Principles of Management (MGT503)
Assignment No. 1
Last Date of Submission: Friday, 12 February, 2010.
Marks: 10
Solution guidelines
• Solution file should not exceed one page or 550 words.
• Students are requested to work individually and has to write in the form of an
analytical assignment.
• Give the answer according to question, there will be negative marking for irrelevant

Motivating Government employees
During 1980s, finding qualified employees for jobs in government sector was difficult
because base pay was low, but keeping them motivated and committed once hired, proved even
more difficult, same problem was faced by WAPDA.
The problem traced was the antiquated pay-for-performance system, introduced in 1990, the system
allowed 5 percent annual salary increases for the consecutive 8 years within the salary range
assigned to each positions. Each year at appraisal time, managers met informally with their
employees to review each employee’s performance during the year. If employees performed
satisfactorily, they received salary increases of 5 percent. As a result, almost all employees
received yearly 5 percent merit increase and reached the top of their salary range in the
minimum of eight years.
This system discouraged superior performers, because managers could not reward them.
Managers could not approve or disapprove a merit raise. No matter how hard these star
employees worked, they received the same raises as everyone else. Moreover, those who had
less seniority but higher performance than their colleagues might still be paid less until their
eighth year, when they finally reached the top of the pay scale. Few had the patience to wait.
Higher management on realizing that their reward system was not encouraging performance,
the personnel department was directed to devise a system that would encourage initiative,
motivate employees, and reduce turnover. The first step was to develop job descriptions for
all positions in WAPDA, from supervisor to clerical job. Job descriptions would remedy a
defect in the old system: poorly defined criteria for performance appraisals.
The new job description were assigned no more than six key goals per position and included
specified measurements to be used in assessing whether the person holding that position had
accomplished each goal. For instance, one of the goals for supervisor is to train, motivate,
and supervise lower-level employees. The data used to measure this objective include
training records, skill certification, productivity statistics, and employee morale figures
derived from attitude surveys.
Under the old system, managers could only approve or disapprove an employee for a merit
raise. The new system allows manager five ratings, ranging from provisional to outstanding.
But officials knew that just presenting more appraisal options would not solve the problem.
They examined the government merit system, which has five performance levels, and
learned that fewer than 1 percent of government employees were rated in the lower two
categories. Managers tabulate the point totals for each employee and compare the results to
the minimum values established for each level in the rating system. Merit raises are awarded
on the basis of these values.
The second merit system is still too new to be judged, but participants are enthusiastic.
Managers invited employees from throughout the government organizations to participate in
drawing up the job descriptions so that they would understand how the descriptions were
created and what the revamped merit system was expected to accomplish.
Employees now have a clear understanding of performance expectations, and managers have
a more objective method of evaluating employee performance.
1: What type of non-financial rewards could be offered by the WAPDA administrators
to reinforce high employee performance? (5)
2: What role does Equity theory play in the new system? (5)

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