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Wage policy in India Essay

Star Automobiles Ltd. Primary is in the field of manufacturing of two wheelers. They manufacture and market mopeds. These are available in the brand names ‘arrow’ and ‘double arrow’ where ‘arrow’ is their traditional product and ‘double arrow’ is the improved version. The company was started about 20 yrs ago.

Their product ‘arrow’ enjoys a reasonably good reputation and they were comfortable in the market. However, with the entry of the new generation of fuel-efficient mopeds the company started losing its market. They immediately started developing the improved ‘double arrow’ but by the time they came out with this new model, the competitors had already strengthened their position in the market. The arrow model was still acceptable by a segment of the market as it was the cheapest vehicle.

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‘Double arrow’ is a new generation vehicle. It was costlier than Jet but its performance was much superior. It is compared favourably with the competitors’ products; however, it was yet to gain a foot hold in the market.

The company had to refurbish the marketing activities in order to get back their market share. They employed young sales engineer to launch a strong sales drive. Mr. Ramesh Tiwari, Btech and a diploma holder in marketing got selected and was put on the job. Mr. Ramesh Tiwari started well in his new job.

He was given a territory to contact the prospective customers’ and to book the orders. The company had introduced a new financial assistance scheme. Under this scheme, buyers were given easy loans. It was particularly advantageous for group booking by employees working in an organization. Mr. Ramesh Tiwari was able to contact people in a different organization, arrange for group bookings and facilitate the loans. His performance was good in the first year and in the second year of his service. The company had its own system of rewarding those whose performance happened to be good.

They usually arranged a paid holiday trip for the good performer along with his wife. Mr Ramesh Tiwari was accordingly informed by the marketing manager to go to Chennai with his wife on company expenses. Mr Ramesh Tiwari asked him as to how much it would cost to the company. The marketing manager calculated and told him that it would cost about 8000/-. He quickly asked him whether he could get that 8000/- in cash instead of the trip as he had better plans. The marketing manager countered this saying that it might not be possible to do so.

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It was not the trading of the company, however, he would check with the personnel manager. After a couple of days, Mr Tiwari was informed that it would not be possible to give him a cash reward. Mr. Tiwari grudgingly went for the trip and returned. On his return, he was heard complaining to one of his colleagues his little daughter was also along with him. The marketing manager and the personnel manager thought he was a bit too fusy about the money and some of his colleagues also thought so. During the subsequent days Mr. Ramesh Tiwari’s performance was not all that satisfactory this showed his lukewarm attitude towards his job and the subordinates.


  1. Did the personnel manager handle the issue properly?
  2. What is your recommendation to avoid such situations in future?

Case let 2

In 1950, with the enactment of the Insurance Act, Government of India decided to bring all the insurance companies under one umbrella of the Life Insurance Corporation of India (LIC). Despite the monopoly of LIC, the insurance sector was not doing well. Till 1995, only 12% of the country’s people had insurance cover. The need for exploring the insurance market was felt and consequently, the Government of India set up the Malhotra Committee.

On the basis of their recommendation, the Insurance Development and Regulatory Authority (IRDA) Act was passed in parliament in 2000. This moved allowed the private insurers in the market with the strong foreign partners with 74:26% stakes. XYZMoon life was one of the first three private players getting the license to operate in India in the year.

Examination Paper of Human Resource Management

IIBM Institute of Business Management 2000.

XYZ Moon life Insurance was a joint venture between the XYZ Group and Moon Inc. of US. XYZ started off its operations in 1965, providing finance for industrial development and since then it had diversified in to housing finance, consumer finance, mutual funds and now its latest venture was Life Insurance. Its foreign partner Moon Inc. had its presence in Asia since the past 75 years catering to over 1 million customers across 11Asian countries. Within a span of two years, twelve private players obtained the license from IRDA.IRDA had provided certain base policies like, Endowment Policies, Money back Policies, Retirement Policies, Team Policies, Whole Life Policies, and Health Policies.

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They were free to customize their products by adding on the riders. In the year 2003, the company becomes one of the market leaders amongst private players. Till 2003, total market share of private insurers was about 4%, but Moon Life was performing well and had the market share of about 30% of the private insurance business. In June 2002, XYZ Moon Life started its operations at Nagpur with one Sales Manager(SM) and ten Development Officers (DO). The role of a DO was to recruit the agents and sell a career to those who have an inclination towards insurance and could work either on a part-time or full-time basis.

They were very specific in recruiting the agents because their contribution directly reflected their performance. All DOs faced three challenges such as Case Rate (number of policies), case size (amount of premium), and recruitment of advisors by natural market, personal observations, nominators, and centre of influence. Incentive of offered by the company to development officers and agents were based on their performance, which resulted in to the internal competition and finally converted into a rivalry.

In August 2002, a branch manager joined along with one more sales manager and ten development officers. Initially, the branch was performing well and was able to build their image in the local market. As the industry was dynamic in nature, there were frequent opportunities bubbling in the market. In order to capitalize the outside opportunities, one sales manager left the organization in January 2003. As the sales manager was a real performer, he was able to convince all the good performers at XYZ Moon Life Insurance to join the new company.

In April 2004, the company faced a grave problem, when the Branch Manager left the organization for greener pastures. To fill the position, in May 2004, the company appointed a new branch manager, Shashank Malik, and a sales manager, Rohit Pandey. The branch manager in his early thirties had an experience of sales and training of about 12 years and was looking after two branches i.e., Nagpur and Nasik. Malik was given one Assistant Manager and 25 Development Officers. Out of that, ten were reported to him.

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He was given the responsibility of handling all the operations and the authority to make all the decisions while informing the Branch Manager. Malik opined that the insurance industry is a sunrise industry where manpower plays an important role as the business is based on relationship. He wanted to encourage one-to-one interaction, transparency and discipline in his organization. While managing his team, he wanted his co-workers to analyze themselves i.e., to understand their own strengths and weaknesses.

He wanted them to be result-oriented and was willing to extend his full support. Finally, he wanted to introduce weekly analysis in his game plan along with the inflow of new blood in his organization. Using his vast experience, he began informal interactions among the employees, by organizing outings and parties, to inculcate the feelings of friendliness and belonging.

He wanted to increase the commitment level and integrity of his young dynamic team by facilitating proper channelization of their energy. He believed that proper training could give his team a proper understanding of the business and the dynamics of insurance industry.

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