INTRODUCTION

Human resource is the most vital resource of an organization as it handles all the
physical resources therein and takes the responsibility of decision making, work done and
achievement of results etc. So, to carry on these heavy responsibilities, employees should
be motivated by providing the best remuneration and compensation package as per the
industry standards. Lucrative compensation is a means of attracting and retaining the best
talents in an organization.
Compensation is an integral part of human resource management. It is the
remuneration received by an employee in return to his or her contribution for the
organization. good compensation system evolves a balanced work!employee
relationship by providing monetary and non!monetary benefits to the employees. In this
way, it acts as a motivating factor to the employees and increases the organizational
effectiveness.
"he remuneration provided by any organization to its employee in return to its
contribution to the organization is known as compensation. It can be monetary or non!
monetary benefits provided by an organization. Compensation is the key drive to improve
the effectiveness of any organization by improving the efficiency of employees.
.
OBJECTIVE OF THE STUDY
"his pro#ect attempts to understand the ob#ectives$!
"o understand in details the concept of compensation management atdifferent
level of employee.
"o understand the impact of compensation management on performance level.
comparative study of the compensation management strategies followed in
different sectors in India.
EVOLUTION OF COMPENSATION
"oday%s compensation systems have come from a long way. &ith the changing
organizational structures workers% need and compensation systems have also been
changing. 'rom the bureaucratic organizations to the participative organizations,
employees have started asking for their rights and appropriate compensations. "he higher
education standards and higher skills re(uired for the #obs have made the organizations
provide competitive compensations to their employees.
Compensation strategy is derived from the business strategy. "he business goals and
ob#ectives are aligned with the H) strategies. "hen the compensation committee or the
concerned authority formulates the compensation strategy. It depends on both internal
and e*ternal factors as well as the life cycle of an organization.
+volution of Strategic Compensation
Traditional Compn!ation S"!tm!
In the traditional organizational structures, employees were e*pected to work hard
and obey the bosses% orders. In return they were provided with #ob security, salary
increments and promotions annually. "he salary was determined on the basis of the
#ob work and the years of e*perience the employee is holding. Some of the
organizations provided for retirement benefits such as, pension plans, for the
employees. It was assumed that humans work for money, there was no space for other
psychological and social needs of workers.
C#an$ in Compn!ation S"!tm!
&ith the behavioral science theories and evolution of labour and trade unions,
employees started asking for their rights. ,aslow brought in the need hierarchy for
the rights of the employees. He stated that employees do not work only for money but
there are other needs too which they want to satisfy from there #ob, i.e. social needs,
psychological needs, safety needs, self!actualization, etc. -ow the employees were
being treated as human resource.
"heir performance was being measured and appraised based on the organizational and
individual performance. Competition among employees e*isted. +mployees were
e*pected to work hard to have the #ob security. "he compensation system was
designed on the basis of #ob work and related proficiency of the employee.
,aslow%s -eed Hierarchy
Toda"%! Modrn Compn!ation S"!tm!
"oday the compensation systems are designed aligned to the business goals and
strategies. "he employees are e*pected to work and take their own decisions.
uthority is being delegated. +mployees feel secured and valued in the organization.
.rganizations offer monetary and non!monetary benefits to attract and retain the best
talents in the competitive environment. Some of the benefits are special allowances
like mobile, company%s vehicle/ House rent allowances/ statutory leaves, etc.


MEANIN& OF 'A&E( COMPENSATION PAYMENT)
&age is a monetary payment made by the employer to his employee for the work
done or services rendered. It is a monetary compensation for the services rendered.
worker may be paid )s. 011 per day or )s. 2311 per month. "his is wage payment. "he
worker gives his services and takes payment called wage payment. Industrial workers are
paid remuneration for their services in terms of money called wage payment. &ages are
usually paid in cash at the end of one day, one month or one week. ,oney wage is the
monetary compensation or price paid by the employer to his employee for the services
rendered. Such compensation is also called wage or salary or reward given by an
organisation to a person in return to a work done.
4enerally, compensation payable to an employee includes the following three
components$
5asic compensation for the #ob 6wage7salary8
Incentive compensation for the employee on #ob
Supplementary compensation paid to employees 6fringe benefit and employee
services8
IMPORTANCE OF 'A&E PAYMENT)
*+ To ,or-r)
&age payment is important to all categories of workers. &age is a matter of
life and death to workers7employees. "heir life, welfare and even social status depend on
wage payment. It is only source of income to large ma#ority of workers. "hey and their
unions always demand higher wages and other monetary benefits.
,a#ority of labour problems and disputes are directly related to wage
payment. "he efficiency of workers and their interest and involvement in the work
depend on wage payment. +ven their attitude towards employer depends on wage
payment. In brief, wage payment is a matter of greatest importance to workers. &age
problem is the most pressing and persistent problem before the entire labour force.
.+ To mplo"r)
&age payment is e(ually important to employers as their profit depend on the
total wage bill. n employer in general is interested in paying low wages and thereby
controls the cost of production. However, low wages are not necessarily economical. In
fact they may prove to be too costly to the employer in the long run. +.g. In garment
manufacturing company if tailors are not paid properly then it is difficult for the company
to retain them. n employer has a moral and social responsibility to pay fair wages to his
worker as they are e(ual partners in the production process. He should give fair wages
which will benefit to both the parties. +mployees will offer full co!operation to the
management when they are paid attractive wages. .n the other hand, strikes and disputes
are likely to develop when workers are paid low wages or when they are dissatisfied and
angry due to low wage rates. It is possible to earn more profit by paying attractive wages
to workers. +.g. )eliance, Citi 5ank, ,otorola are earned huge profits because of their
higher pay packages.
/+ To $o0rnmnt)
4overnment also give special importance and attention to wages paid to
industrial workers as industrial development, productivity, industrial peace and cordial
labour! management relation depend on the wage payment to workers. 4overnment
desires to give protection to the working class and for this minimum wages act and other
cts are made. In India, wages are now link with the cost of living. "his is for the
protection of workers. 4overnment is the biggest employer in India and the wage rates of
government servant and employees of public sector organisations are decided by
government only. )evision of pay scale of government employees made for ad#usting
their wages as per the cost of living. 'or this, 9:ay Commission; is appointed and pay
scale is ad#usted as per the recommendations made.
In India, wage payment is very critical, controversial and delicate issue for all
categories of work force. "his is due to poverty, rising prices, mass unemployment and
rising population. &age payment indeed a ve*atious problem and needs to be tackled
from economic, social and humanistic angles.
CONCEPT OF FAIR 'A&ES)
'air wages is the wage which is above the minimum wage but below the living wage.
.bviously the lower limit of the fair wage is the minimum wage and the upper limit is set
by the ability of the industry to pay. 5etween these two limits, fair wages should depend
on the factors like <
0. :revailing rates of wages in the same occupation
=. :revailing rates of wages in the same region or neighbouring areas
>. +mployers ability to pay
2. Level of national income and its distribution
3. :roductivity of labour
?. Status en#oyed by the industry in the economy
Hence it can be said that fair wages are determined on industry cum region
basis. &hen fair wages are paid employees en#oy higher standard of living. It is accepted
fact that wages must be fair and reasonable. &ages is fair when the employee is able to
meet its essential needs and en#oy reasonable standard of living. ;+(ual pay for e(ual
work; serves as base of fair wage.
ccording to +ncyclopaedia of social science,;'air wages are e(ual to those
received by the workers performing work of e(ual skill, difficulty or unpleasantness.;
Fa1tor! In2l3n1in$ 'a$ And Salar" Str31t3r
T# or$ani4ation%! a5ilit" to pa")
&age increases should be given by those organizations which can afford them.
Companies that have good sales and therefore high profits tend to pay higher wages
than those which are running at a loss or earning low profits because of the high cost
of production or low sales.
S3ppl" and dmand o2 la5o3r)
If the demand and certain skills are high and the supply is low the result is rise in the
price to be paid for these skills. "he other alternative is to pay higher wages if the
labour supply is scarce and lower wages when it is e*cessive.
T# 1o!t o2 li0in$)
&hen the cost of living increases, workers and trade unions demand ad#usted wages
to offset the erosion of real wages. However when living costs are stable or decline
the management does not resort with this argument as a reason for wage reduction.
T# li0in$ ,a$)
+mployers feel that the level of living prescribed in workers budget is opened to
argument since it is based on sub#ective opinion.
Jo5 r63irmnt!)
@obs are graded according to the relative skill responsibility and #ob conditions
re(uired.
Trad 3nion! 5ar$ainin$ po,r)
"rade unions do affect the rate of wages. 4enerally the stronger and more powerful
trade union, higher the wages.
Prod31ti0it")
:roductivity is another criterion and is measured in terms of output man!hour. It is not
due to labour efforts alone. "echnological improvements, greater ingenuity and skill
by the labour are all responsible for the increase in productivity.
Pr0ailin$ mar-t rat)
"his is also known as Acomparable wages% or %going wage rate%. )eason behind this is
competition demand that competitors adhere to the same relative wage level.
S-ill l0l! a0aila5l in t# mar-t)
&ith the rapid growth of industries, business trade there is shortage of skilled
resources. "he technological development, automation has been affecting the skilled
levels at a faster rate.
P!"1#olo$i1al and !o1ial 2a1tor!)
"his determine in a significant measure how hard a person will work for the
compensation received or what pressures he will e*ert to get his compensation
increased.
Componnt! O2 Emplo" Rm3nration
"he remuneration packet of an employee includes wage7salary, incentives, fringe
benefits, per(uisites and finally non!monetary benefits.
T#i! i! mad 1lar in t# 2ollo,in$ 1#art)

Remuneration Packet of an employee
Wage/ Salary Fringe benefits Perquisites
Total
compensation
payable
Incentives
Non-monetary
benefits
*+ 'a$! and !alar")
&ages represent hourly rates of pay, and salary refers to the monthly rate of pay,
irrespective of the number of hours put in by the employee. &ages and salaries are
sub#ect to the annual increments. "hey differ from employee to employee, and
depend upon the nature of #ob, seniority, and merit.
.+ In1nti0!)
Incentives are paid in addition to wages and salaries and are also called Apayments
by results%. Incentives depend upon productivity, sales, profit, or cost reduction
efforts.
"here are$ 6a8 Indi0id3al in1nti0 !1#m!, and 6b8 &ro3p in1nti0
pro$ramm!. Individual incentives are applicable to specific employee
performance. &here a given task demands group efforts for completion, incentives
are paid to the group as a whole. "he amount is later divided among group members
on an e(uitable basis.
/+ Frin$ 5n2it!)
"hese are monetary benefits provided to employees. "hey include the benefit of$ 6a8
:rovident fund, 6b8 4ratuity, 6c8 ,edical care, 6d8 Hospitalization payment, 6e8
ccident relief, 6f8 Health and 4roup insurance, 6g8 Subsidized canteen facilities,
6h8 )ecreational facilities, and 6i8 :rovision of uniforms to employees.
7+ Pr63i!it!)
"here are special benefits offered to managers7e*ecutives. "he purpose is to retain
competent e*ecutives. :er(uisites include the following$ 6a8 Company car for
traveling, 6b8 Club membership, 6c8 :aid holidays, 6d8 'urnished house or
accommodation, 6e8 Stock option schemes, etc.
8+ Non9montar" 5n2it!)
"hese benefits give psychological satisfaction to employees even when financial
benefit is not available. Such benefits are$ 6a8 )ecognition of merit through
certificate, etc. 6b8 .ffering challenging #ob responsibilities, 6c8 :romoting growth
prospects, 6d8 Comfortable working conditions, 6e8 Competent supervision, and 6f8
@ob sharing and fle*i!time.
SYSTEMS OF 'A&E PAYMENT
A: TIME RATE SYSTEM
B: PIECE RATE SYSTEM
Tim rat !"!tm)
It is the oldest and simplest method of wage payment used e*tensively in the
industrial as well as government departments. &ages are paid as per the time spent by the
workers in the factory. "he production given by them is not taken into consideration. "he
employer buys the hours of the workers and pays them accordingly. "ime rate system is
also called as day wage system. In the time rate system, efficiency, sincerity, ability is not
given attention and all the workers are paid at one and the same rate as per the period
spent in the factory.
ADVANTA&ES OF TIME RATE SYSTEM)
08 Ea!" and !impl) "ime rate is easy to understand and simple to follow and
calculate. &age calculations are also easy and (uick. +ach worker knows how much
wage payment he is entitled to at the end of the month. "his gives convenience to
employer and employees.
=8 &3arant o2 minim3m ,a$) It gives the guarantee of certain minimum wage
payment to every worker irrespective of their working capacity. &orkers get a regular
and stable income and this gives a sense of security to all workers as regards wage
payment.

>8 Maintain! 63alit" o2 prod31tion) Buality of production is maintained here as
the workers are not in a hurry to complete the work. "hey do not rush the #ob and spoil
the (uality because of the temptation to earn more. &orkers tend to work slowly and with
care. +ven accidents are less as workers use the machines in a careful manner.
28 S3pport 2rom trad 3nion!) &orkers and trade unions accept and support time
rate system as all workers are placed in one category as regards wage payment. "his
ensures unity among workers. "rade unions normally prefer time rate system of wage
payment.
38 A0oid! 63arrl! amon$ ,or-r!) "ime rate avoids heart burning and (uarrels
among the workers as uniform wages are paid to all. Here efficiency, honesty and
sincerity of workers are not given any special weightage. &age rate is the same for
sincere and lazy workers.
?8 Con0nint in modrn 2a1tor" !"!tm) "ime rate payment is convenient in
modern factory system where production process is continuous and integrated. It is not
possible to measure the work completed by one individual worker and hence time rate
system is convenient.
DISADVANTA&ES OF TIME RATE SYSTEM)
08 Not !1inti2i1) "ime rate is not scientific system of wage payment as there is no
direct linking between wages and production7productivity. &ages bill may increase
without corresponding increase in the production. "his will bring loss to the employer 7
management.
=8 A5!n1 o2 po!iti0 n1o3ra$mnt) In the time rate system, there is no positive
encouragement to workers to improve their efficiency7 performance as the wage rate is
uniform to all workers/ efficient and inefficient.

>8 No di!tin1tion 5t,n ,or-r!) In the time rate system no distinction is made
between efficient and lazy workers, both are paid at one rate which is unfair. "his system
gives punishment to sincere and efficient workers. "hey are discouraged as they are paid
less than what they deserve. "hey may even leave the #ob.
28 No initiati0 to ,or-r!) "ime rate fails to encourage workers to take more interest
and initiative in their work. In fact, it encourages them to follow 9go slow; policy. "his is
because wage payment is not linked with the production given.
38 La5o3r 1o!t ma" in1ra!) In the time rate system, there is a possibility of
increase in the labour cost without corresponding increase in the production. &orkers
may work with slow speed, give less production but collect the wage as per time or day
fi*ed.
?8 Stri1t !3pr0i!ion) In the time rate strict supervision on the workers is essential as
payment is for period and not production. "his raises the e*penditure on supervision.
C8 No 221t on prod31ti0it"( 22i1in1") "ime rate fails to raise productivity and
efficiency of labour force. It is not an incentive system of wage payment.
Pi1 rat !"!tm)
"his is another basic system of wage payment. It is #ust opposite to the time rate. It
is also treated as an incentive wage system as it encourages workers to produce more and
also to earn more. In the piece rate system, wages are paid as per the output or production
given by the worker and not as per the time spent by the worker in the factory. :ayment
is by results in terms of output given. &age rate is fi*ed per piece of work or for certain
(uantity of production. "he production given by a worker at the end of the day is counted
and payment is made accordingly.

MERITS( ADVANTA&ES OF PIECE RATE SYSTEM)
08 Lin-in$ o2 ,a$! ,it# prod31tion) Here wages are linked with production or
productivity. It raises the productivity of labour. &orkers work with speed and use their
capacity fully as the wage payment is directly related to the (uantity of production
given by a worker.
=8 Di!tin1tion i! mad 5t,n 22i1int and in22i1int ,or-r!) Distinction is made
between efficient and inefficient worker and full #ustice is done to efficient worker as he
gets payment in proportion to the production given. +fficient workers support the piece
rate system but it is not preferred by unskilled and inefficient workers. "hey get less
payment under this method as their capacity to produce is less.
>8 En1o3ra$! ,or-r! to ta- initiati0 in t# ,or-) :iece rate system encourages
workers to take more interest and initiative in the work as every worker gets full reward
of his efforts. "here is direct efforts!reward relationship in the piece rate system.
28 Fair to mplo"r and mplo"!) "his system is fair to employers as well as
employees. "he employees get income in proportion to production given by them and the
employer gets production in proportion to the wage paid.
38 In1nti0 !"!tm) "his system serves as the incentive system. &orkers work
efficiently and take interest in the work due to corresponding benefit7 reward in the
form of higher wage payment.
?8 Limitd !3pr0i!ion ad63at) In this system strict supervision on the workers is not
necessary as workers work sincerely. "his is because their wage payment is directly
linked with their sincerity and ability.
C8 Frdom o2 ,or- to ,or-r!) &orkers get more freedom of work and there is
effective control on the cost of production in the piece rate system.
E8 Brin$! 1ordial rlation!) :iece rate brings cordial labour! management relations and
industrial peace.
DEMERITS(LIMITATION OF PIECE RATE SYSTEM
08 No $3arant o2 minim3m ,a$ pa"mnt) "here is no guarantee of certain
minimum wage payment to a worker. "his may prove to be dangerous particularly to a
newly recruited worker and workers who are below average
=8 'or-r! !322r 0n ,#n t#" ar not at 2a3lt) Sometimes workers suffer in
wage payment even when they are not fault. Due to power failure, etc they may not be
able to give production and naturally they will not be eligible for wage payment even
when they remain present in the factory for the whole day.
>8 Compli1atd !"!tm) :iece rate system is complicated and difficult as it is difficult
to understand by ordinary workers. ,anagement will have to keep elaborate records of
production given by each worker. &orkers also make complaints as regards
wage payment when they feel that due payment is not made to them.
28 Di!t3r5! 3nit" o2 ,or-r!) :iece rate affects the unity among workers as wage
payment will not be uniform to all workers. "his will lead to (uarrel among workers.
"rade unions oppose piece rate system on the ground that it will lead to rivalry among
workers and destroy unity among them.
38 Not 2air to train!) :iece rate system is not fair to trainees, as their capacity to
produce is less and naturally they will get less wages.
?8 ;3alit" o2 prod31tion i! ad0r!l" a221td) It affects the (uality of production as
workers may work with speed and this may bring down the (uality of production. In
addition the wastages and spoiled work are likely to increase due to haste on the part of
the workers to labour hard and over strain themselves in order to earn more. "his affects
the health of workers.
TIME RATE V(S PIECE RATE SYSTEMS
,eaning$
&ages are paid as per the time spent by
workers.
&ages are paid as per the output or
production given by workers.
.ld7new system$
.ldest and simplest method of wage
payment.
,odern and incentive system of wage
system.
4uarantee of wages$
4ives guarantee of certain minimum wage
payment to every worker.
'ails to give guarantee of minimum wage
payment to every worker.
Support$
+mployees and trade unions support time
rate system.
+mployers and efficient workers prefer
piece rate system.
F nderstanding of system $
+asy to understand and simple to administer. Complicated system as various recorded
and registers are re(uired to be maintained
Distinction between workers$
Distinction is not made between efficient and
inefficient workers as all are paid at one and
same rate.
Distinction is made between efficient and
inefficient workers. +fficient worker is paid
more while an inefficient worker is paid
less.
+ffect on production$
+ncourages workers to follow go!slow policy
and naturally production suffers.
+ncourages workers to take more interest in
the work and naturally production increases.
Buality of production$
Buality, workmanship of production are not
affected, raw materials, machinery are
utilised properly. "he spoiled work is also
negligible.
Buality, workmanship of production may
suffer. Increase in spoiled work and wastage
of raw materials.
Supervision$
Strict supervision is necessary as workers are
paid as per the period spent.
Strict supervision is not necessary as
workers are paid in proportion to the
production given.
Suitability$
Suitable to manufacturing units, also
suitable when individual contribution is not

Suitable when contribution of individual
worker is measurable and work is
easily measurable. standardised and repitive in character.
INCENTIVE SYSTEMS OF 'A&E PAYMENT
"he wage plan should be highly incentive means it should encourage workers to take
more initiative and interest in the work, produce more and also earn more. "he wage plan
which serves all these purposes is called incentive wage plan. Such an incentive plan is
beneficial to both ! employers and employees as well as it is useful for the rapid industrial
growth.
Incentives include monetary as weft as non!monetary benefits offered. "here is
motivation to work hard and to earn more. In every incentive plan, wages are linked with
the given output. Incentives are not fi*ed like wages and salaries. "hey vary from
individual to individual and from period to period.
IL. defines incentives as Gpayment by resultsG. Incentives can also be described as
Gincentive systems of paymentG.
ccording to Dale Hoder, 9Incentive wages relate earnings to productivity and may use
premiums, bonuses, or a variety of rates to compensate for superior performance; :iece
rate system is the oldest incentive wage plan which is also useful for attracting and
retaining (ualified personnel in the organisation and for motivating personnel to higher
levels of performance. In many incentive plans, a combination of time rate and piece rate
systems is used. Such combination creates an ideal incentive plan.
TYPES OF INCENTIVE PLANS)
"here are two types of incentive plans$
6a8 Individual incentive plans, and
6b8 4roup incentive plans.
Individual incentive plan is meant for individual employees. He has to work hard i.e.
efficiently, produce more and share the monetary benefits for himself. "he benefit is
directly linked with his ability, efficiency and capacity.
In the group incentive plan, the incentive is not for individual employee but for the group
of employees working in one department or section. Such group incentive plan may cover
the entire labour force of a production unit. "he group will work collectively, give more
production and share the benefit. Initially the benefit will be given to the group and
thereafter, it will be divided among the members of the group.
,anagement is interested in group incentive plan while employees are interested in
individual incentive plans. :roduction activities are now conducted in an integrated
manner and naturally incentives should be offered to the employees. 4roup incentive
plans are better as they encourage team spirit and develop cooperation and understanding
among the employees. "his avoids wastages and promotes productivity.
FEATURES(RE;UISITES OF A &OOD INCENTIVE PLAN)
Simpli1it" )
good incentive plan is one which is easy to understand and simple to operate.
n average worker must be able to know the incentive offered and what he is e*pected to
do. "he monetary as well as non!monetary benefits offered must be made clear to all
workers.
En1o3ra$ initiati0)
good incentive plan should create initiative among workers to work more and to
earn more. It must offer more income to workers and more profit7production to the firm
or company.
D2initn!! and 2l<i5ilit")
good incentive plan should be definite. "his means fre(uent changes should not
be made as regard rates, etc. as such changes create confusion and doubts in the minds of
workers. Such plan must give clear benefits to workers
In addition, an ideal incentive plan should be fle*ible. It should take care of
technological and other changes taking place from time!to!time. "here should be suitable
provision for such ad#ustment. 'le*ibility makes incentive plan adaptable.
'id 1o0ra$ and 63ita5l)
good incentive plan should not be for employees in certain departments only. It
should have a wide coverage and almost all employees should be covered in such plan.
Such wide coverage makes the plan popular at all levels and among all categories of
workers.
n incentive plan should be e(uitable. "his means it should provide e(ual
opportunity to all employees to show efficiency and earn more. "his avoids
dissatisfaction among employees and makes the plan #ust and fair to all employees.
&3arant o2 minim3m ,a$ pa"mnt$
n incentive wage plan should include certain minimum wage payment to every
worker per month. "his should be irrespective of the production he gives. Such provision
of guarantee payments creates a sense of security and confidence among workers.
S1inti2i1 2i<ation o2 !tandard ,or-load)
Fnder the incentive plan, e*tra payment is given for the e*tra work i.e. work
which is over and above certain (uality. Such standard work!load must be clear, specific
and fi*ed with scientific time studies so that ma#ority of employees will be able to give
e*tra production for e*tra payment.
J3!ti1 to mplo"r and mplo"!)
good incentive plan should do #ustice to both parties. "he employer must get
additional production along with e*tra profit and the workers must get e*tra payment for
e*tra production.
PROFIT9SHARIN&
:rofit!sharing is regarded as a steppingstone to industrial democracy. :rof. Seager
observes$ G:rofit!sharing is an agreement by which employees receive a share, fi*ed in
advance of the profits.G
:rofit!sharing usually involves the determination of an organisationIs profit at the
end of the fiscal year and the distribution of a percentage of the profits to the workers
(ualified to share in the earnings. "he percentage to be shared by the workers is often
predetermined at the beginning of the work period and IS often communicated to the
workers so that they have some knowledge of their potential gains. "o enable the workers
to participate in profit!sharing, they are re(uired to work for certain number of years and
develop some seniority. "he theory behind profit!sharing is that management feels its
workers will fulfill their responsibilities more diligently if they realise that their efforts
may result in higher profits, which will be returned to the workers through profit!sharing.
FEATURES OF PROFIT9SHARIN&)
"he main features of the profit!sharing schemes are$
"he agreement is voluntary and based on #oint consultation made freely between the
employers and the employees.
"he payment may be in form of cash, stock of future credits of some amount over
and above the normal remuneration that would otherwise be paid to employees in
a given situation.
"he employees should have some minimum (ualifications, such as tenure or
satisfy some other conditions of the service which may be determined by the
management.
"he amount to be distributed among the participants is computed on the basis of
some agreed formula, which is to be applied in all circumstances.
"he amount to be distributed depends on the price earned by the enterprise.
O5=1ti0! o2 Pro2it9!#arin$)
08 "o supplement the regular earning of the workers,
=8 "o create a sense of partnership among the workers and the management,
>8 "o enable the workers to participate in the prosperity of their company,
28 "o develop cordial labour!management relations and to improve employee morale.
38 "o introduce incentive wage plan
?8 "o raise productive efficiency by reducing costs and increasing output
C8 "o reduce labour turnover and to improve public relations.
E8 "o provide for employee security in the event of death, retirement or disability
ADVANTA&ES OF PROFIT9SHARIN&)
*: E<tra in1om to ,or-r!) &orkers get e*tra cash payment due to profit!sharing
arrangement. "his money is useful for raising their welfare. &orkers can purchase
costly consumer durables out of this money available at one time. "hus, profit!
sharing provides better life and welfare to workers. It creates contended labour force
with higher standard of living. :rofit!sharing plan acts as a good supplement to
regular wages paid to employees. In fact, profit!sharing is aptly described as a form
of addd rm3nration+
.: 'or-r! ta- mor initiati0 and intr!t in t# ,or-) Due to profit!sharing
arrangement, workers7 employees take more interest in the work. "his develops
team spirit among the employees because their share in the profit depends on their
collective initiative, efforts and hard work. In this sense, profit!sharing is useful for
motivating employees. It encourages employees to be regular, stable and efficient as
the benefits of these elements are offered to them through profit!sharing. Here,
efforts and reward are directly and proportionately linked. "his encourages
employees to take keen interest in the work and develops team spirit.
:rofit!sharing acts not only as supplement to regular wages 6i.e. as an incentive wage
plan8 but also as a motivating factor to all employees. It creates common ob#ective
before employer and employees and diverts their energies for achieving one common
ob#ective.
/: In1ra! in prod31tion and prod31ti0it") :rofit! sharing acts as a driving force
for more production and productivity. It motivates workers for raising production as
they get direct and immediate benefit of additional efforts on their part. "he benefits
of increase in production are available to employer and employees.
7: Fair to mplo"r and mplo"!) :rofit!sharing gives mere remuneration to
workers along with more profit to employer. +mployer pays a part of profit to
workers but he is not adversely affected as profit is paid only when it e*ceeds a
particular limit agreed by both the parties. "his arrangement is, certainly fair to both
parties. "here is an element of social #ustice in it.
8: En!3r! 1ordial ind3!trial rlation!) :rofit!sharing creates cordial labour!
management relations. It. reduces industrial disputes, strikes and lock!outs. "his is
because both have common ob#ective and both are likely to suffer due to industrial
disputes, strikes and lock!outs. "hus, profit!sharing reduces industrial disputes and
leads to friendly relations between employer and employees. It certainly acts as a tool
for reducing industrial disputes and also for creating industrial peace.
"hus, profit!sharing agreement encourages workers to work efficiently and also
avoid dispute and (uarrels with the employer. It acts as a natural and self!imposed
check on industrial disputes. :rofit!sharing creates team spirit in the higher cadres of
management as well as in the rank and file of workers.
>: L!! !3pr0i!ion r63ird) :rofit!sharing reduces the e*penditure on supervision
of workers as they take interest in the work on their own. ,oreover, wastage ofI
materials, volume of spoiled work, etc. are also reduced.
?: Sta5ilit" to la5o3r 2or1) :rofit!sharing brings stability to labour force as the
benefit of profit!sharing is usually given only to those who work in the company for
the whole year. "hus, profit!sharing brings down the rate of labour turnover and this
gives benefit to the employer7 management.
@: Promot! !o1ial =3!ti1) :rofit!sharing is a method of social #ustice. It is a
method by which workers are given the reward of their hard work and also allowed
to participate in the progress and prosperity of their company. :rofit!sharing
introduces industrial democracy as workers are treated not only as wage earners but
also as partners for sharing the profits of the company.
DISADVANTA&ES OF PROFIT9SHARIN&)
*: Un1rtaint") "here is high degree of uncertainty in the profit!sharing
scheme7plan. :rofit!sharing is uncertain because it will be paid only when the profit
e*ceeds a particular limit. "he profit may not cross a particular limit due to market
forces and the workers will suffer. "hus, profit!sharing does not give full guarantee
of e*tra payment to workers. It acts like a fair weather plan.
.: Un2air to 22i1int ,or-r!) :rofit!sharing is a group incentive plan. It gives
e(ual benefit to all workers. Distinction is not made between good and bad workers.
s a result sincere and efficient workers get less than what they deserve while
insincere and inefficient get more than what they deserve.
/: Oppo!ition 2rom trad 3nion!) "rade unions and workers feel that bonus
payment is better than profit$!sharing. "hey generally oppose to profit!sharing and
demand bonus from the employer as it is a cheap alternative to profit!sharing.
7: Di!p3t! on 1al13lation o2 nt pro2it) In profit!sharing, the net profit is to be
calculated at the end of the financial year. "here is a possibility of difficulties as
regards the calculation of the net profit. "he employer may like to manipulate the
accounts and show less profit while workers may calculate it as high. Such (uarrel
affects both the parties as it leads to dispute and delay in payment. In brief,
ascertaining net profits is one sensitive problem in profit!sharing.
8: Ad0r! 221t! on la5o3r9mana$mnt rlation!) Sometimes, relations
between labour and management are adversely affected on the point of profit!
sharing agreement. "his defeats the very purpose of profit!sharing. Disputes are
possible as regards the profit!sharing agreement itself.
>: Not 3!23l d3rin$ dpr!!ion) :rofit!sharing as a method of e*tra remuneration
to workers can be used during the period of prosperity when profits are high. It
cannot be used during the years of depression. +ven newly established companies
are not in a position to introduce profit!sharing scheme for their employees.
?: Oppo!ition 2rom 1on!r0ati0 mplo"r!) "he concept of profit!sharing is not
fully acceptable to conservative employers. "hey feel that profit is the reward for
the risks and uncertainties. "hey also argue that workers must be prepared to share
profit as well as loss in the business.
MEANIN& OF FRIN&E BENEFITS)
'ringe benefits may be defined as wide range of benefits and services that employees
receive as an integral part of their total compensation package. "hey are based on critical
#ob factors and performance. 'ringe benefits constitute indirect compensation as they are
usually e*tended as a condition of employment and not directly related to performance of
concerned employee. 'ringe benefits are supplements to regular wages received by the
workers at a cost of employers. "hey include benefits such as paid vacation, pension,
health and insurance plans, etc. Such benefits are computable in terms of money and the
amount of benefit is generally not predetermined.
"he purpose of fringe benefits is to retain efficient and capable people in the organisation
over a long period. "hey foster loyalty and acts as a security base for the employees.
FEATURES OF FRIN&E BENEFITS)
Different from regular wages $ 'ringe benefits are different from regular wages as
such benefits are those payments, which an employee en#oys in addition to wages
he receives. It is a supplementary payment and provides support to an employee.
+mployee motivation $ 'ringe benefits are not given to employees for performing
certain #obs. "he purpose is to encourage them to take more interest in the
assigned work.
Fseful but avoidable e*penditure $ 'ringe benefits constitute a labour cost for the
employer.
-ot directly linked with efforts $ 'ringe benefits are not direct reward for the
efforts made or the production given by an employee.
5eneficial to all employees $ 'ringe benefits are a labour cost but its benefits
should be made available to the entire labour force and not to a small group of
employees.
OBJECTIVES OF FRIN&E BENEFITS)
To !3pplmnt dir1t rm3nration $ 'ringe benefits supplement regular pay of
employed. It raises the total earnings of an employee and provides better life and
welfare to him.
Emplo"r! pr2r 2rin$ 5n2it!) employers prefer this indirect remuneration to
direct pay increase.
To rtain 1omptnt mplo"!) 'ringe benefits create satisfied labour force. In
addition, the management can attract and retain competent personnel in the
organisation by offering liberal packet of fringe benefits.
To d0lop $ood 1orporat ima$ $ 'ringe benefits help to develop a good corporate
image.
To rai! mplo" moral) Liberal package of 'ringe raises the morale of
employees.
LIMITATIONS OF FRIN&E BENEFITS)
"here are some limitations of 'ringe 5enefits. "hese are$
'ringe 5enefits may lead to unhealthy competition among employees
"he e*pected benefit may not be available if the monetary benefits are not
ade(uately attractive to employees.
"he motivation may not be as per e*pectation if the implementation of the
benefits scheme is not transparent.
ADVANTA&ES OF FRIN&E BENEFITS
"here are certain advantages of 'ringe benefits. "hese are$
'ringe benefits provide support to remuneration paid to employees.
'ringe benefits improve efficiency and productivity of employees.
'ringe benefits act as an added attraction to the employees.
'ringe benefits reduce monotony and fatigue of employees. "hey make employees
efficient and co!operative for whatever organisational changes re(uired to be
introduced.
'ringe benefits raise morale of the employees. "hey develop affinity for the
organisation.
'ringe benefits develop good corporate image and raise market standing of the
organisation.
'ringe benefits act as a motivating force. "hey motivate employees and induce
them to work for the progress and prosperity of the organisation.
TYPES OF FRIN&ES( FRIN&E BENEFITS)
A*: Pa"mnt 2or tim not ,or-d 5" t# mplo")
Holidays.
Jacations.
Leave with pay and allowances.
A.: Contin$nt and d2rrd 5n2it!)
:ension payment.
4roup life insurance benefit.
4roup health insurance.
Sick leave, maternity leave, child care leave, etc.
Suggestion7service award
Severance pay.
A/: L$all" r63ird pa"mnt!)
.ld age, disability and health insurance
Fnemployment compensation
&orkerIs compensation.
A7: Mi!1+ 5n2it!)
"ravel allowances.
Company car and membership of clubs, etc
,oving e*penses.
Child care facilities.
"ool e*penses and meal allowances, etc
JOB EVALUATION
DEFINITION)
ccording to +dwin b. 'lippo, 9@ob evaluation is a systematic and orderly process of
determining the worth of #ob in relation to other #obs;.
@ob evaluation means determining the relative worth of a #ob in an organization by
comparing it with other #obs within an organization and with #ob market outside #obs are
evaluated on the basis of their content and are placed in the order of their importance. In
this way, #ob evaluation helps in establishing #ob hierarchy. It is a process by which #obs
in an organization are appraised. It suggests comparative importance of different #obs.
wage structure hierarchy is based on such #ob evaluation.
In #ob evaluation the #obs are ranked on the basis of their relative importance and not the
#ob holders. "hey are rated through performance appraisal. @ob evaluation is the output
provided through #ob analysis.
Fat3r!)
0. It determines the relative worth of #obs in an organization. @obs are evaluated as per
their content and place in the order of their importance.
=. It is based on the analysis of the facts about the #ob collected through #ob analysis.
>. It helps to bring a balanced wage structure in an organization. "his is possible as #ob
hierarchy is established. "he purpose is fi*ation of satisfactory wage differentials among
various #obs.
O5=1ti0!)
0. "o establish by impartial #udgement the logical and accurate relationship of each
#ob to other #obs within the firm.
=. "o establish satisfactory wage and salary differentials.
>. "o select employees more accurately and train, promote or transfer them within
the firm ob#ectively and impartially.
2. "o provide them information for work organization, employees selection,
placement and other similar problems.
3. "o promote employee goodwill, strengthen and maintain morale and loyalty and
provide an incentive for efficiency.
?. "o determine the rate of pay for each #ob that is fair and e(uitable in relation to
other #obs in the plant.
Ad0anta$! ( Importan1$
0. @ob evaluation clearly indicates the relative worth of different #obs in the
organization.
=. It establishes a hierarchy of #obs and evolves a graduated wage scale for
employees.
>. It is useful for introducing a satisfactory, rational and balanced wage structure in
an organization. It is also useful for simplifying wage administration.
2. It promotes employees goodwill, strengthens and maintains high morale and
loyalty of workers and also provides incentives for raising efficiency.
3. It provides a scientific base for promotions and transfers of workers in an
organization.
?. It avoids in#ustice to workers as regards wage payment, promotions and transfers.
C. It simplifies wage administration and facilitates merit rating and training
programmes for employees.
E. It removes grievances and disputes among employees over relative wages and
makes the wage system acceptable to all employees.
COMPONENTS OF COMPENSATION
Jo59Anal"!i!
@ob analysis is a systematic approach to defining the #ob role, description, re(uirements,
responsibilities, evaluation, etc. It helps in finding out re(uired level of education, skills,
knowledge, training, etc for the #ob position. It also depicts the #ob worth i.e. measurable
effectiveness of the #ob and contribution of #ob to the organization. "hus, it effectively
contributes to setting up the compensation package for the #ob position.
Importan1 o2 Jo5 Anal"!i!
@ob analysis helps in analyzing the resources and establishing the strategies to
accomplish the business goals and strategic ob#ectives. It forms the basis for demand!
supply analysis, recruitments, compensation management, and training need
assessment and performance appraisal.
Componnt! o2 Jo5 Anal"!i!
@ob analysis is a systematic procedure to analyze the re(uirements for the #ob role and
#ob profile. @ob analysis can be further categorized into following sub components.

Jo5 Po!ition
Jo5 'ort#
@ob &orth refers to estimating the #ob worthiness i.e. how much the #ob contributes to
the organization. It is also known as #ob evaluation. @ob description is used to analyze
the #ob worthiness. It is also known as #ob evaluation. )oles and responsibilities helps
in determining the outcome from the #ob profile. .nce it is determined that how much
the #ob is worth, it becomes easy to define the compensation strategy for the position.
"herefore, #ob analysis forms an integral part in the formulation of compensation
strategy of an organization. .rganizations should conduct the #ob analysis in a
systematic at regular intervals. @ob analysis can be used for setting up the
compensation packages, for reviewing employees% performance with the standard
level of performance, determining the training needs for employees who are lacking
certain skills.
:ay!Structures
@ob position refers to the designation of the #ob and employee in the organization. @ob
position forms an important part of the compensation strategy as it determines the
level of the #ob in the organization. 'or e*ample management level employees
receive greater pay scale than non!managerial employees. "he non!monetary benefits
offered to two different levels in the organization also vary.
Jo5 D!1ription
@ob description refers the re(uirements an organization looks for a particular #ob
position. It states the key skill re(uirements, the level of e*perience needed, level of
education re(uired, etc. It also describes the roles and responsibilities attached with
the #ob position. "he roles and responsibilities are key determinant factor in
estimating the level of e*perience, education, skill, etc re(uired for the #ob. It also
helps in benchmarking the performance standards.
.nce #ob analysis has been done organizations need to decide upon the pay structures.
:ay structure refers to the process of setting up the pay for a #ob in an organization. "he
process deals with internal and e*ternal analysis to estimate the compensation package
for a #ob profile. Internal e(uity, +*ternal e(uity and Individual e(uity are the most
popular pay structures. @ob description provides the in depth knowledge about the #ob
profile and its worth.
:ay structures are the strong determinant of employee%s value in the organization. It
helps in analyzing the employee%s role and status in the organization. It provides for
fair treatment to all employees. :ay structures also include the estimation of
incentives."he level of incentives also depends on the level of #ob position in the
organizational hierarchy.
Intrnal E63it"
"he internal e(uity method undertakes the #ob position in the organizational
hierarchy. "he process aims at balancing the compensation provided to a #ob profile
in comparison to the compensation provided to its senior and #unior level in the
hierarchy. "he fairness is ensured using #ob ranking, #ob classification, level of
management, level of status and factor comparison.
E<trnal E63it"
Here the market pricing analysis is done. .rganizations formulate their compensation
strategies by assessing the competitors% or industry standards. .rganizations set the
compensation packages of their employees aligned with the prevailing compensation
packages in the market. "his entails for fair treatment to the employees. t times
organizations offer higher compensation packages to attract and retain the best talent
in their organizations.
Salary!Surveys
.rganizations have to bridge the gap between the industry standards and their salary
packages. "hey cannot provide compensation packages that are either less than the
industry standards or are very higher then the market rates. 'or the purpose they
undertake the salary survey. "he Salary survey is the research done to analyze the
industry standards to set up the compensation strategy for the organization.
.rganizations can either conduct the survey themselves or they can purchase the
survey reports from a reputed research organization. "hese reports constitute the last
=!3 years or more compensation figures for the various positions held by the
organizations. "he analysis is done on the basis of certain factors defined in the
ob#ectives of the research.
O5=1ti0! o2 Salar" S3r0"
"o gather information regarding the industry standards
"o know more about the market rate i.e. compensation offered by the
competitors
"o design a fair compensation system
"o design and implement most competitive reward strategies
"o benchmark the compensation strategies
T"p! o2 Compn!ation S3r0"!
"here are two types of compensation surveys undertaken by the organizations.
Standard S3r0"!
Standard surveys are undertaken by organizations on a regular basis. "hese surveys
are conducted annually based on the organizational ob#ectives. "hese surveys attempt
to cover the same companies every year and provide the same time of analysis. "he
reports are published annually by the research organizations. "he organizations
willing to formulate their compensations strategies based on the surveys purchase the
reports from the research organization.
C3!tom S3r0"!
t times, a few organizations need to know some specific information. "he surveys
which cater this need are known as custom surveys. "he organizations either higher
research organizations to conduct theses surveys for them or they themselves conduct
the survey by sampling few of the competitors on their own. "hese surveys do not
have any time interval. "hey are undertaken as the need arises. "hey focus on
important issues usually one or two.
S3r0" Rport!
"he survey reports consist of the analysis and conclusion drawn from the evaluative
data based on the ob#ectives of the study. "he reports also include the data, facts and
figures to support the analysis and conclusion. "he supportive data and anne*ure
provided in the report form the basis for the un!biased conclusion and validation of
the analysis.

IMPORTANCE OF COMPENSATION
Compensation can include monetary and non!monetary components. Compensation often
includes an employee%s base salary and additional benefits, such as health insurance,
retirement plans and performance bonuses. "he compensation packages a business offers
to employees affects the company%s recruitment rate, retention rate and employee
satisfaction. Several federal laws affect the compensation that businesses offer.
business owner should understand the importance of compensation and the prevailing
laws to remain competitive in the market.
R1r3itmnt
"he compensation packages that businesses offer to employees play an important role in
the company%s ability to attract top talent as #ob candidates. "op!performing employees
greatly impact the competitiveness and productivity of a small business. "he specific
components of an attractive compensation package vary per employee. high base
salary may attract a top #ob candidate that is =1!something and single, while a #ob
candidate with a family may consider a fle*ible work schedule e*tremely important.
ccording to @ohn )ossheim of ,onster.com, recruiters should research a #ob candidateIs
current or prior salary and benefits to get an idea of what is important to the candidate.
Moti0ation
Compensation often impacts an employee%s motivation and #ob satisfaction, although it is
not the only factor. ccording to an article written by ,ae Lon Ding of :ersonnel
Systems ssociates, compensation systems positively impact a large percentage of
workersI performances. ,any employees feel motivated to help their companies succeed
if the employer shares its profits with employees, such as with bonuses or profit!sharing
plans. "he greatest impact of money on productivity and performance is in #obs where
performance is directly related to compensation. 'or e*ample, the knowledge of
receiving a bonus after achieving a certain sales (uota will likely motivate a salesperson
to increase productivity.
Rtntion
)etaining productive employees is critical to running a successful business. )etaining
employees saves companies money in training costs and helps maintain an efficient and
knowledgeable workforce. Health insurance and retirement packages are benefits that
many employees desire from their employers. Companies that offer these benefits have a
much better chance of retaining workers than businesses that fail to offer benefit
packages. .ther ways to retain employees is through regular promotions, which not only
provide an employee with a higher base salary, but also the ability to take on more
responsibility in the workplace.
"he Compensation system has a great significance in a business organization. ,en is the
most important factor among four ,%s, i.e. ,en, ,aterial, ,achine and ,oney. "he
responsibility of managing the other three factors is handed over to ,en. So, nobody can
imagine a business process without ,en.
Labourers bring motion to the process of production7business in an organization.
,oreover as a human being, they also have e*pectations, emotions, ambitions and egos
for which they want to have a fair share in the production process. "herefore a fair
compensation system is must for every business organization which helps in the
following way$
0. n ideal compensation system has a positive influence on the efficiency of employees
and encourages the employees to perform better and achieve the preset standards.
=. It augments the #ob evaluation process which in turn helps in setting up the more
realistic and achievable standards.
>. Such a system is well defined and uniform to all the employees of an organization as a
general system.
2. It is easy to implement and abide by the principle of e(ual pay.
3. "he system is so simple and fle*ible that an employee can compute his compensation
receivable by himself.
?. "he compensation system tries to give appropriate return to the workers for their
contributions to the organization.
C. It arouses an environment of morale, efficiency and cooperation among the workers
and provides satisfaction to the workers.
E. "he compensation system is designed complying with the various labour acts and
therefore does not result in disputes between the employee%s union and the management.
"his builds up a peaceful relationship between the employer and the employees.
K. It stimulates the employees to perform better and show their e*cellence.
01. It forces the employees to work hard and efficiently to survive in the competitive
environment. "he system also provides the growth and advancement opportunities to the
deserving employees.
00. "he perfect compensation system is a source of happiness and satisfaction for the
workforce that minimizes the labour turnover and confers a stable organization
0=. "he ade(uate compensation system helps in retaining the best talent in an
organization and thereby stops the switching over of employees to another #ob. "his in
turn facilitates the e*pansion and growth of the business organization owing to the
support of skillful, talented and happy workforce.
0>. sound compensation system is treated as the hallmark for the success and
prosperity of an organization as it can satisfy the employees with the ade(uate pay!
packages.
02. If compensation is not provided, employees gets demotivated.
TYPES OF COMPENSATION
Dir1t Compn!ation
Direct compensation refers to monetary benefits offered and provided to employees
in return of the services they provide to the organization. "he monetary benefits
include basic salary, house rent allowance, conveyance, leave travel allowance,
medical reimbursements, special allowances, bonus, :f74ratuity, etc. "hey are given
at a regular interval at a definite time.
Ho3! Rnt Allo,an1
Ba!i1 Salar"
Salary is the amount received by the employee in lieu of the work done by him7her
for a certain period say a day, a week, a month, etc. It is the money an employee
receives from his7her employer by rendering his7her services. .rganizations either
provide accommodations to its employees who are from different state or country or
they provide house rent allowances to its employees. "his is done to provide them
social security and motivate them to work.
Con0"an1 Allo,an1
.rganizations provide for cab facilities to their employees. 'ew organizations also
provide vehicles and petrol allowances to their employees to motivate them.
La0 Tra0l Allo,an1
"hese allowances are provided to retain the best talent in the organization. "he
employees are given allowances to visit any place they wish with their families. "he
allowances are scaled as per the position of employee in the organization.
Mdi1al Rim53r!mnt
.rganizations also look after the health conditions of their employees. "he employees
are provided with medi!claims for them and their family members. "hese medi!
claims include health!insurances and treatment bills reimbursements.
Bon3!
5onus is paid to the employees during festive seasons to motivate them and provide
them the social security. "he bonus amount usually amounts to one month%s salary
of the employee.
Sp1ial Allo,an1
Special allowance such as overtime, mobile allowances, meals, commissions, travel
e*penses, reduced interest loans/ insurance, club memberships, etc are provided to
employees to provide them social security and motivate them which improve the
organizational productivity.
Indir1t Compn!ation
Indirect compensation refers to non!monetary benefits offered and provided to
employees in lieu of the services provided by them to the organization. "hey include
Leave :olicy, .vertime :olicy, Car policy, Hospitalization, Insurance, Leave travel
ssistance Limits, )etirement 5enefits, Holiday Homes.
La0 Poli1"
It is the right of employee to get ade(uate number of leave while working with the
organization. "he organizations provide for paid leaves such as, casual leaves,
medical leaves 6sick leave8, and maternity leaves, statutory pay, etc.
O0rtim Poli1"
+mployees should be provided with the ade(uate allowances and facilities during
their overtime, if they happened to do so, such as transport facilities, overtime pay,
etc.
Ho!pitali4ation
"he employees should be provided allowances to get their regular check!ups, say at
an interval of one year. +ven their dependents should be eligible for the medi!claims
that provide them emotional and social security.
In!3ran1
.rganizations also provide for accidental insurance and life insurance for employees.
"his gives them the emotional security and they feel themselves valued in the
organization.
La0 Tra0l
"he employees are provided with leaves and travel allowances to go for holiday with
their families. Some organizations arrange for a tour for the employees of the
organization. "his is usually done to make the employees stress free.
Rtirmnt Bn2it!
.rganizations provide for pension plans and other benefits for their employees which
benefits them after they retire from the organization at the prescribed age.
Holida" Hom!
.rganizations provide for holiday homes and guest house for their employees at
different locations. "hese holiday homes are usually located in hill station and other
most wanted holiday spots. "he organizations make sure that the employees do not
face any kind of difficulties during their stay in the guest house.
Fl<i5l Timin$!
.rganizations provide for fle*ible timings to the employees who cannot come to
work during normal shifts due to their personal problems and valid reasons.

FACTS AND FINDIN&S
In2ormation T1#nolo$" S1tor
Indian I" industry is witnessing a high growth rate. "he sector is recruiting more and
more technical and professional people. &ith the immense recruitments and high attrition
rate, organizations focus on higher competitive packages.
"he compensation package for an employee is based on various factors such as his7her
educational level, relevant e*perience in the industry, #ob%s position in the hierarchy,
skills and attributes and #ob related technicality. "he average salary offered as per the
e*perience level of the candidate is as follows$

'igure$ verage salary offered in I" Sector 5ased on +*perience
Data(uest!IDC has reported following as the top =1 highest salary payers in Indian I"
sector.
o HCL Infosystems Limited
o He*aware "echnologies
o ),SI :rivate Limited
o Cadence Design Systems
o "ata Consultancy Services
o ztecsoft Limited
o -ucleus Software
o Induslogic
o Lanbay International Inc
o Cybage Software :rivate Limited
o ccel 'rontline "echnologies
o 4eomatric Software Solutions Co. Ltd.
o Sierra
o 'le*tronics
o Computer Sciences Corporation
o Interra Systems
o Sasken Communication "echnologies Limited
o -II" "echnologies
o &ipro Limited
o Infosys "echnologies Limited
Entr" L0l Compn!ation Pa1-a$!
Indian I" industry provides a lucrative compensation package provided for entry level
#obs. "op players like "CS, &ipro, Infosys, Sasken, I5,, ccenture and other
multinationals and locally owned organizations are providing most competitive packages
to attract and retain talented human resource.
Indian I" sector offers various #ob openings to fresh engineers or diploma holders. "he
candidate aspiring to #oin an I" organization should posses certain technical and non!
technical skills and attributes.
ttainment of (ualified degree or diploma certificate from a reputed institute7university
would be an added advantage. "he desired skills are$
M +ffective Communication Skills
M Sound "echnical Lnowledge
M Strong Commitment Level
M Strong nalytical Skills
M bility to meet deadlines
5esides the pay packages, employees are also given certain monetary and non!monetary
benefits such as allowances, accommodations, respective positions, perks, incentives,
insurances, etc. "hese benefits differ from organization to organization.

'igure$ verage Salary offered by "op :layers in Indian I" Sector for +ntry Level @obs

Mana$mnt L0l Compn!ation Pa1-a$!
I" industry offers lucrative growth prospective to its employees. "op players of the
industry such as "CS, &ipro, Sasken, I5,, Infosys, ccenture, .racle, HCL, Satyam,
Sify and other organizations are providing heavy perks and handsome pay packages to
retain their talented workforce. part from basic salary and special allowances,
employees are given some other monetary and non!monetary benefits like club
memberships, annual bonus, and other special allowances.
+ffective communication skills, good analytical skills and sound technical knowledge are
must to have a respectable position in I" sector.
:eople working in I" sector should be willing to work at stretch, they should be able to
work in pressure and meet deadlines. lso, the level of e*perience determines one%s level
of compensation package and position in the industry.

'igure$ verage Salary offered in Indian I" Sector for ,anagerial Level :ositions
In!3ran1 S1tor
:rivatization has brought in lot of surprises for insurance sector. In India, insurance
sector is at the booming stage as only 21N of the population is insured. :rivate
organizations are striving hard and hard to develop the sector. .rganizations are coming
up with newer insurance plans to attract the market such as accidental insurance, medical
insurance, medi!claims, family!health insurance, dental insurance, diabetes insurance,
auto insurance, etc. 4overnment is also supporting the insurance sector to increase the
4ross Domestic :roduct ratio from the sector.
'rom the government #obs to private organizations openings, work environment, #ob
profiles, pay packages and career growth options have been changed. 'rom basic salary
with small incentives, compensation systems have been grown to increased salaries,
incentives, perks, allowances, accommodations, etc.
'igure$ verage Salary offered in Indian Insurance Sector based on +*perience
'ollowing are the top players of the insurance sector offering most competitive packages
to their employees$
M Life Insurance Corporation
M -ew Hork Life
M :rudential
M ,et Life
M 5irla Insurance
M Lotak ,ahindra
M ICICI
M HD'C
Entr" L0l Compn!ation Pa1-a$!
Insurance sector is at the growth stage recruiting more and more people in the industry.
.rganizations are providing most competitive packages to attract and retain the talent.
,ost of the #obs in the insurance sector are part time, providing the opportunity for the
employees to earn e*tra apart from their regular income. "he compensation is also
performance based, depending upon the insurance amount and premiums.
Candidate who wishes to #oin the insurance sector has to complete a graduation degree.
:4 diploma in insurance can get him7her position of agent or insurance advisor in some
reputed organization.
Since most of the #obs offered in the sector are in the marketing segment, candidates with
marketing skills would have better career prospects. 'ollowing are the key skill
re(uirements for the #ob profile in the sector$
O +*cellent communication skills
O +*cellent marketing skills
O 4ood interpersonal skills
O 4ood public relations
O "arget!oriented approach
O nalytical skills
"op players in the sector offers the following compensation packages at entry level$

'igure$ verage salary 6in lakhs8 offered to entry level employees

Mana$mnt L0l Compn!ation Pa1-a$!
Indian insurance sector is growing at a fast pace and offering lucrative career options.
5oth private and public organizations offer part time and full time employment in the
sector. Life Insurance Corporation of India, 5irla Insurance, ,a* -ew Hork Insurance,
ICICI :rudential, and ,et Life Insurance are some of the leading organizations in the
sector. +ducational institutes are also coming up with certificate courses in insurance
management. "he course offers managerial positions and e*cellent growth perspective in
the sector.
+*cellent marketing skills and communications skills with appropriate e*perience level
would help any individual to score well in the industry. Compensation package in the
industry includes heavy perks and incentives part from basic salary structure and other
special allowances. ,ost of the #obs in the sector are categorized in the retail and
marketing segment.

'igure$ verage Salary offered in Indian Insurance Sector for ,anagerial Level :ositions
IT Ena5ld Sr0i1!
&ith I" industry at the boom, Indian I"!enabled services are also en#oying the returns.
)ecruitments are taking place at a high rate. It has also given rise to the outsourcing
industry. I"!enabled services cover a rage of service sectors like 5:., L:., Hardware
and Software. "he compensation packages in the sector vary from #ob!#ob and company
to company. +*perience level also forms an integral part of the compensation package.
Compensation :ackages in 5:. P L:.
5:. and L:. units have entered the Indian markets with lucrative compensation
packages and high incentives.
,ost of the organizations in the segment are foreign!owned. 'ew of the Indian
organizations have also come with the 5:. and L:. units. "he organizations are
attracting young talent by offering lucrative compensation packages.

'igure$ verage salary offered in 5:. and L:.
Compensation :ackages in Software P Hardware Services
Software P Hardware services have created lots of #obs in the sector. 'resh and
e*perienced engineers are offered #obs with high packages. "op players like ,icrosoft,
.racle, I5,, HCL, Infosys, Satyam, Sify, &ipro, L4, and Samsung are offering
lucrative packages to attract and retain talented workforce

'igure$ verage salary offered in 5:. and L:.

Entr" L0l Compn!ation Pa1-a$!
5:. P L:. have come up with lots and lots of #obs for fresh graduates with handsome
salary packages and incentives. "hey are attracting young talent. .utsourcing industry
has come up with new #ob prospects for graduates. 5ut it demands hard work and skilled
labour. "he desired skills for 5:. P L:. services are$
M +ffective Communication Skills
M Strong Commitment Level
M Strong nalytical Skills
M bility to meet deadlines
Despite the fact that L:. P 5:. do not offer #ob securities, the recruitment rate in the
segment is very high. ,ost of the #ob profiles are target based. High recruitment rate is
due to high average salary being offered to fresh graduates also.

'igure$ verage Salary offered by "op :layers in Indian I"!+nabled Services for +ntry
Level @obs
Mana$mnt L0l Compn!ation Pa1-a$!
+mployees need to work hard and achieve their targets in order to be in the lime light.
High attrition rate has caused organizations offer high compensation package.
Compensation plays an important part here. &hen the employees are provided with good
packages they produce well and maintain their stability but if not they cause high attrition
rate.
L:., 5:., software and hardware services offers handsome salary packages and high
incentives to managerial level positions.
"he pro#ect managers and other top management employees en#oy monetary and non!
monetary benefits from the organization. "he organizations offer lucrative benefits to
retain the talent in the competitive environment. &ith "he software and hardware
industry is in need of talented programmers, testers, developers and analysts to improve
their productivity. +ducational institutes are updating their syllabi every year to deliver
updated and skilled human resource. "he organizations are also providing for educational
programmes for their employees or their development to reduce the recruitment cost.

'igure$ verage salary offered in 5:. and L:.
Tl1omm3ni1ation S1tor
Indian telecommunication sector is witnessing a growth rate of more than =3N. &ith the
upcoming of new upgraded technologies such as >4, the sector will be e*periencing a
growth rate of more than 011N. :ublic players and private players are competing with
each other and are developing themselves to produce more (uality and deliver advanced
technologies. "op players in the segment such as 5harti irtel, )eliance
Communications, "ata "eleservices, Idea Cellular, Hutchison, +ssar, -okia, Siemens,
L4, ,otorola, etc are investing in new pro#ects to accommodate the >4 technology.
&ith the business e*pansion and globalization of Indian organizations more and more
recruitments are taking place in the sector. "he sector has also provided #obs in
marketing, installation and construction segments. Immense competition has led the
organizations hire more and more skilled labour, be it for upgrading their technologies or
marketing their products. .rganizations are offering most competitive packages to attract
and retain talented human resource.

'igure$ verage salary offered in "elecommunication Sector 5ased on +*perience
Entr" L0l Compn!ation Pa1-a$!
"he sector is offering openings in banking, insurance, capital market, venture capital,
mutual funds, bonds, commodities markets, etc. Compensation provided to fresh
management graduates is also very lucrative. "he sector is open for C, CS, accountants,
,5 in finance and commerce graduates.
M +ffective Communication Skills
M Sound "echnical Lnowledge
M Strong Commitment Level
M Strong nalytical Skills
part from pay packages marketing people also get high incentives and perks. "he
industry provides for special allowances such as annual bonus, house rent allowances,
mobile allowances, transportations, travel leaves, paid vacations, etc.

'igure$ verage Salary offered in Indian "elecommunication Sector for +ntry Level @obs
,anagement Level Compensation :ackages
"elecommunication provides for e*cellent growth opportunities. In the global
competitive environment e*perienced people have an upper hand in selecting an
organization. .rganizations need to offer most competitive packages and heavy perks to
attract and retain the talented work force.
+ffective communication skills, good analytical skills and sound technical knowledge are
must to have a respectable position in telecommunication sector. .rganizations such as
Idea Cellular,
"ata "eleservices, )eliance Communications, 5harti irtel, -okia, Siemens, ericcson,
,otorola, etc are advancing their technologies and providing most competitive
compensation packages. :eople working in telecommunication sector are asked to work
at stretch and in pressure. lso, the level of e*perience determines one%s level of
compensation package and position in the industry.

'igure$ verage Salary offered in Indian "elecommunication Sector for ,anagerial
Level :ositions

Ban-in$ B Finan1 S1tor
Indian banking and finance sector is currently e*periencing high growth rate. &ith
increased 'DI and high inflation rates, finance sector is en#oying high deposits. 'inancial
institutes and commercial banks are e*panding their business and going for large scale
recruitments. "he banks are collaborating with insurance units to provide insurance
coverage to their clients. 'ew of the banks are also dealing in gold and silver.
-ationalized banks are preferred more as they provide for #ob security.
Compensation packages in banks have always been lucrative. Incentives, special
allowances, travel leaves, concessions, paid vacations, paid leaves, retirement benefits are
also offered along with basic salary and other allowances such as house rent
allowance,transportation vehicle etc. Compensation package in finance and banking
sector depends on the level of knowledge and e*perience an individual have.
"op players such as nationalized banks! 5ank of India, S5I, Indian .verseas 5ank, 5ank
of 5aroda, :un#ab -ational 5ank, HD'C, ICICI and other private banks, financial
institutes such as 5a#a# Capital, Lotak ,ahindra, etc, are offering high salary packages
with lucrative incentives to attract and retain their talented work force.

'igure$ verage salary offered in 5anking P 'inance Sector 5ased on +*perience
ENTRY LEVEL COMPENSATION PACCA&ES
Indian finance P banking sector offers #obs in various segments. "he managerial level
#obs are held by management professionals, commerce graduates and finance
professionals. However at the entry level there are more #obs for graduates in marketing
segment. "he positions are for customer care e*ecutives, marketing e*ecutives in credit
card department, loan department, verification department, recovery department.
In other departments like audit, credit, advances, foreign e*change, etc individuals are
professionals such as C, CS, ,5!finance, commerce graduates, 5.com, ,.Com etc.
Software packages such as tally certification guarantees #obs in the finance sector.
4etting into nationalized banks is (uite difficult, but if the candidate has desired skills
and willingness, he7she has to pass an entrance e*am followed by personal interview and
medical inspection. "hese e*ams are conducted by the respected banks only.
:ackages offered to individuals are based on their knowledge level and training
e*perience. "he profile of the candidate also matters. However the candidates looking for
a career in finance should possess the necessary skills. "hey are$
O +ffective Communication Skills
O Commerce 5ackground
O +*cellent ,arketing Skills
O Strong nalytical Skills
O bility to meet deadlines
part from pay packages finance professionals also get high incentives and perks. "he
industry provides for special allowances such as annual bonus, house rent allowances,
mobile allowances, transportations, travel leaves, paid vacations, etc.

'igure$ verage Salary offered in Indian 5anking P 'inance Sector for +ntry Level @obs
Q "he salary figures provided are for the business development e*ecutives and marketing
P sales e*ecutives
Mana$mnt L0l Compn!ation
'inance sector is a promising sector where compensation is considered. "he sector has
witnessed tremendous increase in the salary packages in the last few years. "he
compensation packages offered to managerial level employees are very much lucrative.
5esides the basic salary employees are also provided with heavy perks and incentives
with special allowances. "hey are offered club memberships, company%s vehicle, travel
leaves, paid vacations, other allowances and non!monetary benefits.
.rganizations also conduct training and development programs for their employees%
professional growth. .rganizations provide for certification courses and online degree
courses for the employees. t higher level employees are given employee stock options.
Individuals are given e(ual preferences on the basis of their performance.

'igure$ Components of Compensation :ackages at ,anagerial Level in 5anking P
'inance Sector
-ationalized banks offer #ob security and private financial institutes provide high
lucrative packages. &ith the globalization, liberalization, business e*pansion, more
number of competitors, #obs in the financial sector are also demanding too much hard
work. +arlier bank #obs were considered very comfortable ones but now the scenario has
been changed. Indian banking sector is heading for =2QC. Some of the nationalized and
private banks have started working E to E.

'igure$ Components of Compensation :ackages at ,anagerial Level in 5anking P
'inance Sector
Ho!pitalit" S1tor
In ne*t 01 years Indian hospitality sector is e*pected to grow at fast rate. "he emergence
of 4overnment voluntary schemes such as Incredible India has caused more and more
tourists pouring in Indian holiday destinations. "his has caused more and more
development of the hospitality sector. "he sector can be categorized into two sub
industries! hotel industry and travel P tourism industry.
"he sector offers #obs in various segments customer care e*ecutives, marketing,
servicing, house keeping, kitchen management, faculties, cabin crew, finance, help desk,
management, etc. Hospitality sector offers lucrative compensation packages. "he
compensation package in the sector includes heavy incentives, meals, accommodation,
and travel allowances along with basic salary. Fsually basic salary is less but the
incentives and perks known as tips provides for handsome earnings.
"he compensation packages in the industry are based on the brand and position an
individual is working for. "here%s a huge gap between the compensation provides by a 3
star hotel and an ordinary 0 star hotel. "he package and position is also depicted on the
basis of the educational background of the candidate. person with hotel management
degree will earn more than an individual with no certifications in hotel management.

'igure$ Distribution of Compensation :ackages in Hotel IndustryQ
Q "he figures are determined after analyzing the compensations offered in various
segments within the hotel industry.
'or e*ample, 'ront Desk +*ecutives get very less compensation packages 6including
perks and incentives8.

'igure$ Distribution of Compensation :ackages in "ourism IndustryQ
Q "he figures are based on the proportion of compensation packages offered in the sub
segments of tourism industry.
Entr" L0l Compn!ation Pa1-a$!
Hospitality Sector offers lucrative packages to fresh graduates. n individual needs to
complete a full time or part time degree or certification course to enter the promising
industry. "he compensation packages offered vary from #ob to #ob, segment to segment
and brand to brand. 'or e*ample, a pilot in some private airlines gets a very high package
than a driver in a roadways organization. 5ut the industry offers heavy returns to the
owners of the business enterprises.
Hotel Industry
n individual who wish to #oin the hotel industry needs to have a certification course or
diploma7degree in hotel management.
.f course there are many low grade restaurants and other family restaurants and hotels
where these certifications are not re(uired but there the compensation packages are very
less. "he brand names such as I"C hotels, Hyatt )egency, .beroi Hotel and Leela Hotels
offer high lucrative packages with heavy perks and incentives. 5ut these organizations
look for diploma7degree holders. n individual must possess the following skills to fulfill
his7her salary e*pectations$
M +ffective Communication Skills
M Specialized Skills
M Strong Commitment Level
M &illingness to &ork at Stretch
M "eam!oriented
M &illingness to &ork in Shifts
To3ri!m Ind3!tr"
"ourism industry also offers very promising compensation packages. "here are various
#ob openings in the sector. .ne can start his7her career in any of the sub segments. "here
are growth opportunities in railways, airlines, roadways and crews. "here are both public
and private organizations dominating the sectors. Crews and irlines offer most lucrative
packages to fresh graduates. "hey look for degree7diploma holders. "op players such as
ir India, Indian irlines, Deccan irways, Indian )ailways, D"C, 5+S", Shipping
Corporation of India Ltd are offering most competitive packages to their employees. .ne
needs to have some skills and attributes to start his7her career in the industry. "he desired
skills are$
M +ffective Communication Skills
M Specialized Skills
M Strong Commitment Level
M &illingness to &ork at Stretch
M "eam!oriented
M &illingness to "ravel
M &illingness to &ork in Shifts
Mana$mnt L0l Compn!ation Pa1-a$!

Hospitality industry offers high packages. lthough the basic salary in the sector is less
as compared to other sectors but the incentives and perks offered are very high that
makes the total amount a huge one. &ith relevant e*perience, diploma
certification7degree provides for an added advantage for the individuals working in the
hospitality industry.
"op management en#oys very high compensation packages in the hotel industry. "he
packages include basic salary, incentives and bonus. Due to immense competition
packages are increasing at a high rate to attract and retain the talented workforce.
5ig names such as Hyatt )egency, Leela Hotels, I"C Hotels, .beroi Hotels are offering
lucrative packages. In the tourism industry airlines such as ir India, Lingfisher, @et
irways and Indian irlines are offering higher packages to attract and retain best human
resource.

'igure$ verage Salary .ffered to "op ,anagement in Hotel Industry
Hospitality sector provides for varied compensation packages. 'or e*ample, hotels
located in center city and resort areas provide higher salary to their managers as
compared to hotels located along highways or in the suburbs. In a study it was found that
managers of a hotel located in center city earns an average of 0=3N more than the
manager working at a highway hotel. Industry is e*pected to grow at the rate of EN that
predicts that compensation packages for the employees will also increase with the same
pace.
Halt#1ar B Mdi1al S1tor
Salary package is the core aspect for attracting and retaining employees. "he immense
growth in the sector has caused the compensation packages in the industry increase at a
rapid pace. "he compensation packages in the industry are reaching the same roof as of
I" sector in the country. "he industry is booming and this has led the medical institutes to
offer lucrative packages to attract and retain skilled medical practitioners.
In recent study it was revealed that medical tourism is increasing in India.
It is e*pected that the Indian healthcare industry will grow by more than 21N in the ne*t
3 years. "his has caused more and more companies are entering the sector which is
demanding more and more professionals. Hence, the organizations offer most
competitive packages to ac(uire the best talent around. It has been found that that there
are many ,-Cs in the Indian healthcare industry who want to put the management on a
global scale.
Compensation Structure
"he compensation package includes the following components. part from the regular
components, medical practitioners are also provided with the special benefits mentioned
below.

'igure$ Components of compensation package in Indian Healthcare P ,edicine Industry

'igure$ Special 5enefits offered in Indian Healthcare P ,edicine Industry
"he traditional aspect of e(ual pay in e(ual regions has been taken over by the new
phenomena of competitive pay across the industries. 4lobalization and business
e*pansions have caused the organizations to attract and retain the talented workforce.
"hey also keep in the mind the internal parity i.e. the pay structures are comparable with
respect to the #ob positions in the organizational hierarchy.
+ntry Level Compensation :ackages
Indian healthcare industry can be categorized in public and private sectors. "he public
enterprises offer #ob security and the private institutes provides for lucrative packages.
"he industry is creating opportunities in new areas to facilitate more health care services
such as health and fitness, wellness, rehabilitation, home healthcare, nutrition.
It is a challenge to the healthcare industry to restructure its compensation packages to
attract the young talent.
Houng talent opts for performance based pay and incentives whereas old generation is
still demanding the heavy benefits. .rganizations need to formulate a balanced strategy
to improve the organizational productivity and provide the most competitive pay!
packages.
4iven below are the various openings the industry has for fresh medical professionals$






n individual should have a (ualified degree from a reputed university to enter the
healthcare sector. He7she should possess the desired skills to gain the most competitive
packages$
M +ffective Communication Skills
M Sound "echnical Lnowledge
M Strong Commitment Level
M Strong nalytical Skills
M &illingness to &ork at Stretch
5esides the pay packages, employees are also given certain monetary and non!monetary
benefits such as allowances, accommodations, respective positions, perks, incentives,
insurances, etc. "hese benefits differ from organization to organization.

Mana$mnt L0l Compn!ation Pa1-a$!
.rganizations understand that only compensation package will not help them retain their
talented workforce but they need to provide e*cellent working atmosphere, growth
opportunity, and space for e*perimentation. "he individual satisfaction level must also be
maintained. "hey should take measures to motivate employees. Like other industries in
healthcare industry too, the non!technical staff such as marketing team are receiving
lucrative packages.
"op ,anagement Compensation Structure
"he organizations are offering lucrative compensation packages to their senior
management. "hey try to balance the packages provided to the technical professionals
and non!technical professionals by offering annual bonuses and variable pay plans.
Companies are becoming competitive when it comes to luring top e*ecutives with a mi*
of high basic salary, incentives, +mployee Stock .wnership :lan and deferred pay. "hey
are also looking at performance!based salaries, with variable pay as a percentage of
salaries on the rise.

'igure$ Compensation :ackage .ffered to Senior ,anagement in Indian Healthcare
Industry
Significant increase has been in salary packages in the industry. "he average increase in
salary in the sector has been reported as 0=N in the year =11?. .rganizations have
offered car and accommodation benefits to their senior and middle management
employees. 4iven below is the average increase in the salary in the industry at various
segments$

'igure$ verage salary increase in the Indian Healthcare Sector
"he compensation in the industry also depends on the specialized area. Compensation is
decided with respect to the individual%s contribution to the organization.
LIMITATIONS
+verything has some pros and cons and so certain limitations of this study that we could
observe are as follows$
"he area of pro#ect work is wide and include various sector so, the data or result may be
appro*imate as the conclusion is based on the survey method.
"he organizations which have been studied and surveyed, the facts
depend on various web references.
ppro*imate data has been provided.

SCOPE
"he scope of this pro#ect is to understand the concept of compensation management and
study of the strategies in various sectors in India.
RESEARCH METHODOLO&Y
RESEARCH DESI&N
INTRODUCTION
)esearch Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It specifies the methods and procedures for
ac(uiring the information needed to conduct the research effectively.
RESEARCH METHODOLO&Y
TYPE OF DATA COLLECTED
Data is defined as data that is collected from original sources for a specific purpose.
"hese include books, the internet, the company website etc.
S'OT ANALYSIS
STREN&TH.
Superior customer service vs. competitors.
Services have re(uired accreditations.
High degree of customer satisfaction.
4ood places to work
Dedicated workforce aiming at making a long!term career in the field.
'EACNESSES
Some gaps in range for certain sectors.
Customer service staff needs training.
:rocesses and systems, etc
,anagement cover insufficient.
Sectorial growth is constrained by low unemployment levels and
competition for staff
CONCLUSION
"oday employees are treated as essential component of organization even more valuable
than other assets. +mployee compensation hence is very critical process on part of
Human resource manager. In recent times a shift is observed in a way that employees are
being compensated. "he compensation plan must be communicated easily to the
employees. lso fairness and transparency should also be taken into consideration while
designing compensation plan. +mployees must be encouraged to participate in the design
of the compensation plan.
"here are various factors on which compensation plan should be designed. ,a#or factors
includes inter dependency of the #obs, accurate and ob#ective measure of performance of
the employee , .rganizational culture of the company, management support for the staff,
effective communication skills of the employee and employee fle*ibility towards various
responsibility given. +mployees should be accessed on these parameters instead of being
accessed on basis of traits for the purpose for revision in compensation plan.
"oday there is a paradigm shift in work culture with focus on team based approach as
compared to traditional approach of individualistic work approach. -ow employees are
rewarded and paid compensation on basis of individual performance as well as
performance of the whole team. "hus rewarding of an individual should essentially be
combined with certain team based reward as well. "he compensation plan should be able
to recognize the contribution of individual employee towards organization. lso
compensation plan should recognize collaborative efforts of the team. "hus individual
rewards should consider the fact that the employee has been a team player, thus fostering
an environment of cooperation and collaboration.
Compensation plan and reward systems are different in different organizations. "here is
no thumb rule that can be placed in an organization to determine what kind of plan they
should place in the system or a plan that can be implemented in that particular
organization. 'inding and hence formulating the correct compensation plan for any
particular organization will always remain the most difficult task to implement. 5ut it can
be achieved successfully with a lot of planning thus finding the right mi* of rewards for
the individuals and teams in their organizations.