NAME : Mitalee Acharyya

COURSE: Ex-PGDM 2010-11

ROLL NO: 23

FACULTY: Mr. V. K Bhide

SUBJECT: Compensation & Benefits Management

Compensation Structure In Airline

Industry
ASSIGNMENT NO. 1

SYMBIOSIS INSTITUTE OF MANAGEMENT

STUDIES
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

PAY STRUCTURE DESIGNING FOR AIRLINE SUPPORT DIVISIONS

SUCH AS LOGISTICS, DUTY FREE SHOPS, TICKETING & CUSTOMER
SUPPORT

• The industry pays its employees certain allowances which provide adequate
compensation for particular work requirements, situations and off-setting
certain expenses help employees to maintain an appropriate standard of
living that reflects a positive image of the industry and to comply with
statutory requirements.

• Such allowances are subject to modifications and withdrawal according to

changing circumstances. The industry may also establish other types of
allowances if deemed necessary for the improvement of the working
conditions and operations.

• Any changes of allowances status contained in this document, or

recommendation for new ones shall be studied by the HR Head, who shall be
responsible for analyzing its impact and submitting them to the General
Manager for concurrence before the MD’s approval.

• The industry also offers its employees certain benefits, in addition to normal
compensation, to reward their contribution to its success, to meet some of
their reasonable needs and fulfill statutory obligations

• It also provides benefits over and above statutory requirements to assist in

maintaining the competitiveness of its total remuneration package and its
position in the employment market.

• It also provides an effective medical care program for its employees and their
eligible dependents to assist them recover the healthcare costs incurred by
them.

• They also encourage and consider it essential for employees to have an

insurance coverage in order to protect their income in case of permanent total
disability or death, as a result of non- industrial causes. Accordingly, the
company shall arrange and pay for life/medical insurance coverage scheme.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Methodology

Perform Competency
Understand existing Mapping to determine
Define Project Review job
Start organization structure competencies and
Objectives descriptions
and employee grades attributes expected at
each grade

Revise employee
Perform benchmarking
Determine appropriate grades to align them
Stop Establish grade pricing against industry
salary structure with roles and
standards
responsibilites

Competency Mapping is a process of identifying key competencies for a

.company or institution and the jobs and functions within it
Types of
Competencies

Technical Managerial Human Conceptual

Competencies Competencies Competencies Competencies

Knowledge, attitudes and Knowledge, attitudes and The abilities needed to

Knowledge, attitudes and
skills associated with the skills required to visualize the invisible,
skills required to plan,
technology or functional motivate, utilize and think at abstract levels
organize, mobilize and
expertise required to develop human and use the thinking to
utilize various resources
perform the role resources plan future business

Based on our understanding of the job descriptions of various roles, we have identified a set of core competencies for
BDF staff. This helped us determine the grades required within the company as well as the competency attributes
expected at each grade.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Competency Dictionary

Attribute Level

Sl. Competenc Competency

No y Label Definition Basic Average Good Excellent

Understands the
Is able to provide reasons behind other
Listening and Is able to read, write,
information in a people’s thoughts and
interpretation, speak and follow
1 Communication Clearly conveying desired manner. Is uses this
establishing rapport, instructions in order to
information and ideas able to communicate understanding to
.understanding needs .perform his role
through a variety of ideas effectively. predict and prepare
media to individuals or for others' reactions.
groups in a manner
that engages the
audience and helps
them understand and
.retain the message

Is able to give
Knowledge of and opinions when
Takes proactive
ability to use effective Is capable of collective decisions
decisions and
approaches for understanding various are required. Accepts
2 Decision Making calculates risk
choosing a course of scenarios for effective delegated authority
The capacity to make involved. Is committed
action or developing . decision making and acts within
sound and practical .to decisions
.appropriate solutions span of control.
decisions which deal
effectively with the
issues and are based
on thorough analysis
.and diagnosis

Voices ideas on Continuously suggests

Takes initiative to try
business issues Able to take prompt innovative changes
Exhibits drive and out new ideas at his
3 Initiative without prompting, action to accomplish and can translate the
evergy towards work place to improve
adopts changes in .objectives innovative ideas into
achieving goals and .process
.work place .concrete changes
results; maintains and
adheres to high
performance
.standards

Assigns responsibility
to different people
Recognizes conflicts Foresees conflict and
An interpersonal according to their Takes advantage of
and acts accordingly. tries to minimize the
influence directed capability and sets most opportunities,
Senses the need to same before it arises,
4 Leadership towards the deadlines for the could do more to
assign duties to takes necessary steps
achievement of a goal same. Coaches leverage them through
people and to achieve desired
.or goals people when required .others
.delegating results.
and is open to give
.advice when asked
Competency Dictionary

Attribute Level
S.N Competenc Competency
o y Label Definition Basic Average Good Excellent

Is effective in
planning the best
Diaries appointments Meets deadlines,
balance of resources
and keeps to them delivers work on time
Establishing courses including human,
on time. Can without sacrificing Ability of arrange
of action for self and financial and
Planning And prioritize tasks and quality. Is a positive and assign work to
5 others to ensure that technological to meet
Organizing recognize the influence on the use use resources
work is completed goals. Able to assist
difference between of time in-group efficiently.
.efficiently other team members
urgent and important meetings - helps
where necessary to
.tasks .maintain focus
.formulate objectives

Identifies and
Ability to handle
educates others to
outcomes arising out
focus on causes,
Process problems Identify problems of the solutions
Ability to identify not symptoms, of
6 Problem Solving into solutions and and determine suggested and
.problems problems and
new opportunities. possible solutions. implemented. Work
works co
actively to resolve
operatively to seek
the issues.
.solutions

Uses strategies to
Participates willingly
promote team
with the team by
effectiveness across Communicates
doing his/her share
the business such as information about
Actively participating of the teams' work. Takes in charge of
providing information the business to
as a member of a Works well within the managing the whole
Team to other areas of the management and
7 team to move the team environment to business and
Management organization to help employees.
team toward the establish completing it at the
make decisions Actively organizes
.completion of goals constructive ideas or .right time
collaboratively and activities aimed at
solutions that meet
sharing resources to building team spirit
organizational
solve mutual
.objective
. problems

Approaches all
objectives and work Ensures that all Evaluate and
Strives to satisfy
activities recognizing customers are Manages high continuously
customers and
that success of the always being volume customer improve high
8 Customer Focus always willingly
business depends on attended to and service response volume customer
attends to
satisfying the reviews any and delivery contact and
customers.
customer - internal customer complaints. operations.
and/or external
Expected Attribute Level at Each Grade

Decision Planning And Problem Team Customer

Grade Communication Initiative Leadership
Making Organizing Solving Management Focus

1
Executive Excellent Excellent Excellent Excellent Excellent Excellent Excellent Excellent
Manager

2
Senior Excellent Excellent Excellent Good Excellent Good Excellent Excellent
Manager

3
Superviso Good Good Good Good Good Average Good Good
r/Manager

4
Associate Average Average Average Average Average Average Basic Average
Staff

5
Executive Average Basic Basic Basic Basic Basic Basic Average
Staff
Department-wise Staff Grades

In
HR & Purchasing
Grade Finance Flight/Seap Retail
Marketing & Logistics
ort
Head of
1 Head of HR &
Head of Finance Purchasing & Head of Retail
Executive Manager Marketing
Logistics
IT Manager,
Shop Floor
Financing & Treasury Marketing In
2 Manager,
Manager, Manager, HR Flight/Seaport
Senior Manager Merchandising
Management Manager Manager
Manager
Accountant
IT Hardware
Supervisor, IT
Marketing
Software Supervisor,
Supervisor,
3 Account Supervisor Sales Duty Manager,
Training Buyer
Supervisor/Manager (AP&AR), Cash Coordinator Public Relations
Manager, Admin
Office Manager, Store
Officer
Manager, Inventory
Manager
Marketing
IT Hardware
Executive,
Technician, IT Sales Retail
Training
Software Supervisor Administration
Coordinator,
Administrator, Seaport, In Supervisor,
General Services
Account Executive, Flight Stores Security
Coordinator,
Cash Office In-Charge, In Manager, Senior
4 Admin Assistant
Supervisor, Store Flight Finance Merchandiser,
Associate Staff Coordinator, Buyer
Supervisor, Senior Admin/Accoun Senior
Payroll
Store Man, Inventory tant, Admin Maintenance,
Coordinator,
Analyst, Management Clerk In Flight, Sales Supervisor,
Recruitment
Account Executive, In Flight Project
Coordinator, PR
Cash Office Cashier, Admin Store Coordinator
Media
Executive Secretary Clerk
Coordinator
Security Staff,
Secretary &
Retail Admin
Clerk,
Merchandiser,
5 Store Admin Staff, Receptionist, Assistant
Sales Staff,
Executive Staff Store Man Drivers Maintenance,
Sales Porter
Retail Porters,
Beauty Advisors,
Supplier
Promoters, Sales
Assistant
Cost of Revised Compensation

Current Compensation Recommended Change in Cost to

Grade
(Rs.) Compensation (Rs.) Company (Rs.)
1
Executive 250000 – 230000–
Manager
2
Senior 180000 – 250000 170000 – 230000
Manager
3
Supervisor/M 70000 – 180000 90000 – 150000
anager
4
Associate 40000 – 70000 45000 – 80000
Staff
5
Executive 25000 – 40000 25000– 40000
Staff
(Recommended Fixed Package (Average Rs. per annum

itacinummoC
Base tropsnarT
Grade ARH FP
)(Average
ecnawollA no ecnawollA

1
vitucexE 0004651 00064 000481 0000032 000672
reganaM
2
-0006511 -00043 -000631 -000071 -000402
roineS
reganaM 0004651 00064 000481 000032 000672

3
00216- -00801
vrepuS 0003-0081 00021-0027 00051-0009
regana 000201 00081

4
-00603
aicossA 0061-009 0046-0063 0008-0054 0069-0045
ffatS 00445
5
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vitucexE 008-005 0004-0052 0004-0052 0084-0003
ffatS 00272
Recommended Variable Benefits

Grade Bonus

1
Executive Manager
Upto 20% of basic pay

2 Upto 20% of basic pay

Senior Manager

3 Upto 20% of basic pay

Supervisor/Manager

4 Upto 20% of basic pay

Associate Staff

5 Upto 20% of basic pay

Executive Staff
Recommended Other Benefits

Educational
Assistance
Annual Leave Medical
Grade LTA (Max. 2 children
)(Working Days Insurance
upto the age of
)18 years

1
Executive 22 65000 15000 40000
Manager

2
Senior Manager
22 50000 15000 40000

3
Supervisor/Mana 22 34000 15000 40000
ger

4
Associate Staff
22 22000 15000 40000

5
Executive Staff
22 16000 15000 40000
Recommended Annual Leave Air Tickets

Grade Tickets provided for Class of travel

1
Employee + Family Business
Executive Manager

2
Employee + Family Business
Senior Manager

3
Employee + Family Economy
Supervisor/Manager

4
Employee Economy
Associate Staff

5
Executive Staff
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Employee Benefits

The industry offers its employees certain benefits, in addition to normal compensation, to
reward their contribution to its success, to meet some of their reasonable needs and to
fulfill its statutory obligations.
They also provide benefits over and above the statutory requirements to assist in
maintaining the competitiveness of its total remuneration package and its position in the
employment market.

They provide an effective medical care program for its employees and their eligible
dependants to assist them to recover the healthcare costs incurred by them. Also, they
consider it as essential for employees to have insurance coverage in order to protect their
income in cases of permanent total disability or death, as a result of non-industrial causes.
Accordingly, the company shall arrange and pay for life/medical insurance coverage
scheme.
The company may establish any other certain benefit program beyond those prescribed
by statutory law or change the current benefits according to the circumstances.

Statutory Benefits (Pension Scheme)

Employees holding the relevant documents shall be entitled to participate and register in
the Pension Scheme as prescribed by Labor Law, provided that they are not already under
this Scheme. The HRD shall be responsible for the administration of the pension scheme
within the company, according to procedures prescribed by the Law.
From the date of employment, the company shall deduct 6% from the gross salary of the
employee including Social Allowance (up to a maximum salary of Rs. 1,25,000) as the
contribution of the employee to pension scheme, and add 11% as the company’s
contribution. The total of 17% shall be deposited in the employee’s account with the
Pension Scheme.

Upon cessation of employment, the company shall report to the PISS the duration of the
employee’s services with company. Thereafter the employee shall receive his/her end of
service benefits under the Pension Scheme and he/she shall not be eligible for the
provisions of the end of service gratuity which is provided by the company for the non-
national employees. However, the end of service benefits shall not be provided to
employees whose employment has terminated within one year from the date of
employment.

However, if the employee’s salary is above the maximum (Rs. 1,25,000) prescribed by
pension scheme statutory, the employee shall be paid end of service benefits on the
surplus , and it shall be calculated as per the company’s End of Service Benefits Policy
applied to non-nationals.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Staff Housing Facility

Employees are eligible for Housing Finance as applicable, on the same terms and
conditions as applicable and as set out in Housing Policies and Procedures in the
company’s Manual
Staff Consumer Financing
The company shall provide its employees Retail Consumer Financing, under the
different approved products on the same terms and conditions and as set out in the
Policies and Procedures in the company’s Manual.

Personal Loan Facility

Minimum Service:
Employees: The employee must complete 3-years service in the company and must be
eligible for End of Service Indemnity.
Maximum Amount: 5 – months Gross Salary.
Repayment period : The finance shall be repayable
a- Employees in Grades I, II & III : Maximum of 24 months
b- All other employees : Maximum of 18 months

The total amount of deductions towards repayment of the loan and other debt
obligations of the staff member, must not exceed 40% of the monthly gross salary of the
employee.

Other Conditions:
a- The employee should fulfil the following conditions
i) There should be no legal action pending against the staff member
ii) The Staff members should not be under investigation within the company
iii) The latest Annual Performance appraisal of the Staff member should at a
minimum, be “ Fully Effective”.
An Employee will be eligible for a new loan, only 3-years after the repayment of the
earlier loan. However, under the following conditions employees will be eligible for
a new loan , 1-year after repayment of the earlier loan.

In the event of resignation or termination of the employee:

The outstanding amounts under the facility, shall be recovered from the amounts due for
the staff on account of end-of-service Indemnity plus other amounts due to the staff
member.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

In the event, the end-of-service dues are insufficient to cover the amount due from
the staff member, the company will settle the amount covered by the end of service
dues and convert the balance amount into a normal retail financing facility as per terms
and conditions applicable.

Approval Authority
a- Managing Director will approve the loan facility in respect of his direct reports as
well as the General Manager, based on the recommendation of the Head –HR.
b- General Manager will approve the loan facility in respect of all other staff
members, based on the recommendation of the Head –HR.
The Managing Director shall have the authority for exceptional approval in granting loan
and exceptional approvals shall be kept to the minimum possible.

Visa Charge Card Facility

All employees in grades I – IV shall become eligible for a Visa Card facility when
they successfully complete the probationary period and are confirmed as regular staff.
All employees in grades III to IV shall be eligible for Visa Charge Card subject to the
condition that they do not possess Visa Credit Card offered by any Company
The limits of Visa cards shall be as follows:
a- Employee in grades I - IV shall be entitled to 60% of one basic salary after deduction
of any loan installments or standing orders.
All applicable fees and tariffs shall be as per the approved Fee and Tariff Schedule for
staff.
The Head of HRD shall be authorized to approve Visa Card for employees strictly in
accordance with the policies, limits and criteria established.
Visa Credit Card Facility
Issue of Visa Credit Card to Employees shall be governed by the Visa Credit Card
Product policy as detailed in the Manual except for the parameters as given below.
All employees in grades I – IV shall become eligible for Visa Credit Card facility
when they successfully complete the probationary period and are confirmed as regular
staff.
All employees in grades III to IV shall be eligible for Visa Credit Card subject to the
condition that they do not possess Visa Charge Card offered by the Company.
The minimum salary requirement as well as credit limit criteria for Visa Gold and
Classic cards are as per the table below.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Visa Gold Visa Classic

Minimum Rs. 80000 Rs. 20000
Basic Salary
Minimum Rs. 80000 Rs. 20000
Credit Limit
Maximum Lower of:
Credit Limit ™ One Basic Salary OR,
™ Three times the difference of (40% of Basic Salary and
Total monthly installment repayment obligations)

All applicable fees and tariffs shall be as per the approved Fee and Tariff Schedule for
staff.
Staff members applying for visa credit card shall require to sign a form authorizing the
company to deduct from employees end of services settlement amount all credit card
outstanding due.
The Head of HRD shall be authorized to approve Visa Credit Card for employees strictly
in accordance with the policies, limits and criteria established.
Administration of Financing Facility& Issue of Cards
The Head - HRD shall be responsible to authorize to process all types of staff financing
facilities after approval. He is also responsible for administering all staff loans,
providing regular reports on a monthly basis to the General Manager including new
loans, new issued Visa Charge Cards, new issued Visa Credit Cards and any past dues
and delinquencies.

Prior to issuing Visa Credit Card or Visa Charge Card the approving authority shall
ensure that all the conditions for issuing the same are satisfied.
Repayment on Leaving The Company
In the event a staff member leaves the company for whatever reason, all outstanding
loans and Visa Credit Card Balances and Visa Charge Card Balances shall be offset
against any benefits and salary payable to the staff member. If there are insufficient
funds to settle the staff indebtedness the matter shall be referred to the General
Manager who shall decide whether legal action should be initiated against the former
staff, or whether Housing loan and Car loan shall be transferred to consumer loans with
applicable terms and conditions. In these circumstances, the Companying department
shall take over the responsibility for the administration of these loans where new
documentation and collateral shall be executed.
 COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

Meals Allowances
The company shall provide all staff, in grades I – V, with reimbursement of meals up
to Rs. 200 per day whenever the employee has to work beyond 19.30 hours, upon
production of cash receipts
Parking
The company shall provide parking facility at the Head Office parking, depending on
the availability of parking space. Exceptions shall be approved by the General
Manager, when work requirements justify the same.
Telephone
The Company shall provide, on request, the necessary guarantee to enable employees
to get International telephone facility, at their residence, depending on the grade and
nature of work. The approval for obtaining the necessary guarantees shall be provided by
the Head – Human Resources..
Any overseas calls made by employees in connection with the Company’s work shall
be reimbursed, on submission of adequate proof by employees.
Entertainment
Actual expenses incurred by an employee on entertaining a business guest, shall be
reimbursed to him/her, provided the expenses are reasonable and have been approved
by the Department Head, and are met out of available department budget.
Memberships to Professional Bodies

Each Department Head is entitled to seek reimbursement from the Company for the
actual payments made by him/her towards annual membership subscriptions to any two
professional bodies, one overseas and one local, which are related directly to his/her
field.
Reimbursements shall be made on submission of proof of payment.
Medical Insurance Coverage
The Head - HRD shall be responsible for studying and negotiating with insurance
companies and recommending reputed ones in terms of conditions and appropriate
levels of medical coverage for General Management Committees approval.
Medical insurance shall be arranged with the approved insurance company, by way
of a compliant Insurance policy for all employees, and the insurance policy shall
provide global coverage that shall cover treatment locally and abroad as per the terms
and conditions agreed upon with insurance company. The eligibility of such coverage is
as follows:
a- For Grades I, II & III, the Policy shall cover the employee and upto a
maximum of 4 eligible dependants, including 3 children under 18 years.
COMPENSATION STRUCTURE IN THE AIRLINE INDUSTRY

b- For Grades I – III, the policy shall cover the employee only. However, if the
employee chooses to include his dependants he shall have to pay the cost.
When required, employees shall take medical treatment as per terms and conditions
of the medical insurance policy and in the medical centre/clinics identified by the
insurance company.
In case that the employee pays for medical treatment, he/she shall have to submit to
the Head - HRD authenticated and appropriate medical invoices as required by the
medical insurance companies. HRD shall be responsible for reviewing the invoice and
supported documents and forwarding them to the medical insurance company for taking
necessary action and reimbursing the expenses to the employee.
Depending on the type of arrangements made with the insurance company it may
be possible for employees to receive treatment from a company appointed as
medical facility, which shall claim reimbursement directly from the medical insurance
company.
Medical insurance policy also provides for reimbursement to the employee for loss of
pay on account of sickness up to a maximum of 30 working days in a calendar year.
Disability and Death Benefits:
The Company considers it essential for employees to have insurance coverage in
order to protect their income in cases of permanent total disability or death, as a result
of non-industrial causes. The Company shall arrange and pay for life/medical insurance
scheme for its employees and provide coverage for permanent disability or death. These
benefits are in addition to the regular end of service benefits.
The term total disability shall mean that the employee is no longer in a position to
perform the duties that he/she was performing before occurrence of the disability and
based on authenticated medical report, the employee is not likely to recover from the
condition of disability for a long period.
In the above-mentioned circumstances, in case of total disability and in case of death ,as
per the Labor Law, the insurance company shall pay the employee and his/her
dependents as per the life and workman’s compensation insurance policy.
It shall be the responsibility of the HRD to obtain and keep current a nomination
form from every employee to avoid any legal disputes over the payment,
Exceptions:
Exceptions, in respect of all the above employee benefits shall require the approval of
the Managing Director.