is capable of becoming”

Q.2

 (b) Explain the relation between morale and productivity. 08

The saying goes that happy employees are productive employees, and there is a definite correlation between productivity and morale. Small-business owners are often faced with many employee challenges, particularly during their first few years of operation. Managing morale is one way small-business owners can help ensure that productivity rates keep rising.

When employee morale is high, the levels of general job satisfaction and overall well-being are also high. This means that employees work better together and function as a cohesive team. Keeping team morale high is a vital step toward completing a project on time and under budget. When employees feel good about their job, they want to work hard and accomplish more as a team. They also tend to invest more emotionally in their job. They have good morale and they don't want to work anywhere else; they want your company to succeed.

As any manager who has witnessed interoffice fighting can attest, having good morale will often improve interoffice relationships. Workplaces with high morale typically display much less negativity and general bad behavior issues than workplaces where morale is low. It is much easier to get along with others when you feel that you are happy at your job and all is right in the world. When employees are not busy fighting one another, they have more time to actually do their jobs.

When employers treat their employees with respect, they not only improve morale, but they also help employees treat their customers and other employees with respect. Managers or bosses of companies set the entire tone for the workplace with their behavior. When they show respect and their employees do the same for those they interact with, the entire company can change. Sales go up, and employees feel appreciated and apply themselves to their jobs.

One issue with productivity is a lack of skilled workers. Companies with low retention rates typically have several employees in training or at different stages of knowledge for their positions. Companies with high morale retain their employees longer. They don't have to lose time for training, and the employees who are there know what is expected of them and know how to do their jobs effectively and in less time than someone who is just starting out.

Outcome # 1. High Morale – High Productivity:

This is the ideal combination of morale and productivity and occurs when right motivational policies are adopted by managers. Workers know their jobs, they are trained to manage various aspects of the job and feel committed towards the organisational goals.

Outcome # 2. High Morale – Low Productivity:

In this situation, though workers are satisfied with the jobs, they are not committed to the work. This may be because of the nature of task, the nature of superiors, kind of technology used, work methods or inadequate training facilities that restrict efforts to perform their jobs well. People work for their individual/group goals rather than organisational goals.

Outcome # 3. Low Morale – Low Productivity:

It represents the other extreme of morale- productivity continuum. Lack of motivation, unclear jobs and lack of harmonious superior – subordinate relationships reflect low morale and, therefore, frustrations, tensions, discontentment and grievances develop against managers which results in low productivity.

Outcome # 4. Low Morale – High Productivity:

Low morale results in high productivity when negative motivation is used by managers. Punishments, threats and penalties for non-conformity to organisational plans and policies directs workers towards high productivity. Such a situation does not last for long as negative motivation can increase production only for a short span of time.

Workers’ behaviour will soon be reverted to low job performance and low output. Behavioural management, thus, requires that work environment should be able to achieve high morale- high productivity combination. Though morale and productivity are not perfectly related, a positive correlation between them creates a healthy work environment.

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