HR/IR Questions, useful for Interview preparations...

1. In HR parlance, who are 'Whistle-Blowers'?
Answer : Individuals who report unethical practices by their employers to outsiders.

2. Expand MPS, a scale used to measure the overall potential of workers' intrinsic motivation and used in the Job Diagnostic Survey developed by Richard Hackman and Greg Oldham?
Answer : Motivating Potential Score

3. How do we better know the employment agencies and executive recruiters who locate suitable candidates?
Answer : Head hunters

4. What's the term used to describe an employee who is not tied to one country or company but moves around?
Answer : Mobile worker

5. Name the Process of Certifying the competence of a person, an employee, in an area of capability?
Answer : Accredition

6. What are "Blind Ads" in HR parlance?
Answer : Recruitment advertisements that do not have the name or identity of the employer.

7. Boulwarism is a popular negotiation strategy. Who developed this concept?
Answer : General Electric Company

8. We all familiar with Buyback of shares. But while managing people what is 'Buyback'?
Answer : Buying back of a personnel, who attempts to resign, with an offer of increase in salary or wages and/or other benefits.

9. Who proposed the 'Equity Theory' in the year 1960?
Answer :  J Stacy Adams

10. What are 'Cafetaria Benefit Programs'?
Answer : Flexible benefits that allow employees to select the frings benefits and services that satisfy their needs.

11. ASA Framework was developed by Ben Schneider, a researcher from University of Maryland, and used in selection of personalities. What does ASA stand for?
Answer : Attraction - Selection - Attrition

12. What is known as the relationship between what a worker gets from the job and what he contributes to the job according to the Equity Theory?
Answer : Outcome/Input Ratio

13. In Clayton Alderfer's ERG Theory, R stands for Relatedness and G for Growth then what does E mean?
Answer : Existence

14. Employees hired or contracted by organisations on a temporary basis to fulfill the needs of the labor for a specific period are known as what?
Answer : Contingent Workers

15. What is the tendency of the personnel to experience and express their negative emotional attitude and generally perceive themselves and others surrounding them negatively called?
Answer : Neuroticism

16. Who introduced the modern concept of 360 Degree Appraisal?
Answer : General Electric Company

17. What is a 'Career Plateau'?
Answer : A chance of obtaining a promotion or a position with more responsibility is small.

18. Which internationally acclaimed Indian movie has been included as a case study for 'Human Behavior at Work' by Indian Institute of Management, Indore?
Answer : Lagaan

19. Elton Mayo, one of the pioneers in human behavior studies, called the assumptions of McGregor as "Rabble Hypothesis". What are they?
Answer : Theory X and Theory Y

20. Who is known as the "Father of 401k"?
Answer : Ted Benna

21. What is MBGO and who proposed it?
Answer : Management By Group Objectives by Likert and Fisher

22. Richard Beckhard developed a concept known as 'Beckhard's Confrontation Meeting'. What is the concept?
Answer : One day meeting of entire management of an organisation in which they take the reading of their original health

23. Name the personality who introduced the concept of 'Bureaucracy' in 1922?
Answer : Max Weber

24. Name the title of the book in which Douglas McGregor described his famous Theory X and Theory Y?
Answer : The Humanside of Enterprise

25. We all are familiar with the concept ESOP, thanks to the IT revolution. But in HR what is ETOP?
Answer : Environmental Threat and Opportunity Profile

26. In McKinsey's 7S Framework there are four 'soft variables', Staff, Skills, Style and Shared Values. What are the other three 'hard variables'?
Answer : Strategy, Structure and System

27. Fill in the blank. In Expectancy theory Force = ________ x Expectancy?
Answer : Valency

28. What is known as 'Great man Theory'?
Answer : Leaders are born and not made

29. Who proposed the "Surplus Value Theory of Wages". The theory states the labor was an article of commerce, which could be purchased on payment of 'Subsistance Theory'?
Answer : Karl Marx

30. Where is the famous 'Western Career Fair' take place annualy
Answer : Silicon Valley

31. Which theory is commonly referred as the 'Hierarchy of Human Needs'?
Answer : Maslow Theory

32. Joseph Luft and Harry Ingham developed a framework to improve the effectiveness of communication. Name it?
Answer : JOHARI Window

33. Name the person who called for the scientific selection of workers and 'Harmonious Cooperation' between labour and management?
Answer : Henry L. Gantt

34. Where did Elton Mayo and F.J.Roethlisberger conduct their famous studies which dealt the influence of work groups on performance?
Answer : Hawthorne Plant at Western Electric Company

35. In HR parlance what is known as an 'Agency Shop'?
Answer : The union where employees do not have to join but they must pay union dues to keep their jobs alive

36. Who is known as 'The father of Social Systems Approach' to organisation and management?
Answer : Vilfredo Pareto

37. The degree to which a person prefers doing two or more things simultaneously is known as what?
Answer : Polychronic

38. Name the creativity-simulation technique which tries to make the strange familiar and the familiar strange?
Answer : Synectics

39. An illegal strike called by employees who refuse to work during the term of a binding contract is known as 'Wildcat Strike'. State True or False?
Answer : True

40. What does 'Theory X' and 'Theory Y' argue?
Answer : View of Human Nature and Motivation

41. The degree to which people are willing to take chances is known as what?
Answer : Risk Propensity

42. What does 'Peter Principle' state?
Answer : In a hierarchy, people tend to rise to their level of incompetence

43. In Change management or general HR parlance what are Psychic Costs?
Answer : Stress, Strain and Anxieties that affect the inner self of a person during a period of change

44. Which term is used to describe the use of a person's cultural reference points to evaluate others?
Answer : Ethnocentrism

45. This term is derived from the typographer's word for a painting plate made from the previously composed type. Walter Lippman applied this word to perception in 1922. Since then it has became a term frequently used for perceptual errors. What is it?
Answer : Stereotype

46. Who is widely recognised as the pioneer in Cognitive Theory?
Answer : Edward Tolman

47. In an organisation if your feedback is like PIGS, what does it denotify?
Answer : Positive, Immediate, Graphic, Specific

48. What is the systematic study of cause and effect of personal space requirements called?
Answer : Proxemics

49. Expand COBRA?
Answer : Consolidated Omnibus Budget Reconicliation Act

50. Name the effect of successes made by unions at the negotiating bench influencing the wages, working conditions and other terms of employment benefits for workers who are not yet the members of unions?
Answer : Spillover Effect

One mind blowing interview


Interviewer : Tell me about yourself.
Candidate: I am Rameshwar Kulkarni. I did my Tele Communication engineering from BabanRao Dhole-Patil Inst it ute of Technology.

Interviewer : BabanRao Dhole-Patil Inst it ute of Technology? I had never heard of this college before!
Candidate : Great! Even I had not heard of it before getting an admission into it ..
What happened is – due to cricket world cup I scored badly! in 12th.I was getting a paid seat in a good college. But my father said (I prefer to call him ‘baap’) – “I can not invest so much of money”.(The baap actually said – “I will never waste so much of money on you”). So I had to join this college. Frankly speaking this name – BabanRao Dhole-Patil, can at the most be related to a Shetakari Mahavidyalaya

Interviewer: ok, ok. It seems you have taken 6 years to complete your engineering.
Candidate : Actually I tried my best to finish it in 4 years. But you know, these cricket matches and football world cup, and tennis tournaments. It is difficult to concentrate. So I flunked in 2nd and 3rd year. So in all I took 4 + 2 = 7 years.

Interviewer: But 4+2 is 6.
Candidate: Oh, is it ? You know I always had KT in maths. But I will try to keep this in mind. 4+2 is 6, good, thanks. These cricket matches really affect exams a lot.. I think they should ban it .

Interviewer : Good to know that you want cricket matches to be banned.
Candidate : No, no… I am talking about Exams!!

Interviewer: Ok, What is your biggest achievement in life?
Candidate : Obviously, completing my Engineering. My mom never thought I would complete it . In fact, when I flunked in 3rd year, she was looking for a job for me in BEST (Bus
corporation in Maharashtra ) through some relative.

Interviewer : Do you have any plans of higher study?
Candidate: he he he.. Are you kidding? Completing ‘lower’ education it self was so much of pain!!

Interviewer : Let’s talk about technical stuff. On which platforms have you worked?
Candidate : Well, I work at SEEPZ, so you can say Andheri is my current platforms. Earlier I was at Vashi center. So Vashi was my platform then. As you can see I have experience of different platforms! (Vashi and Andheri are the places in Mumbai)

Interviewer : And which languages have you used?
Candidate : Marathi, Hindi, English. By the way, I can keep quiet in German, French, Russian and many other languages.

Interviewer: Why VC is better than VB?
Candidate : It is a common sense – C comes after B. So VC is a higher version than VB. I heard very soon they are coming up w it h a new language VD!

Interviewer: Do you know anything about Assembly Language?
Candidate: Well, I have not heard of it . But I guess, this is the language our ministers and MPs use in assembly.

Interviewer : What is your general project experience?
Candidate : My general experience about projects is – most of the times they are in pipeline!

Interviewer: Can you tell me about your current job?
Candidate: Sure, Currently I am working for Bata Info Tech ltd. Since joining BIL, I am on Bench. Before joining BIL, I used to think that Bench was another software like Windows.

Interviewer : Do you have any project management experience?
Candidate: No, but I guess it shouldn’t be difficult. I know Word and Excel. I can talk a lot. I know how to dial for International phone call and use speaker facility. And very important – I know few words like – ‘Showstoppers ‘ , ‘hot fixes’, ‘SEI-CMM’, ‘quality’, ‘version control’, ‘deadlines’ , ‘Customer Satisfaction’ etc. Also I can blame others for my mistakes!

Interviewer: What are your expectations from our company?
Candidate : Not much.
1. I should at least get 40,000 in hand..
2. I would like to work on a live EJB project. But it should not have deadlines. I personally feel that pressure affects natural talent.
3. I believe in flexi-timings.
4. Dress Code is against basic freedom, so I would like to wear t-shirt and jeans.
5. We must have sat-sun off. I will suggest Wednesday off also, so as to avoid breakdown due to overwork.
6. I would like to go abroad 3 times a year on short term preferably 1-2 months) assignments. Personally I prefer US, Australia and Europe. But considering the fact that there are Olympics coming up in China in the current year, I don’t mind going there in that period. As you can see I am modest and don’t have many expectations. So can I assume my selection?

Interviewer : he he he ha ha ha. Thanks for your interest in our
organization. In fact I was never entertained so much before. Welcome to INFOSYS.

The fellow was appointed in a newly created section ‘Stress Management’ in the HRD of Infosys.

Contract employee v/s permanent employee

Who Is a Contract Employee?
A contract employee is an individual engaged by a business to provide a specific set of services. An employer-employee relationship is established pursuant to the terms and conditions of a written employment contract. The contract delineates the length of employment, the salary and bonuses (if any) to be paid, and the other benefits that accrue to the contract employee. The contract also sets forth the specific role the employee will play. Contract employees frequently are engaged for the pursuit of a particular project.
Job satisfaction is reliant upon different factors for different people. In the first instance, it might appear as though establishing yourself within a company, forming close working relationships with colleagues and receiving promotional opportunities as part of your career progression are more readily achievable as a permanent employee. However, all of these things can be accomplished as a contractor, and your career progression could be hindered if such factors are preventing you from considering a move into contract work.
The decision to go contract can be a difficult one unless you have an adequate understanding of how it can work to your advantage, so it is important that you consider the potential benefits of this type of employment in order to avoid inadvertently closing the door to opportunities that could take your career to new levels.

Contracting may be for you if you relate to these points:
•You want the choice to be selective of those you work with and work according to your preference.
•You love variety in your life, one job for life or even say 10 years working for the same employer is an idea you do not endorse.
•You are your own boss; the independence to manage your time is the major lure for working on contract as popped to being a permanent employee.
•You are a fast learner and know how to implement your ideas independently. The learning curve is also very high when working independently; you learn marketing sales and finance management all at the same time

Benefits of contract emp. for the employee -
Independent contractors make their own hours; decide when to work and who to work for. They do not depend on the success of a single business to produce Income and meet their financial responsibilities. According to the Wall Street Journal, independent contractors earn up to 40 percent more per hour than Permanent employees. Contractors do not receive benefits from clients; The higher pay is meant to make up for this. Rather than having taxes taken out Each pay period, independent contractors pay quarterly taxes, allowing them to hold onto their cash longer.
Many people may also be reluctant to opt for contract work due to concern that it will hinder their chances of gaining Charter ship. However, a large proportion of employers will offer opportunities to experience a variety of job roles and responsibilities to help contractors working with them in achieving chartered status. By working as a contractor, you can experience a wide variety of environments, acquiring a range of transferable skills that can work to your advantage as you develop your career. These skills are also likely to be gained faster in a contract position than in a permanent post and, as well as expanding your knowledge, they can make you a more desirable recruitment option and increase your chances of future employment and assignment opportunities.



The amount of control you have over factors such as when to work, where to work, who to work for and a contract length to suit you, is substantially increased with contract work. Permanent employees are usually subjected to greater restrictions than contractors, which can strongly influence the decision to take on a contract assignment. Contracting also provides an excellent opportunity to meet new people, not only socially, but also as a fantastic networking opportunity. By forming relationships with the people you meet working on different projects; you can keep up to date with new developments as well as the challenges faced by your industry. These new relationships can also provide important links to future career opportunities. Project managers regularly have tight deadlines that they work to, so are therefore generally more concerned about employing contractors with the right skill set that will successfully work within a specified timeframe than they are about getting a cheaper candidate who might not be as efficient. This can result in contractors being paid a premium for their services. Under normal circumstances contractors are not tied to the same period of notice as permanent staff either, which gives them more freedom to move around quickly and easily. As a week’s notice is not unusual for contractors; it can be easy to change jobs as soon as new opportunities arise. Contractors have the added advantage of choosing when they work, so can enjoy longer holidays than their permanent counterparts. It is not uncommon for contractors to take holidays of up to six weeks after an assignment has been completed. Being paid on an hourly basis also means that paid overtime is available for contractors, whereas permanent employees do not always have this option. As a contractor, it is important that you work through a reputable agency, as they are able to offer good relationship management, as well as discounted PI and PL insurances, free careers advice, ongoing rate negotiation and updates about the latest market trends.

A contract employee typically works for one or several organizations on a project or temporary basis. Many employers hire contract employees to supplement their staff for a variety of reasons.

Flexibility - Because businesses often hire contractors for temporary projects, they offer some flexibility with work schedules and locations. Many contractors work from home, and visit their clients periodically to report their progress.
Higher Wages - Because a contractor is not an employee of an organization, benefits such as health insurance and paid vacation is not offered. Employers may pay higher hourly wages to contractors because they have no additional costs and the commitment is short-term.

Commitment - A contractor is not committed to an employer after the assignment or project is completed, and can find one or several other opportunities while working on an assigned project.

New Skills - Because contractors often work in different organizations and industries, they often learn new skills as part of the project, which can enhance their resume.

3R of Employee Retention

3R of Employee Retention

How do you retain employee in an organization?

To keep them satisfied enough to let them believe that their needs will be better met at your organization than anywhere else.

Sound straightforward & simple.

But, how do you start & from where do you start?

There are plenty of challenges:

• Today’s employees—especially younger ones—think more like “free agents,” selling their services to the highest bidder and ever willing to entertain other offers.
• Many employees today get calls from “headhunters” several times a month.
• In many organizations, losing employees has a domino effect. When one employee leaves, others often wonder about opportunities elsewhere.

For the same reason, there has been a sea change in the way organization has been treating employees.

To retain the employees, keep satisfaction high, you need to implement each of the 3 Rs of employee retention: respect, recognition, and rewards.

Respect: It is the foundation of keeping employees. It involves esteem, special regard, or particular consideration given to people. Recognition & Rewards will have little effect if you don’t respect employees.

Recognition: It is defined as “special notice or attention” and “the act of perceiving clearly.” Many problems with retention and morale occur because management is not paying attention to people’s needs and reactions.

Rewards: These are the extra perks you offer beyond the basics of respect and recognition that make it worth people’s while to work hard, to care, to go beyond the call of duty. While rewards represent the smallest portion of the retention equation, they are still an important one.

While implementing the “3 R”, it should be noted that respect should be the largest component of your effort. Without it, recognition & rewards will prove hollow.

                       

                                                                                              courtesy- Ritesh..

Why shud we do an Internship..

This year's graduates who completed an internship as part of their degree were 26% more likely to get a job than their peers who did not, according to the latest research from the Graduate Management Admissions Council (GMAC), which administers the GMAT test.
The data comes from a survey of both MBA and specialised masters graduates - the GMAC Global Management Education Graduate Survey.


"The value of an internship can't be underestimated -for both the employer and the employee," says Michelle Sparkman-Renz, director of research communications at GMAC. "Whether or not a candidate has work experience, internships are effective in helping students realise their career ambitions.
And in a hyper-competitive job market, an internship is a great way for a student to shine and get their résumé put on the top of the pile when applying for a full-time job at the company."
According to data from the 2011 GMAC Corporate Recruiters Survey, internships are one of the best ways for job candidates to prove themselves in their targeted industry. Indeed, the employment of interns as full-time hires was notable in both the consulting and high tech sectors, with a 70% rate of hire for interns.
More than 40% of MBA and specialised master's graduates who participated in the GMAC graduate survey said they completed an internship while in school.

All about fringe benefits..

TYPES OF FRINGE BENEFITS

Organizations provide a variety of fringe benefits. The fringe benefits are classified under four heads as given here under:

1.For Employment Security :
Benefits under this head include unemployment, insurance, technological adjustment pay, leave travel pay, overtime pay, level for negotiation, leave for maternity, leave for grievances, holidays, cost of living bonus, call-back pay, lay-off, retiring rooms, jobs to the sons/daughters of the employees and the like.

2.For Health Protection:
Benefits under this head include accident insurance, disability insurance, health insurance, hospitalization, life insurance, medical care, sick benefits, sick leave, etc.

3.For Old Age and Retirement:
Benefits under this category include: deferred income plans, pension, gratuity, provident fund, old age assistance, old age counseling , medical benefits for retired employees, traveling concession to retired employees, jobs to sons/daughters of the deceased employee and the like.

4.For Personnel Identification, Participation and Stimulation:
This category covers the following benefits: anniversary awards, attendance bonus, canteen, cooperative credit societies, educational facilities, beauty parlor services, housing, income tax aid, counseling, quality bonus, recreational programs, stress counseling, safety measures etc.

The fringe benefits are categorized as follows:

a)Payment for Time Not worked: Benefits under this category include: sick leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance time, bargaining time, travel time etc.

b)Extra Pay for time Worked: This category covers the benefits such as: premium pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment compensation, Christmas bonus, Deewali or Pooja bonus, food cost subsidy, housing subsidy, recreation.

Employee Security

Physical and job security to the employee should also be provided with a view to promoting security to the employee and his family members. The benefit of confirmation of the employee on the job creates a sense of job security. Further a minimum and continuous wage or salary gives a sense of security to the life.

Retrenchment Compensation:

The Industrial Disputes Act, 1947 provides for the payment of compensation in case of lay-off and retrenchment. The non-seasonal industrial establishments employing 50 or more workers have to give one month’s notice or one month’s wages to all the workers who are retrenched after one year’s continuous service. The compensation is paid at the rate of 15 days wage for every completed year of service with a maximum of 45 days wage in a year. Workers are eligible for compensation as stated above even in case of closing down of undertakings.

Lay-off Compensation:

In case of lay-off, employees are entitled to lay-off compensation at the rate to 50% of the total of the basic wage and dearness allowance for the period of their lay-off except for weekly holidays. Lay-off compensation can normally be paid up to 45 days in a year.

Safety and Health

Employee’s safety and health should be taken care of in order to protect the employee against accidents, unhealthy working conditions and to protect worker’s capacity. In India, the Factories Act, 1948, stipulated certain requirements regarding working conditions with a view to provide safe working environment. These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fume, artificial humidification, over-crowding, lighting, drinking water, latrine urinals, and spittoons. Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, striking gear and devices for cutting off power, self-acting machines, easing of new machinery, probation of employment of women and children near cotton openers, hoists and lifts, lifting machines, chains ropes and lifting tackles, revolving machinery, pressure plant, floors, excessive weights, protection of eyes, precautions against dangerous fumes, explosive or inflammable dust, gas etc. Precautions in case of fire, power to require specifications of defective parts of test of stability, safety of buildings and machinery etc.

OBJECTIVES OF FRINGE BENEFITS

The view point of employers is that fringe benefits form an important part of employee incentives to obtain their loyalty and retaining them. The important objectives of fringe benefits are:

1.To create and improve sound industrial relations

2.To boost up employee morale.

3.To motivate the employees by identifying and satisfying their unsatisfied needs.

4.To provide qualitative work environment and work life.

5.To provide security to the employees against social risks like old age benefits and maternity benefits.

6.To protect the health of the employees and to provide safety to the employees against accidents.

7.To promote employee’s welfare by providing welfare measures like recreation facilities.

8.To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are called golden hand-cuffs.

9.To meet requirements of various legislations relating to fringe benefits.

Need for Extending Benefits to Employees

(i)Rising prices and cost of living has brought about incessant demand for provision of extra benefit to the employees.

(ii)Employers too have found that fringe benefits present attractive areas of negotiation when large wage and salary increases are not feasible.

(iii)As organizations have developed ore elaborate fringe benefits programs for their employees, greater pressure has been placed upon competing organizations to match these benefits in order to attract and keep employees.

(iv)Recognition that fringe benefits are non-taxable rewards has been major stimulus to their expansion.

(v)Rapid industrialization, increasingly heavy urbanization and the growth of a capitalistic economy have made it difficult for most employees to protect themselves against the adverse impact of these developments. Since it was workers who are responsible for production, it was held that employers should accept responsibility for meeting some of the needs of their employees. As a result, some benefits-and-services programs were adopted by employers

(vi)The growing volume of labor legislation, particularly social security legislation, made it imperative for employers to share equally with their employees the cost of old age, survivor and disability benefits.

(vii)The growth and strength of trade unions has substantially influenced the growth of company benefits and services.

(viii)Labor scarcity and competition for qualified personnel has led to the initiation, evolution and implementation of a number of compensation plans.

(ix)The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go, at least partly, to the employees who are responsible for it, so that they may be protected against the insecurity arising from unemployment, sickness, injury and old age. Company benefits-and-services programs are among some of the mechanisms which managers use to supply this security.

FLEXIBLE BENEFITS

What are Flexible Benefits?

Flexible benefits allows allow employees to pick benefits that most their needs. The idea is to allow each employee to choose a benefit package that is individually tailored to his or her own needs and situation. It replaces the traditional “one-benefit-plan-fits-all” programs that dominated organizations for more than 50 years.

The average organization provides fringe benefits worth approximately 40% of an employee’s salary. Traditional benefit programs were designed for the typical employees of the 1950s—- a male with wife and two children at home. Less than 10% of employees now fit this stereotype. While 25% of today’s employees are single, a third are part of two-income families with no children. As such these traditional programs don’t tend to meet the needs of today’s more diverse workforce. Flexible benefits, however, do meet these diverse needs. They can be uniquely tailored to reflect differences in employee needs based on age, marital status, spouses’ benefit status, number and age of dependents, and the like.

The three most popular type of benefit plans are modular plans, core-plus options, and flexible spending accounts. Modular plans are pre-designed packages of benefits, with each module put together to meet the needs of a specific group of employees. So a module designed for single employees with no dependents might include only essential benefits. Another, designed for single parents, might have additional life insurance, disability insurance, and expanded health coverage.

Core-plus plans consist of a core of essential benefits and a menu-like selection of other benefits options from which employees can select and add to the core. Typically, each employee is given “benefit credits,” which allow the “purchase” of additional benefits that uniquely meet his or her needs. Flexible spending plans allow employees to set aside up to the dollar amount offered in the plan to pay for particular services. It’s a convenient way, for example, for employees to pay for health-care and dental premiums. Flexible spending accounts can increase employee take-home pay because employees don’t have to pay taxes on the dollars they spend out of these accounts.

Linking Flexible Benefits and Expectancy Theory:

Giving all employees the same benefits assumed that all employees have the same needs. Of course we know that assumption is false. Thus, flexible benefits turn the benefit expenditure into a motivator.

Consistent with expectancy theory’s thesis that organizational rewards should be linked to each individual employees goals, flexible benefits individualized rewards by allowing each employ to choose the compensation package that best satisfies his or her current needs.

Flexible Benefits in Practice

Today almost all major Corporations in the United States offer Flexible benefits. And they are becoming a norm in other countries too. For instances a recent survey of 136 Canadian Organizations found that 93% have adopted flexible benefits or will in the near term. And a similar survey of 307 firms in the United Kingdom found that while only 16% have flexible benefits programs in place, another 60% are either in the process of implementing them or are seriously considering them.

In India and most countries of Asia with the exception of Japan Flexible benefits are not offered by employers for various reasons which may create personnel and trade union problems.. In India some flexible benefits are offered in a limited way to the top management personnel like Executive Directors, President, Vice President, General Manager etc., It may take a few more years to offer flexible benefits to employees in India and other Asian counties by the managements.

401k Compensation system

There are two main types of employer-sponsored retirement plans: defined benefit and defined contribution. A defined benefit plan, such as a traditional pension plan, sets the amount that the employer will pay to workers upon their retirement. In defined contribution plans, the plan sets the amount of the contributions that an employer makes, not the benefit it will pay at retirement. In 1978, section 401(k)of the Internal Revenue Code authorized a new kind of defined contribution plan that allows the employee to make pre-tax contributions to the plan.

In a 401(k) plan, the employer sets up a special savings and investment account with an investment company, a bank trust dept, or an insurance company. The employee agrees to put part of his or her salary into the plan through automatic deductions each pay period. This money is deducted before the employee’s paycheck is taxed, so that it remains untaxed until it is taken out of the plan, often years or even decades later.

Employers frequently match employee contributions up to a certain level, sometimes by as much as 100 percent, but are not required to do so. The money in the plan is invested into one or more funds provided in the plan according to choices made by the employee. The plans usually are intended to earn money over a very long period of time, which is much less risky than short-term investing..

Employees like 401(k) plans for several reasons. The tax deferral an obvious plus. Others popular features include the increased portability of this plan from one employer to another, the matching contributions, and the sense of control due to the ability to choose one’s own investments.

A gud story,...yet a lovely fact...

An Indian man walks into the New York City bank
and asks for the loan officer. He tells the Loan Officer that he was going to India
for some business for 2 weeks and needs to
borrow $5,000. The Loan Officer tells him that the bank will need
Some form of security for the loan. So the Indian man hands over the keys and the
documents of the new Ferrari car parked on the
street in front of the bank. The loan officer consults the president of the bank,
Produces all the required items and everything
check out to be OK. The loan officer agrees to accept the car as a
security for the loan. The bank president and the Loan Officer had a
good laugh at the Indian
For keeping a $750,000 Ferrari as a security and
taking only $5,000 has a loan. An employee of the bank then drives the Ferrari
Into the banks underground garage and parks it
there. Two weeks later the Indian returns and pays
$5000 and the interest which comes to it $15.41. Seeing this, loan officer says, “Sir, we are very happy to have your business
And this transaction has worked out very nicely,
but we are a little puzzled.
While you are away, we checked you out and
Found out that you were a multi millionaire. What puzzled us was why would you bother to
borrow $5000?” The Indian replies
"Where else in the New York City can I park my
car for 2 weeks and
For only $15.41 and expect it to be there when I
return".
This is a true incident and the Indian is none other than... "VIJAY MALLYA —