Prepared by SM Nahidul Islam

Dept. of Finance & Banking

1. Definition of recruitment & Retrenchment of workers.

Recruitment:
The process of finding and hiring the best-qualified candidate (from within or outside of an organization) for
a job opening, in a timely and cost effective manner. The recruitment process includes analyzing
the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and
integrating the new employee to the organization.
Retrenchment:
Retrenchment means termination of the contract of service of the employees in a redundancy situation which
arise from several factors such as closure of business, restructuring, reduction in production, mergers,
technological changes, take-over, economic downturn and others.

2. Definition of Labour turnover & State the reasons for labour turnover

Answer: Labour turnover (or staff turnover) is all about employee retention - i.e. the ability of a business
to convince its employees to remain with the business. Labour turnover is defined as the proportion of a
firms workforce that leaves during the course of a year. The formula for calculating labour turnover is,
therefore

Labour turnover = 100

The causes of labour turnover are given below:

1. Dissatisfaction with job

2. Dissatisfaction with the remuneration
3. Dissatisfaction with the hours of work.
4. Relationship with supervisors and workers.
5. Illness or accident
6. Move from locality
7. Discharge
8. Death
9. Retirement
10. Betterment

3. State the costs of labour turnover

Answer: Costs of Labour Turnover can e divided into the following two kinds:

1. Preventative costs: Preventative costs are incurred by the organization to keep the workers happy
and discourage them from leaving the job. Such costs include: Cost of Personnel Administration,
Cost of Medical services, Cost of welfare service and other incentive schemes.
2. Replacement costs: Replacement costs are incurred for recruitment and training of new workers.
This includes costs like inefficiency of new workers, training costs, inexperience of new workers,
loss of output due to delay in getting new workers, increased spoilage and defectives, cost of
selection and placement.

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 Prepared by SM Nahidul Islam
Dept. of Finance & Banking
4. Which factors should be considered while selecting a system of payment?

Answer: The following factors must be given due consideration before selecting a system of payment:
1. Simplicity: The wage system should be simple and capable of being understood by workers of
average intelligence. Simplicity from the point of view of analysis and recording in the Cos Accounts
may also be considered.
2. Quantity and quality of output: If quantity is more important than quality, the method of
remuneration should be such that it encourages increased production. On the other hand, when
quality is more important, wage payments should be preferably based upon time rather than on
production quantities.
3. Incidence of overhead: In large manufacturing enterprises, heavy expenses of indirect nature
(overhead) are incurred. A major portion of overhead is again fixed, that is to say, they remain
constant even when volume of production fluctuates with a range.
4. Effect upon workers: High wages will attract efficient workers from outside, and retain those who
are already in employment; so the cost of labour turnover is less. The role of workers union should
also be assessed and it should be taken into consideration in selecting the wage system.
5. Statutory provisions: There may be legislative measures to protect the right of wage earners and to
emphasize managerial obligations in this regard.

5. Write the essential features of an effective wage plan.

Answer: The essential features of an effective wage plan are given below:
1. It should be based upon scientific time and motion study to ensure a fair output and fait remuneration.
2. There should be guaranteed minimum wages at a satisfactory level.
3. The wages should be related to the effort put in by the employee. It should be fair to both the
employees and employer.
4. The scheme should be flexible to permit any necessary variations which may arise.
5. There must be continuous flow of work.
6. The scheme should aim at increasing the morale of the workers and reducing labour turnover.
7. The scheme should not be in violation of any local or national trade agreements.
8. The operating and administrative cost of the scheme should be kept at a minimum.

6. Differences between Time rate system and Price rate system

Answer: The differences between Time rate system and Price rate system

Time rate system Price rate system

Under this system earnings of a worker are In this system earnings of a worker are calculated
calculated on the basis of time spent on the job on the basis of number of units produced.

In this system, minimum guaranteed time rate is
paid to every worker.
Under time rate system, remunerations are not
directly linked with productivity.
Under this system emphasis is on high quality of
work.
Under this system, no guarantee of minimum
payment to every worker.
Remuneration of workers directly linked with
productivity.
Under piece rate system there is no consideration
for the quality of work.

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 Prepared by SM Nahidul Islam
Dept. of Finance & Banking
Under time rate system, strict supervision is In this system, close supervision is not required.
essential.
This method may lead to trade unions to support Under this method the attitude of trade unions is
it. not to co-operate with the schemes.
More idle time arises in time rate systems Compared with time rate system there is no
change of idle time in piece rate schemes.

7. State the features of Emersons efficiency plan & why this plan is suitable?

Answer: The main features of the Emersons efficiency plan are:

a. Day wages are guaranteed.
b. A standard Lime is set for each job or operation, or a volume of output is taken as standard.

c. Below 66 % efficiency, the worker is paid his hourly rate.

d. From 66 % up to 100% efficiency, payments made on the basis of step bonus rates.
e. Above 100% efficiency, an additional bonus of 1% of the hourly rate is paid for each 1% increase in
efficiency.

Emersons Efficiency Plan is suitable to:

1. Encourage slow workers to better their performance.
2. Facilitate an easy transfer from time wages to payment by results scheme. But this scheme is not
meant for skilled and competent workers.