As a fast growing economy, business houses in India saw a sudden change in the way it operates its business. The huge English speaking educated population and the reduced cost of labour drew many multi national corporations to set companies in India. The sudden spurt in the economy brought with it many issues related to human resource. Every stage of human resource function was faced with many challenges.

Recruiting the right person suited for the task has become a major challenge before the human resource department. The boom in information technology and the high pay structure drove many to choose a career in IT. Recruiting the best candidate amongst millions who graduate every year is not an easy task. He should have the right aptitude, communication skills, analytical skills and a lot other skills to contribute to the profitability of the company. Conducting a background check is inevitable to understand the credibility of the candidate. A false resume can lead to the loss of a huge amount of money for the business, besides having a direct hit on its goodwill.

The labour laws in India falls under the concurrent list of the Indian Constitution which gives the Central and the State Governments the power to pass the labour laws. Globalisation and the resultant spread of the business into many states require the companies to be well versed in the various laws governing the labour. This is more difficult for an MNC when it launches the business in India for the first time. The legal officers appointed by the company should have a through knowledge of the labour laws and their repercussions. The Minimum Wages Act of 1948 prescribes the minimum wages to be provided to the employees in certain sectors of the industry while the Payment of Wages Act defines the time limit within which the salary should be paid to the employees.

A major issue faced by the Indian industry, recently airlines and textile industry, is the sudden stoppage of work on account of certain labour problems. The level of the impact felt by the airline industry is huge with the company incurring a tremendous loss on account of the strike. For the settlement of the industrial disputes, the Government has brought many adjudicating authorities like the Conciliation Officers, Board of Conciliation, Labour Courts, Industrial Tribunals, etc. In the absence of a compromise with the trade unions and the management many companies had to face lock outs, strikes and other labour related problems a few years back. A change in the attitude off late is a positive sign of health for the industries.

The Government regulations on the compensation paid to the employees keeps varying in every budget. The introduction of the Fringe Benefit Tax on the employer on the perquisites to the employees has brought about changes in the compensation policy. The reduction in the interest rates of Provident Funds has brought with it many protests from the working class. Another problem faced by the company is in the form of increased remuneration to the employees. The severe competition from the MNCs has forced the companies to bring in similar pay packages. Wider gap in the pay rates draws the employees to the multi national corporations leading to the loss of expertise.

The labour and compensation issues are wide and varied. To ensure sustenance and success the management should adopt a flexible management policy that incorporates all the changes making a win-win situation for both the employees and the company.