Compensation Management
Compensation Management
Compensation Management
PROJECT REPORT
ON
COMPENSATION MANAGEMNT
AT
Project report submitted in partial fulfillment of the
requirement for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
Submitted By:
DECLARATION
I
hereby declare
that
this
project
report
titled
COMPENSATION
MANAGEMENT has been carried out by me for HDFC BANK , this report has to be
submitted by me for the award of my MBA Degree in the department of Business Management,
Osmania University.
I, further, declare that this is my original work and I did not try to duplicate any
other report. This is done by me as a part of my academic course during 2012-2014
Place:
Date:
ACKNOWLEDGEMENT
At the outset, I wish to thank the management of HDFC BANK For their kind
gesture of allowing me to undertake this project, and its various employees who lent their
helping hand towards the completion of this study.
The co-operation I received from the wide cross-section of employees of HDFC
COLLEGE under the guidance of Ms. ARSHIYA, Asst. Professor for giving
me such an opportunity to carry out this project, I am thankful to all the faculty members
of our college for co-operation and their encouragement during the course of project
work.
I am thankful to my parents and all my friends who are cooperated to complete this project encouragement.
ABSTRACT
Compensation
Management
deals
with
initiating,
designing,
INDEX
CONTENTS
PAGE NO
LIST OF TABLES
LIST OF GRAPHS
i
ii
LIST OF FIGURES
iii
CHAPTER-1
1-5
INTRODUCTION
CHAPTER-2
6-17
COMPANY PROFILE
CHAPTER-3
18-55
REVIEW OF LITERATURE
CHAPTER-4
56-71
72-75
FINDINGS
CONCLUSIONS
SUGESSTIONS
CHAPTER-8
BIBLIOGRAPHY
QUESTIONNAIRE
76
78
LIST OF TABLES
.NO
PA
GENO
57
58
59
60
61
62
63
64
65
66
67
0
1
2
68
69
70
71
3
4
5
LIST OF GRAPHS
.NO
PA
GENO
57
58
59
60
61
62
63
64
65
66
67
0
1
2
68
69
70
71
3
4
5
CHAPTER I
INTRODUCTION
INTRODUCTION
Human resources are the most valuable and unique assets of an organization. The
successful management of an organizations human Resources is an exciting, dynamic
and challenging task, especially at a time when the world has become a global village and
economies are in a state of flux. The scarcity of talented resources and the growing
expectations of the modern day worker have further increased the complexity of the
Human resources function.
Even though specific resources function/activities are the responsibility of the
human resources department, the actual management of human resources is the
responsibility of all managers to understand and give due Importances to the different
human resources policies and activities in the Organization.
Human Resources Management outline the importance of HRM and its different
functions in an organization.
It examines the various HR processes that are concerned with attracting,
managing, motivating and developing employees for the organization. The book discusses
the issue in human resources management in a changing environment and suggests
possible ways of leveraging and managing human resources. changing trends in human
resources management have been explained using contemporary examples from Indian
companies.If you want 10 days of happiness, grow grain. If you want 10 years of
happiness, grow a tree. If you want 100 years of happiness, grow power.
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service get a gratuity on departure at 15 days
salary (last drawn salary) for each completed year of service.
Immigration
department and his/her immediate junior were chosen as they informants. The
information from there dept and the required knowledge specially from the administrative
was used from discussion on compensation packages.
SAMPLING TECHNIQUE
The sampling technique used for the collection of information through the
questionnaires is the simple random sampling. And the sample size is 50 respondents.
QUESTIONNAIRE DESIGN
The designed questionnaire consists of 12 to 13 questions, a combination of open
ended and close ended questions for employees.
ANALYSIS OF DATA
For the purpose of analysis, feedback is collected from the employees in the
organization by the way of questionnaire. Data collected is represented in the form of
percentages in the form of percentages and graphs and an analysis has been done on the
basis of these percentages and graphs.
organization.
Confidentiality of some information related to human resource plan cost lack
CHAPTER - II
COMPANY PROFILE
COMPANY PROFILE
DISTRIBUTION NETWORK:
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of
over 1400 branches spread over 600 cities across the country. All branches are linked on
an online real-time basis. Customers in 90 locations are also serviced through Phone
Banking. The Banks expansion plans take into account the need to have a presence in all
major industrial and commercial centers where its corporate customers are located as well
as the need to build a strong retail customer base for both deposits and loan products.
MANAGEMENT
Mr. Jagdish Kapoor took over as the banks Chairman in July 2001, Prior to this,
Mr.Kapoor was a Deputy governor of the Reserve Bank of India.
The Managing Director, Mr.Aditya Puri, has been a professional banker for over
25 years. And before joining HDFC Bank in 1994 was heading Citibanks operations in
Malaysia.
The Banks Board of Directors is composed of eminent individuals with a wealth
of experience in public policy, administration, industry and commercial banking. Senior
executive representing HDFC are also on the Board Senior banking professionals with
substantial experience in India and abroad head various businesses and functions and
report to the Managing Director.
10
11
3. TREASURY OPERATIONS :
Within this business, the bank has three main product areas A ) Foreign Exchange and Derivatives
B ) Local Currency Money Market &
C ) Debt Securities and Equities.
With the liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures.
The above business groups are supported by the following groups:
Human Resources
Information Technology
Operations
B).LOTUS NOTES:
Lotus Notes is the system that HDFC bank uses for internal communication.
c) Facilities Management
Wipro is the company appointed to give HDFC Bank the on-site support required
at different locations / cities.
ORGANIZATION STRUCTURE AND ORGANIZATION CHART
HDFC Bank Board of Directors comprises of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.
13
ORGANIZATION CHART
Chairman
Joint Managing
Director
Executive
Director
(Corporate
Joint Managing
Director
Executive
Director
Executive
Director
Executive
Director
(Project
(Wholesale
(Retail
General Managers
Sales
manager
Sales
manger
2
Team
leader
Team
leader
BDE 1
BDE 2
BDE 1
BDE 2
SALES
Manage
r3
Team
leader
BDE 1
BDE 2
14
Sales
Manager
4
Team
leader
BDE 1
BDE 2
15
CHAPTER III
REVIEW OF LITERATURE
16
REVIEW OF LITERATURE
INTRODUCTION TO TOPIC
Compensation is what employees receive in exchange for their contribution to the
organization. Generally,. Employees offer their services for three types of rewards. Pay
refers to the base wages and salaries employees normally receive. Compensation forms
such as bonuses, commissions and profit sharing plans are incentives designed to
encourage employees to produce results beyond normal expectation. Benefits such as
insurance, medical, recreational, retirement, etc., represent a more indirect type of
compensation. So, the term compensation is a comprehensive one including pay,
incentives, and benefits offered by employers for hiring the services of employees. In
addition to these, managers have to observe legal formalities that offer physical as well as
financial security to employees. All these issues play an important role in any HR
departments efforts to obtain, maintain and retain an effective workforce.
Companies success in the marketplace is as much a function of the business
practitioners manage employees as it is a function of companies structures and financial
resources. Compensating employees represents a critical human resource management
practice: Without sound compensation systems, companies cannot attract and retain the
best qualified employees.
Compensation systems can promote companies competitive advantage when they
are properly aligned with strategic goals. Likewise, Compensation practices can
undermine competitive advantage when they are designed and implemented haphazardly.
The purpose of this is to provide knowledge of the art of compensation practice
and its role in promoting companies competitive advantage. Students will be best
prepared to assume the roles of competent compensation professionals if they possess a
grounded understanding of compensation practices and the environments in which
business professionals plan, implement, and evaluate compensation systems. Thus we
examine the context of compensation practice, the criteria used to compensate employees,
compensation system design issues, employee benefits, and the contemporary challenges
that compensation professionals will face well into this century.
17
EVOLUTION OF COMPENSATION
Todays compensation systems have come from a long way. With the changing
organizational structures workers need and compensation systems have also been
changing. From the bureaucratic organizations to the participative organizations,
employees have started asking for their rights and appropriate compensations. The higher
18
education standards and higher skills required for the jobs have made the organizations
provide competitive compensations to their employees.
Compensation strategy is derived from the business strategy. The business goals
and objectives are aligned with the HR strategies. Then the compensation committee or
the concerned authority formulates the compensation strategy. It depends on both internal
increments and promotions annually. The salary was determined on the basis of the job
work and the years of experience the employee is holding. Some of the organization
provided for retirement benefits such as, pension plans, for the employees. It was
assumed that humans work for money, there was no space for other psychological and
social needs of workers.
INTRINSIC COMPENSATION
Intrinsic compensation represents employees critical psychological states that
result from performing their jobs. Job characteristics theory describes these critical
20
Skill variety is the degree to which the job requires the person to perform
EXTRINSIC COMPENSATION:
Extrinsic compensation includes both monetary and non-monetary
rewards Compensation professionals establish monetary compensation
programs to reward employees according to their job performance levels or
for learning job-related knowledge or skills. As we will discuss shortly,
monetary compensation represents core compensation. Non-monetary
rewards include protection programs (for example, day care assistance).
Most compensation professionals refer to no monetary rewards as employee
benefits or fringe compensation.
CORE COMPENSATION:
There are six types of monetary or core, compensation. The elements of base pay
adjustments are listed in Table.
21
BASE PAY:
Employees receive base pay, or money, for performing jobs. Base pay is recurring;
that is, employees continue to receive base pay as long as they remain in their jobs.
Companies disburse base pay to employees in either one of two forms as hourly pay or
wage or as salary. Employees earn hourly pay for each hour worked. They earn salaries
for performing their jobs, regardless of the actual number of hours worked. Companies
measure salary on an annual basis.
Companies typically set base amounts for jobs according to the level of skill,
effort, and responsibility required performing the jobs and the severity of the working
conditions. Compensation professionals refer to skill, effort, responsibility, and working
conditions factors as compensable factors because they influence pay level. Courts of law
use these four compensable factors to determine whether jobs are equal per the equal pay
Act of 1963. Compensation professionals use.
22
Work Environment
Compensation, benefits, and job analysis specialists work in nearly every industry.
They typically work in offices.
How to Become a Compensation, Benefits, and Job Analysis Specialist
Compensation, benefits, and job analysis specialists need a bachelors degree, and
some specialists need related work experience.
Pay
The median annual wage for compensation, benefits, and job analysis specialists
was $59,090 in May 2012.
Job Outlook
Employment of compensation, benefits, and job analysis specialists is projected to
grow 6 percent from 2012 to 2022, slower than the average for all occupations. Job
prospects should be best for those with experience performing compensation analysis,
benefits administration, or other human resources work.
Similar Occupations
Compare the job duties, education, job growth, and pay of compensation, benefits,
and job analysis specialists with similar occupations.
JOB EVALUATION
Mississippi State University recognizes that staff positions may change in work
content or responsibilities. Therefore, a position may be evaluated for reclassification
when there has been a significant change in required job skills or responsibilities.
Procedure for Job Evaluation - New or Existing Postions
23
A link and temporary password to the online job evaluation system will be sent to
the employee and the employees supervisor for existing positions or to the
supervisor requesting a new position for completion of the Job Evaluation
Questionnaire.
24
Cost-of-living adjustments
Seniority pay
Merit pay
Incentive pay
Pay-for-knowledge and skill-based pay.
These compensable factors to help meet three pressing challenges, which we introduce
late in this chapter: internal consistency market competitiveness recognition of individual
contributions.
Seniority Pay:
Seniority Pay systems reward employees with periodic additions to base pay according
to employees length of service in performing their jobs. These pay plans assume that
employees become more valuable to companies with time and that valued employees.
25
Merit Pay:
Merit Pay programs assume that employees compensation over time should be
determined, at least in part, by differences in job performance. Employees earn
permanent increases to base pay according to their performance. Merit pay rewards
excellent effort or results, motivates future performance, and helps employers retain
valued employees.
INCENTIVE PAY
Incentive Pay or variable pay rewards employees for partially or completely
attaining a predetermined work objective. Incentive pay is defined as compensation
(other than base wages or salaries) that fluctuates according to employees attainment or
some standard base on a reestablished formula, individual or group goals, or company
earnings.
26
DISCRETIONARY BENEFITS:
Discretionary benefits fall into three broad categories: protection programs, paid
time-off, and services, Protection programs provided family benefits, promote health,
and guard against income loss caused by catastrophic factors such as unemployment,
disability, or serious illness. Not surprisingly, paid time-off provides employees with pay
for time when they are not working, such as vacation. Services provide enhancements
such as tuition reimbursement and day care assistance to employees and their families
ORGANISATIONAL CULTURE:
Organizational culture is an organizations system of shared values and beliefs that
produce norms of behavior (9). These values are apparent in companies organizational
and work structures. Also, organizational culture influences HR systems designs,
including compensation.
27
TRADITIONAL HIERARCHY
The Traditional design of U.S. companies emphasizes efficiency, decision making
by managers, and dissemination of information from the top of the company to lower
levels, illustrates is the intermediary for the companys chief executive officer and the
vice presidents of the functional areas. Within the functional areas, the decision making
flow downward from the vice president to managers of specialties within the functions.
NATURE OF COMPENSATION
Compensation offered by an organization can come both directly through base pay
and variable pay and indirectly through benefits.
salary
Variable pay : it is the compensation that is linked directly to performance
29
comparable jobs.
Group similar jobs into pay grades.
Price each pay grade by using wage curves.
Fine tune pay rates.
JOB EVALUATION
Job analysis offers valuable information for developing a compensation system in
terms of what duties and responsibilities need to be undertaken. The worth of a job to the
organization is as ascertained through job evaluation. Since the whole process is largely
subjective, a committee is appointed to collect information and come up with a hierarchy
of jobs according to their value. The evaluation is done through the use of market pricing
or through the use of ranking, point or factor comparison methods.
responsibilities, etc.
They represent the full range in terms of salary such that some are among
the lowest paid in the group of jobs, others are in the middle range and
some are at the high end of the pay scale.
30
One of the major problems with these sources is the comparability of jobs in
the survey to jobs in the organization. To overcome the limitations of published
surveys, conduct your own surveys of important jobs. The following survey methods
are generally used to collect relevant wage-related information:
31
WAGES
In India, different Acts include different items under wages, though all the Acts
include basic wage and dearness allowance under the term wages. Under the Workmens
Compensation Act, 1923, wages for leave period, holiday pay, overtime pay, bonus,
attendance bonus, and good conduct bonus from part of wages. Under the payment of
Wages Act, 1936, Section 2 (vi), any award of settlement and production bonus, if paid,
constitutes wages. Under the Payment of Wages Act, 1948, retrenchment compensation,
payment in lieu of notice and gratuity payable on discharge constitute wages.
However, the following types of remuneration, if paid, do not amount to wages
under any of the Acts:
i. Bonus or other payments under a profit-sharing scheme which do not form a
part of contract of employment.
ii. Value of any house accommodation, supply of light, water, medical
attendance, traveling allowance, or payment in lieu thereof or any other
concession.
iii. Any sum paid to defray special expenses entailed by the nature of the
employment of a workman.
iv. Any contribution to pension, provident fund, or a scheme of social security
and social insurance benefits.
v. Any other amenity or service excluded from the computation of wages by
general or special order of an appropriate governmental authority.
The term Allowances includes amounts paid in : addition to wages over a period
of time including holiday pay, overtime pay, bonus, social security benefit, etc. The wage
structure in India may be examined broadly under the following heads:
BASIC WAGE
32
The basic wage in India corresponds with what has been recommended by the Fair
Wages Committee (1948) and the 15th Indian Labour Conference (1957). The various
awards by wage tribunals, wage boards, pay commission reports and job evaluations also
serve as guiding principles in determining basic wage. While deciding the basic wage,
the following criteria may be considered: (i) Skill needs of the job; (ii) Experience
needed; (iii) Difficulty of work: mental as well as physical; (iv) Training needed; (v)
Responsibilities involved; (vi) Hazardous nature of job.
Other allowances:
The list of allowances granted by employers in India has been expanding, thanks
to the increasing competition in the job market and the growing awareness on the part of
employees.
BONUS
33
Employee compensation and benefits are divided into four basic categories
:
1. Guaranteed pay a fixed monetary (cash) reward paid by an employer to an
employee. The most common form of guaranteed pay is base salary.
2. Variable pay a non-fixed monetary (cash) reward paid by an employer to an
employee that is contingent on discretion, performance, or results achieved. The most
common forms of variable pay are bonuses and incentives
3. Benefits programs an employer uses to supplement employees compensation, such
as paid time off, medical insurance, company car, and more
4. Equity-based compensation BANK or pseudo BANK programs an employer uses
to provide actual or perceived ownership in the company which ties an employee's
compensation to the long-term success of the company. The most common examples are
BANK options.
35
FACTORS INFLUENCING COMPENSATION LEVELS:The amount of compensation received by an employee should reflect the effort put
in by the employee, the degree of difficulty experienced while expending his energies, the
competitive rates offered by others in the industry and the demand-supply position within
the country, etc. These are discussed below.
a) Job Needs: Jobs vary greatly in their difficulty, complexity and challenge. Some
need high levels of skills and knowledge while others can be handled by almost
anyone. Simple, routine tasks that can be done by many people with minimal
skills receive relatively low pay. On the other hand, complex, challenging tasks
that can be done by few people with high skill levels generally receive high pay.
b) Ability to pay: Project determines the paying capacity of a firm. High profit
levels enable companies to pay higher wages. This partly explains why computer
software industry pays better salaries than commodity based industries (steel,
cement, aluminum, etc), Likewise, multinational companies also pay relatively
high salaries due to their earning power.
c) Cost of living: Inflation reduces the purchasing power of employees. To overcome
this, unions and workers prefer to link wages to the cost of living index rises due to
rising prices, wage follow suit.
d) Prevailing wage rates: Prevailing wage rates in competing firms within an
industry are taken into account while fixing wages. A company that does not pay
comparable wages may find it difficult to attract and retain talent.
e) Unions: Highly unionized sectors generally have higher wages because well
organized unions can exert presence on management and obtain all sorts of benefits
and concessions to workers.
f) Productivity: This is the current trend in most private sector companies when
workers wages are linked to their productivity levels. If your job performance is
good, you get good wages. A sick bank, for example, cant hope to pay competitive
wages, in tune with profit making blanks.
36
FRINGE BENEFITS
The term fringe benefits refers to the extra benefits provide to employees in
addition to the normal compensation paid in the form of wage or salary. Many years ago,
benefits and services were labeled fringe benefits because they were relatively
insignificant or fringe components of compensation. However, he situation now is
different, as these have, more or less, become important components of a comprehensive
compensation package offered by employers to employees.
TB main feature of fringe benefits, as they stand today may be stated thus:9
organization.
They are indirect compensation because they are usually extended as a
ii.
legal requirements.
Paid Holiday: According to the Factories Act, 1948, an adult worker shall
have weekly paid holidays, preferably Sunday. When a worker is deprived
of weekly holidays, he is eligible for compensatory holidays of the same
number in the same month. Some organizations allow the workers to have
iii.
iv.
shift.
Holiday Pay: Generally organizations offer double the normal rate of the
v.
EMPLOYEE SECURITY:
Physical and job security to the employee should also be provided with a view to
ensure security to the employee and his family members. When the employees services
get confirmed, his job becomes secure. Further, a minimum and continuous wage or
38
salary gives a sense of security to the life. The Payment of Wages Act, 1936, the
Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, provide income security to
the employees.
i.
ii.
compensation at the rate equal to 50% of the total of the basic wage and
dearness allowance for the period of their layoff except for weekly holidays.
Layoff compensation can normally be paid up to 45 days in an year.
1.22.3.5 Old age and retirement benefits: Industrial life generally breaks joint
family system. The saving capacity of the employees is very low due to lower wages,
high living cost and increasing aspirations of the employees and his family members. As
such, employers provide some benefits to the employees, after retirement and during old
age, with a view to create a feeling of security about the old age. These benefits are called
old age and retirement benefits. These benefits include provident fund, (b) pension, (c)
deposit linked insurance, (d) gratuity and (e) medical benefit.
i. Provident fund: his benefit is meant for economic welfare of the employees. The
Employees provident found, Family Pension Fund and Deposit Linked insurance
Act, 1952, provides for the institution of Provident Fund for employees in
factories and establishments. Provident Fund Scheme of the Act provides for
monetary assistance to the employees and/or their dependants during post
retirement life. Thus this facility provides security against social risks and this
benefit enables the industrial worker to have better retired life. Employees in all
factories under Factories Act, 1948, are covered by the Act. Both the employee
and employer contribute to the fund. The employees on attaining 15 years of
39
membership are eligible for 100% of the contributions with interest. Generally
the organizations pay the Provident Fund amount with interest to the employee on
retirement or to the dependants of the employee, in case of death.
ii. Pension: The Government of India introduced a scheme of Employees Pension
Scheme for the purpose of providing Family Pension and Life insurance benefits
to the employees of various establishments to which the Act is applicable. The
Act was amended in 1971 when Family Pension Fund was introduced in the Act.
Both the employer and the Employee contributes to this fund. Contributions to
this fund are from the employee contributions to the Provident Fund to the tune of
1.1/3% of employee wage.
40
Pension Rates
Pay for Month
Rate
Rs.800 or more More than Rs 12% of the basic subject to a maximum of Rs 150 as
200 but less Than Rs 800 Rs monthly pension. 15% of the basic subject to a maximum
200 or less
This scheme also provides for the payment of a lumpsum amount of Rs 4,000 to
an employee on his retirement as retirement benefit and a lumpsum amount of Rs 2,000 in
the event of death of employee as life insurance benefits.
include
understanding
and
maintaining
human
relation.
Hence,
The Act followed the British model with necessary changes to suit Indian
conditions. The main objective of the Act is to impose an obligation upon the employer to
pay compensation to the workman who suffers partial or total incapacity for more than 3
days resulting in a loss in earning capacity the main features of the Act are as under:
Coverage: The Act covers all workers employed in factories, mines, plantations,
transportation, construction works, railways, ships and certain other hazardous
occupations as mentioned in Schedule II of the Act. It does not apply to casual workers
covered under the Employees State insurance Act and members of the Armed Forces.
43
20 or more persons are employed. The Act does not apply to (i) cooperative societies
where less than 50 persons are employed and working without the aid of power (ii) new
establishments for 3 years from the date of commencement.
Administration: A Tripartite Central Board of Trustees consisting of representatives of
employees, employers and Government oversee the implementation of the provisions of
the Act. The benefits of the Act include the following:
employees salary every month. The employer con relates an equivalent sum. The
total contributions are deposited with the Provident Fund Commission or invested
in a specified way. Premature withdrawals, loans and advances can obtained by
the employee for higher education, marriage of children, purchase of car,
construction of house, etc. when the employee leaves the company, retires or dies
the credit, balance in his account with interest is paid to his nominees.
Family pensions scheme, 1971: When the employee dies while in service,
pension is paid to his widowr children. Under the new scheme, pension is paid to
his widower children. Under the new scheme, pension is payable to an employee
after his. Retirement in place of provident fund. An employee can opt for either
COMPENSATION STRUCTURE
Components of Compensation System
Compensation system is designed keeping in minds the strategic goals and
business objectives. Compensation system is designed on the basis of certain factors after
analyzing the job work and responsibilities, Components of a compensation system are as
follow
45
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits
and/or indirect in the form of non-monetary benefits known as perks, time off, etc.
Compensation does not include only salary but it is the sum total of all rewards and
allowances provide to the employees in return for their services. If the compensation
offered is effectively managed, it contributes to high organizational productivity.
Direct Compensation
Direct compensation refers to monetary benefits offered and provided to
employees in return of the services they provide to the organization. The monetary
benefits include basic salary, house rent allowance, conveyance, leave travel allowance,
medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a
regular interval at a definite time.
DIRECT
COMPENSATIO
`
46
Indirect Compensation
Indirect compensation refers to non-monetary benefits offered and provided to
employees in lieu of the services provided by them to the organization. They include
Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel
Assistance Limits, Retirement Benefits, Holiday Homes.
Strategic Compensation
Strategic compensation is determining and providing the compensation packages
to the employees that are aligned with the business goals and objectives. In todays
competitive scenario organizations have to take special measures regarding compensation
of the employees so that the organizations retain the valuable employees. The
compensation systems have changed from traditional ones to strategic compensation
systems.
Disability Compensation
A tax-free monetary benefit paid to Veterans with disabilities that are the result of
a disease or injury incurred or aggravated during active military service. The benefit
amount is graduated according to the degree of the Veteran's disability on a scale from 10
percent to 100 percent (in increments of 10 percent). Compensation may also be paid for
disabilities that are considered related or secondary to disabilities occurring in service and
for disabilities presumed to be related to circumstances of military service, even though
they may arise after service. Generally, the degrees of disability specified are also
designed to compensate for considerable loss of working time from exacerbations or
illnesses.
Learn more about Disability Compensation
disabilities. Parents DIC is an income-based benefit for parents who were financially
dependent on of a Service member or Veteran who died from a service-related cause.
Learn more about DIC and Parents DIC
48
Employee Benefits
Benefits and compensation provided to the employees usually depend on the
conditions of employment and other factors like security, safety, health, welfare and
recreation of employees
These benefit programs must be managed carefully to enhance recruitment and to boost
the morale of the employees
Coverage of Benefits Payment for time not worked
(a) Vacation
(b) Holidays
(c) Sick leave
(d) Miscellaneous types of non-working plans
(e) Shifts premium
Safety benefits
Health Benefits
Maternity benefit
Dependent benefit
Insurance benefits
(a) Life insurance
(b) Vision insurance
(c) Dental insurance
49
The reality, however, is that lean periods like this cry out for
optimized efficiency. For businesses to get the most from the budget they do have, they
must focus on those areas that directly influence the companys bottom lineand
compensation has one of the most profound impacts of them all. So as you work to
improve on your employees compensation practices, here are five critical steps that will
maximize your efforts. Your organization can have the most in-depth compensation
management model, equipped with fancy processes and up-to-the second salary market
data, but it all means nothing if it does not tie your merit adjustments to your performance
metrics. A true pay-for-performance culture requires you to thoroughly assess the
organizations performance, calibrate your results to eliminate any managerial bias, and
ultimately compensate individuals for accomplishing their goal targets. Be absolutely
certain that your compensation processes are configured along these lines, or you will be
wasting valuable budget. Human capital is your organizations greatest cost-yet far too
many of us continue to manage employee data and calculate salary adjustments using
basic spreadsheets. Over a decade of research has consistently proven that spreadsheets
are notoriously full of errors. Why? Because people make mistakes. In fact, people are
typically only 95% to 98% accurate when they create formulas in spreadsheets1. Imagine
the number of formulas in any given spreadsheet your department produces-and then
weigh that against the results of one study in particular that found over 90% of
spreadsheets contained errors2.
When rewarding your employees for their hard work, consider offering BANK
options or one-time financial bonuses instead of simply increasing base salaries. And
remember: money is not the only motivator for engaging and retaining your workforce.
Look for other development opportunities, such as training or an increase in
responsibilities. These alternatives reflect your faith in key employees while defining
clear conduits for career growth. Market wages can fluctuate widely depending on your
industry. In addition to assessing merit increases and bonuses, take the time to see where
your organizations salaries line up with market standards. Depending on your corporate
50
salary strategy, you may need to make some adjustments that help ensure fair and
equitable compensation, especially for those roles facing high turnover risk.
HR Should not be conducting compensation budget allocations alone and behind
closed doors at headquarters. Youll still oversee the process to ensure consistency and
control costs but if your organization hopes to improve the ongoing cycle of talent
development, you must be certain that managers participate in this critical process. Give
them all the tools they will need to easily make smart, effective decisions, including
performance and goal data, salary bands, previously allocated budget information,
increase guidelines, and so on. Youll also find that managers and employees alike are
more responsive during compensation processes. Take advantage of this opportunity and
have them complete other necessary performance management tasks, such as talent
assessments for succession planning activities. While we might be tempted to cut back on
some HR efforts, we should remember that out current economic crisis is actually a call
for greater diligence particularly with regard to large budget items like compensation.
Now is the time to optimize your processes to ensure the most efficient use of corporate
resources, and to help engage, retain, and develop your companys most valuable asset its
workforce. .r1e2f
According to the Mr. Grant Mc Glaughlin The Canadian Securities
Administrators have adopted new executive compensation disclosure rules that will come
into force on December 31, 2008. These amendments, the first changes to the executive
compensation rules since 1994, are intended to provide shareholders with a clearer
perspective on executive compensation.
The central elements of the new rules are to require disclosure of all direct and
indirect compensation that an issuers board paid and intended to pay to executives, and
the reasons for the amount of compensation paid to executives so as to provide investors
with an understanding of how compensation decisions were made. The rule changes,
which are significant, are similar to the SECs rules on executive compensation adopted
last year. The new rules apply for financial years ending on or after December 31, 2008,
so issuers will need to comply with the new rules for the 2009 proxy season. The New
Rules in order to prepare to report under the new rules, there are certain steps that
companies should take to ensure they will be fully compliant by the deadline. The new
51
rules are complex, detailed and will require the collection and development of a
significant amount of additional compensation information. The new requirement for
compensation discussion and analysis will require extensive involvement of the board of
directors, compensation committee, and management team and outside advisors. Issuers
should begin preparing
Their executive compensation disclosure as soon as possible. Examine new
executive compensation report of issuers. Although the new rules implemented by the
SEC are not identical to those coming into force in Canada, the policy reasons behind the
new rules, and many features, are very similar. Therefore, analyzing the changes made by
reporting companies in the United States may help issuers in Canada to get a better sense
of how to address the new requirements. Analyze the policy reasons and general
philosophy behind the companys current compensation practices. Under the new rules,
issuers will be required to disclose detailed reasons for their chosen methods of
compensation. Therefore, it will be useful for issuers to establish and articulate a
comprehensive policy for executive compensation to consider weather each element of
executive compensation is consistent with that policy.
The content of this article does not constitute legal advice and should not be relied
on in that way. Specific advice should be sought about your specific circumstances
According to Kathleen A. McNally Today there is a lot of talk about
compensation, its cost to the organization and the companys return on its compensation
investment. As a result, a variety of new pay systems have been developed, each with its
own objective, benefits and risks. Some companies have already installed new pay plans,
and many more are considering it. Many companies that have implemented various new
Pay Plans find that plan objective become disconnected from the larger picture; they have
been designed with a local rather than a global view. These companies are looking for a
way to integrate their pay system into a cohesive whole so the plans drive the company
objectives. Other companies are beginning to look at new plans, wondering how
These plans will fit into the current pay system. Often, there is little connection
between the new pay systems and the overall business plan of the organization. New pay
systems are designed to achieve specific, departmental objectives or, worse, they are
because everybody is doing it. The traditional function of pay to attract, retain and
52
motivate employees has not changed with the introduction of new pay systems; but the
emphasis has shifted from the attraction and retention functions to the motivation
function. The planning process Strategic compensation planning allows an organization to
focus on its strategic objectives and develop a comprehensive plan, considering base pay,
short- and long-term incentives, benefits and growth opportunities. This kind of planning
helps ensure that the compensation system will support the organizations long-and shortterm objectives without overlap, which would have more than one pay plan driving the
same objectives.
A strategy planning chart, allows to evaluate how well its current pay
system helps to attract, retain and motivate its employees. Down the side of the chart are
elements of the compensation system: direct pay, indirect pay (benefits) and several
nonpayer elements of the employee contract that different this company from
competitors. To identify these elements in your organization ask: why would someone
come to work here instead of for the competition, if pay and benefits were the same? The
answer may be such factors as career opportunities, a participative culture, promises to
reduce staff only through attrition, or flexible work hours.
53
CHAPTER IV
DATA ANALYSIS
AND
INTERPRETATION
54
Opinion respondent
No of respondents
% of respondents
Yes
43
86%
No
14%
Total
50
100%
Figure-1
Interpretation:
According to the above table 86% of the employees of the
organization are aware of the pay policies and rest of the 14% of the
employees are not aware of that they may be part time employees or contract
based employees.
55
Opinion response
No of respondents
%of respondents
Yes
33
33%
No
17
17%
Total
50
100%
Figure:2
Interpretation:
From the above table it is evident that 33% of the employees in the IT
industry are aware of their compensation packages in their industry and rest
of the 17% are not aware about the compensation packages which are in
practice in the industry.
3.
S. No
Basis
1
No. of respondents
8
56
% of respondents
8%
Experience
34
68%
Length of service
5%
Other
3%
50
100%
Total
Figure 3
Interpretation:
In the above table it is evident that 8% of the employees remuneration
is provided on the basis of previous work history, 68% of the employees
remuneration is provided on the basis of experience, 11% of the employees
remuneration is provided on the basis of their length of service and 5% of the
employees remuneration is provided on other grounds.
Base
Hourly pay
No. of respondents
0
% of respondents
0%
57
Annual pay
47
47%
Part time
02%
Contract
01%
Total
50
100%
Figure: 4
Interpretation:
In the above table it is evident there are no employees who work an
hourly pay basis as mentioned 0% in the table, 47% of the employees work
on annual pay base, 2% of the employees work on part time base and 1% of
the employees work on contract basis.
5. Pay package according to. factor
S. No
According to
No. of respondents
58
% of respondents
Market level
26
52%
3%
19
19%
Organizations capability
1%
50
100%
Total
Figure: 5
Interpretation:
In the above table it is evident that 52% of the employees
compensation package is defined on the market level, 4% of the employees
pay package is defined below the market level, 19% of the employees
compensation package is defined above market level and 1% of the
employees compensation package is defined on organizations capability.
59
S. No
Determined by
No. of respondents
% of respondents
Manager
1%
Profit
18
18%
Seniority
5%
Performance
26
52%
Cost of living
0%
50
100%
Total
Figure:6
Interpretation:
In the above table shows that the incentive pay factor is determined
1% by the managers, 36% by the profit of the organization, 11% by the
seniority, 52% by the performance of the employees and cost of living is not
taken into the consideration to pay incentives.
S. No
Kinds / Plans
No. of respondents
% of respondents
1 Organization portfolio
0%
0%
3 Individual plans
0%
4 All 3 above
49
98%
5 None
1%
50
100%
Total
Figure - 7
Interpretation:
In the above table it indicates that 98% of the employees are provided
all 3 kinds of incentives plans which are organization profit, group incentive
plan &individual plan and only 1% of the employees are not getting any kind
of incentives because, they are contract employees
S. No
Level of satisfaction
No. of respondents
Highly satisfied
6%
Satisfied
42
84%
Dissatisfied
2%
Highly dissatisfied
0%
50
100%
Total
% of respondents
Figure: 8
INTERPRETATION
After studying the above table it is concluded that 84% of the employees are
satisfied with their fringe benefits, 6% of the employees are highly satisfied with their
fringe benefits, 2% of the employees are dissatisfied with their fringe benefits and none of
the employees is highly dissatisfied regarding their fringe benefits.
Types of benefits
No. of respondents
62
% of respondents
Protection
0%
programme
2
Paid time-off
0%
Above two
48
96%
None
2%
Total
50
100%
Figure:9
Interpretation:
In the above table, 96% of the respondents are provided both the
protection and paid time-off benefits and only 2% of the respondents are not
provided with either one of the benefits.
Scored points
Grade I
76 to 100 points
No. of respondents
4
63
% of respondents
4%
Grade II
51 to 75 points
43
86%
Grade III
26 to 50 points
2%
Grade III
1 to 25 points
1%
50
100%
Grade IV
Total
Figure: 10
Interpretation:
Note: In the questionnaire, question No. 11 deals with the checklist about fringe benefits
which contains 20 benefits and each marking allocates 5 points. According to this,
interpretation has made.
points, it indicates that these respondents are getting total fringe benefits from the
organization and these employees called as Grade-I employees who are top level
executives, 86% of the respondents have scored between 51 to 75 points, it indicates that
they are getting Grade-II employees benefits, 2% of the respondents have scored between
26-50, it indicates that they are getting Group-III employees benefits and 1% of the
respondents are getting Group-IV employees benefits.
11. What is the average working duration/ hour of an employee?
S. No
Basis
No. of respondents
1 8 hours
8
64
% of respondents
8%
2 9 10 hours
34
68%
5%
50
100%
Total
INTERPRETATION
In the above table, 68% of the respondents are provided for 9-10 hours
working duration of an employee.
65
12. Do you agree that the shift system is convenient than adopting a fixed timing to
work?
S. No
Level of satisfaction
Strongly Agree
6%
Agree
42
84%
Neutral
2%
Disagree
0%
50
100%
Total
No. of respondents
% of respondents
INTERPRETATION
After studying the above table it is concluded that 12% of the employees strongly
Agree and Agree which is shows the highest 84 percentage and the natural which is 4%
and disagree there is null.
66
Opinion respondent
No of respondents
% of respondents
Yes
43
86%
No
14%
Total
50
100%
INTERPRETATION
In the above table, the formal job evaluation plan which is shows the
86%. Yes and 14 % for No.
67
Opinion respondent
No of respondents
% of respondents
Yes
43
86%
No
14%
Total
50
100%
INTERPRETATION
In the above table, employee policy manual which is shows the 86%. Yes
and 14 % for No.
68
S. No
Basis
No. of respondents
% of respondents
8%
34
68%
Balanced-Debt Method
5%
50
100%
Total
INTERPRETATION
In the above table Compensation payment system which is shows the Fixed pay
system is 16 % and Variable pay system 68% and balance Debt method 10 %.
69
CHAPTER V
FINDINGS, SUGGESTIONS
AND
CONCLUSION
70
FINDINGS
After doing this project work in the company, we found few of the main things in
the organization. They are as follows:
employees.
The structure of the compensation is not same as when compared with IT sector
family.
The company is communicating soundly about the benefits to its employees and
updating the information about the new benefits.
CONCLUSION
Compensation employees represent a critical human resource management
practice: without sound compensation systems, companies cannot attract and retain the
71
best-qualified employees. Practicing various human resources policies and programs like
employment, development and compensation and interaction among employees create a
sense of relationship between the individual worker and management, among workers and
trade unions and management.
It is the process of interaction among human beings. Human relations is an
area of management in integrating people into work situation in a way that motivates
them to work together productively, co-operatively and with economic, psychological and
social satisfaction. It includes:
The main objectives of compensation administration are to design a costeffective pay structure that will attract, motivate and retain competent employees and that
will also be viewed as fair by these employees apart from meeting legal requirements
organization have to take care of ever-rising employee expectation and competitive
pressures while designing an effective compensation plan. The purpose of this protect to
bring out the importance of designing an effective compensation plan that takes care of
legal stipulations, industry practices, employee expectation, competitive pressures, etc.,
so as to attract and retain talent.
72
SUGGESTIONS
After doing this project work in the company, we found few of the main things
in the organization. They are as follows
organization.
Company should find out the various tax relaxation benefits to the employees.
Providing a handsome compensation package can boost up the employee
motivation.
Communicate about the benefits the employees in an effective manner.
Adjust labor cost to financial results the basic idea is to create a bonus plan
where the company is paying more bonuses in good times and less (or no)
73
BIBLIOGRPHY
74
BIBLIOGRPHY
Books
(i) Joseph J. Martocchio STRATEGIC COMPENSATION THIRD
EDITION -2007, PUBLISHED BY PEARSON EDUCATION
(ii) Richard j. Henderson COMPENSATION MANAGEMENT IN A
KNOWLEDGE BASED WORLD TENTH EDITION-2008, PUBLISHED BY
PEARSON EDUCATION
(iii) Brow Harvey COMPENSATION MANAGEMENT.
(iv) V.S.P RAO HUMAN RESOURSE MANAGEMENT SECOND
EDITION-2007, PUBLISHED BY EXCEL BOOKS.
(v) L.M.PRASAD: HUMAN RESOURCES MANAGEMENT.
(vi) Mirza S Saiyadain HUMAN RESOURCES MANAGEMENT.
Web sites:
www.google.com
www.hdfc.com
www.cite.H.R.com
www.msn.com
75
QUESTIONNARIES
EMPLOYEES SATISFACTION LEVEL REGARDING
COMPENSATION POLICIES
PERSONAL INFORMATION:NAME
:-----------------------
AGE
:-----------------------
QUALIFICATION :----------------------EXPERIENCE:
:------------------------
QUESTIONNARIES
1. Are you aware of the procedure of pay policies in your
organization?
A) Yes
B) No
B) No
76
B) Profit
E) Performance
7. What kind of incentives are providing in your organization?
[
A) Organization profit plan
B) Group incentive plan are
C) Individual incentive plan
D) Above
77
A) Protection programs
B) Paid time off
C) Services
D) All are above
9. What kind of insurance policies is providing to you in your
organization?
A) Group insurance
B) Individual insurance
C) Group and individual insurance
D) None
10. How do you satisfy with the fringe benefits provided by the
organization?
A) Highly satisfied
B) Satisfied
C) Dissatisfied
D) Highly dissatisfied
11. What is the average working duration/ hour of an employee?
A.
8 hours
B. 9 10 hours
A. Yes B. No
79