Human Resource Management Report

Table of Contents
1.0 About EFU Life..... 1 2.0 Pay Structure ....2 3.0 Basis of Pay Structure ....4 4.0 Sources of base Pay Adjustment ..4 4.1 Base Pay ...4 4.2 Wage and Salary Add ons ......5 4.3 Service and Benefits 5 4.3.1 Accommodation ..6 4.3.2 Basic Allowance for subsistence ..6 4.3.3 Medical Facilities .6 4.3.4 Group Insurance ..7 4.3.5 Conveyance ..7 4.4 Deferred Payment .8 4.4.1 Pension plans and Retirement pay ......8 4.4.2 Social Security Plan 8 4.4.3 Provident Fund ... 8 4.4.4 Savings and Thrift Plan ..8 4.5 Pay fir Work Not Done .9 4.5.1 Leave without Pay ...9 4.5.2 Sick Leaves ..9 4.5.3 Paid Leaves 10 5.0 Allocating Pay Structure .11 6.0 Merit Based Increment ...13 7.0 Benefits in Addition to Salary 15 8.0 Fringe Benefits 17

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1.0 About EFU LIFE

EFU Life is the largest private sector life insurance company in Pakistan. Established in 1992, EFU Life has a market share of more than 50% of the private sector life premium income. The Company is also the first life insurance company in the country that has been assigned an Insurer financial strength rating. In 1992, the Government of Pakistan reopened the life insurance business to the private sector organizations and EFU Life Assurance Ltd was incorporated in November 1992 as the first private sector life insurance company. In early 1993, EFU Life commenced writing group life insurance business and by March 1994, the company began writing its individual life business. The Company has a growing branch network of 72 branches through out the country with employee strength of over 1,600 personnel in its sales force and around 150 personnel at its main offices in Karachi and Lahore. The company employs 5 full time actuaries and also has an active involvement of one of the leading actuarial firms in the country. EFU Life is the first life insurance company in Pakistan to be awarded the ISO 9001:2000 certification. Today, EFU Life continues to be the largest private sector life insurance company in Pakistan. In 2005, EFU Lifes premium income was Rs. 2.5 billion.

2.0 Pay Structure

EFU LIFE has 14 Pay Scale Groups or job classifications which range from manager, professional, technical and assistant officer employees. Each levels has a maximum salary, midpoint salary or competitive objective and for computational purposes as minimum salary. Designation Grade Basic Conveyance Utilities Entertainment Drive r Asst. 1 50 9 Officer Officer 1 50 15 Senior 1 50 13 5 5 Officer Executive 2 51 12 5 6 Officer Asst. 2 51 14 5 6 Manager Deputy 2 51 14 5 6 Manager Manager 2 54 0 5 9.50 5.50 Senior 3 50 0 5 15 7 Other Total 18 12 4 3 1.5 1.5 1.5 1 100 100 100 100 100 100 100 100

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Manager
*All in percentages. Not true figures.

The Assistant Officer, Officer and Senior Officer have each 1 grade level which are 1, 2 and 3 respectively. The Executive officer, Assistant Manager, Deputy Manager and Manager each has 2 grade levels, that is, 4, 5, 6, 7, 8, 9, 10 and 11 respectively. The Senior Manager Level has 3 grade levels; 12, 13 and 14. This makes the total of 14 pay scale groups that EFU has.

Classification Level:
1. Every management and professional position is assigned to a classification level. In all cases, the salary range is broad enough to allow for considerate growth in salary and over a career even if the individual is not promoted or advanced to higher-level classification. This allows for recognition of an employee whose superior performance may justify a higher salary. 2. Salary ranges may be adjusted when considered necessary by undertaking survey of comparable organizations. 3. The companys salary system is based firmly on the evaluation of employees performance, supervision assessment by multiple judgment appraisal procedures and performance ranking.

Benefits in Addition to Salary:

Provident Fund Medical Reimbursement Pension Bonus Health Insurance Cover Group Insurance Cover Paid Vacations Car Petrol Allowance 8.33% 8.33% 10.00% 16.66% (2 Basic Pays; depending profitability) (Self & Dependants) (Designation Based) ----

3.0 Basis of Pay Structure

EFU LIFE has based their pay structure based on Market Survey of similar organizations in the market. They have consultants and actuaries that do a market survey on the basis of which they then decide on their pay structure. For Sales Force however they allocate a commission based on the Job Description of the sales force. The commission is paid along with a basic pay. This commission is calculated accordingly when the sales force sell a product approximately a 50% commission is paid on average.

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4.0 Sources of Base Pay Adjustment

In today's environment, employers seeking to attract and retain high-quality employees must appeal to a more diverse workforce, consisting of people in various stages of life. Group cover from EFU Life offers a variety of coverage options. Employers may select basic and supplemental coverage amount to fit the requirements of the group.

4.1 Base Pay

There are various types of pay. Basic pay is received by all and is the main component of an individual's salary. The other pays, often referred to as special pays, and is for specific qualifications or events. A member's grade (usually the same as rank) and years of service determines the amount of basic pay received. It is divided into two main areas that includes
Active Duty Pay Annual Pay Raise

Tax Advantage Most of the allowances are not tax-exempt. Additionally, certain hardship circumstances will change normally taxable pay into tax-exempt. However, we were not really, provided with information that related how much of the salaries are actually exempted from tax or not.

4.2 Wage and Salary Add-Ons

Overtime is the amount of time someone works beyond normal working hours. In the case of Efu, there is no concept of overtime. This is because the employees may need to achieve a certain target everyday and they may seem to spend long hours to achieve that. 4.2.1 Payment for Working on Holidays and Weekends They are usually remain closed on non working days and hence they may have not really allocated any sum of money for such working hours.

4.3 Services and Benefits

The organization has a wide variety of benefits ranging from complete health care to commissary. A review of active duty military benefits noted that when comparing the types of benefits offered by the EFU Life with those offered in

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other firm, all the core benefits offered by other firms-retirement pay, health care, life insurance, and paid time off-are offered by the company. 4.3.1 Accommodation Accommodation is an allowance to offset the cost of housing. Your accommodation depends upon employees location, pay grade and whether you have dependents or not. Accommodation rates are set by surveying the cost of rental properties in each geographic location. Therefore, Accommodation rates in high-cost areas will be much greater than those in low-cost areas. 4.3.2 Basic Allowance for Subsistence (BAS) BAS is meant to offset costs for a member's meals. This allowance is based in the historic origins of the EFUs members in which the organization provided room and board (or rations) as part of a member's pay. This allowance is not intended to offset the costs of meals for family members. Beginning on January 1, all enlisted members get full BAS, but pay for their meals. 4.3.3 Medical Facilities

The employees receive these allowance depending on the pay scale grade they lye in. we were informed that these individuals may receive higher compensation if they belong to higher pay scale grade and vice versa. However every single employee gets coverage the benefit of medical benefits. This benefit can be secured as an independent policy and it provides for payment of sum assured if a member contracts any of the following ten illnesses. Heart Attack Cancer Major Organ Transplant # Stroke Paralysis Kidney Failure Deafness Blindness Multiple Sclerosis
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Human Resource Management Report

Coronary Artery By-Pass Surgery 4.3.4 Group Insurance Group cover from EFU Life offers a variety of coverage options. Employers may select basic and supplemental coverage amount to fit the requirements of the employees. Death Group Accidental Death Benefit Group Accidental Disability Benefit Fortnightly Income Benefit Group Natural Disability Benefit Group Terminal Illness Benefit Group Critical Illness Cover Group Loan Insurance Group Provident Fund Insurance The above covers are offered on a 24 hour worldwide basis, which means that both On Duty and Off Duty claims are covered. The group cover from EFU Life offers comprehensive protection and a whole range of options. It is a costeffective and easy-to-administer means for employers to provide protection to their employees without requiring evidence of insurability. 4.3.5 Conveyance We were informed that the employees are given different kind of conveyance or conveyance allowance based on the pay scale grade the employees lie in. The managerial level employees receive an allowance to travel for the office purposes, the actual figures were not disclosed to us. The lower level of employees does not enjoy this privilege.

4.4 Deferred Payment

4.4.1 Pension Plans and Retirement Pay Service members who remain on active duty for a sufficient period of time may retire and receive retired pay. Retirees also retain the privilege to use base

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Human Resource Management Report

facilities, such as the Commissary and gym. Those members who entered Service on or after a specified time, and who will qualify for an active duty retirement, may choose between two of the current three systems. Members who become disabled while on duty may be medically retired and receive a disability retirement. Additionally, all retirees may choose to participate in the Benefit Plan or the Reserve Components, which protects the retiree's family financially in the event of his or her death. 4.4.2 Social Security Plan Social Security will likely provide additional retirement benefits to retirees beginning, for most persons, after turning sixty. 4.4.3 Provident Fund This benefit can be secured as an independent policy and it provides for payment of a multiple of Provident Fund balance on death of the member.

4.4.4 Savings and Thrift Plan The Thrift Savings Plan (TSP) is a sponsored retirement savings and investment plan, which was originally only for Federal civilian employees. The TSP offers the same type of savings and tax benefits that many other insurance corporations offer their employees under specified plans. The retirement income that the employees receive from your TSP account will depend on how much they have contributed to the companys account during their working years and the earnings on those contributions. But, it's important to remember the TSP is for long-term retirement savings. There are penalties for early withdrawals. So if the employees look for short-term savings, consider they must consider the Government Savings Bonds. They are a convenient way to help save for homes, education, automobiles, or vacations.

4.5 Pay for Work Not Done

4.5.1 Leave without Pay Leave without pay is a temporary non-pay status and absence from duty that, in most cases, is granted at the employee's request. In EFU Life these instances for granting leave without is a matter of supervisory discretion and may be limited by organizations internal policy. Employees, however, have as many as they want however at the time of appraisal this is been considered and in case it exceed the acceptable amount of leaves it work as negative point for the employee.

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Human Resource Management Report

4.5.2 Sick Leave Sick leave (or paid sick days or sick pay) is an employee benefit in the form of paid leave, which workers can use during periods of temporary sickness or to stay home and address their health and safety needs without losing pay or their jobs. In some places of employment it is a workplace policy, and in many jurisdictions it is codified into law. Some policies allow workers paid time off to attend doctor visits or to care for family members. In the case of Efu the employees may have limited number of sick leaves. However if the employees is said to be under a treatment of disease that pay require a prolong time to cure then his/her case is considered and is usually granted this leave. In the case of female employees they are allowed to have an extra or prolonged period for maternity leaves. 4.5.3 Paid Leaves All the employees are entitled to receive a paid leave of one month. However, this period may not exceed from the allotted number of days in case it does than employee needs to give an application. In the case of females, these may be another month of maternity leave.

5.0 Allocating Pay Structure:

While determining a compensation plan, the employer should take notice of how many direct competitors exist within the local market and how much do they pay to new recruits or management trainees and what account for their benefits. All of this information is acquired through market surveys. It is also argued that pay should be kept independent of local wage scale and should be adjusted in accordance to the value generated through service done for the company. Since businesses operate to maximize profits, they set compensation at the least possible level so that most profit could be generated for the company. Therefore, wages are set at the pricing point where wage is set that would attract the most employees and leave less room for turnover or attrition rate. When relating EFU to referent others, here we precisely mean the competitors in accordance to which salaries are determined through the help of market surveys. Some of the main competitors of EFU life include NGI, Alico, Adamjee Insurance and State Life Insurance. Thus, as told by the HR manager, Ms. Abrogena, EFU Life pays wages that are 50% to 60% higher as compared to competitors operating in insurance industry. This is why they have been able to retain their core employee since many years. Similarly, fringe benefits are enjoyed by all employees except for a few such as traveling and car not available for lower or initial level staff. Furthermore, all companies and individuals have been affected by the credit crunch and it paves way to a trickledown effect but consequently, they didnt cut salaries last year or down size productive people, in fact, salaries were increased this year. Moreover, for the sales department, jobs are based on a do or die situation, in simple words, sales are the target for employees and performance is reviewed quarterly, if they do not deliver then that have to let go. Therefore, as told by Ms. Abrogena, not everybody can make sales.

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Human Resource Management Report

Sales people have a fixed salary and get commission for the sales they make. It is usually calculated when a product is sold and is based on 40% of premium. Sales representatives belong to the sales department and the bank assurance department where employees from the former make sales to individuals or companies, whereas, those from the bank assurance department aim at banks where products are placed, sales from these get them a commission of 10%. Thus, units are allocated in this regard of policy product sales. Moreover, increase in salary could be up to 25% to 30% depending on the performance throughout the year and hence profitability is computed product wise where commission is based on piece rate. Likewise, training is further broken down into internal training such as in house weekly training, telephone training if required with the span of time depending on whether new recruits are hired such as those for the designation at reception. There is only one part time position which has a time slot of 6 pm to 11 pm and this is the time when this particular job can easily take place since its all about scanning papers. Though the company is striving for a paperless environment, it would at least take them three more years to free themselves from the huge piles of papers they had surrounding departments. Therefore, there arises a need for a scanners job which might get redundant in years to come. The management trainee of EFU starts by getting a minimum salary which happens to be Rs. 6000 based on price floor set by the government and also according to market surveys under taken by the company. However, it increases within the minimum and maximum range when the employee witnesses vertical growth within the hierarchy and still the salary paid in terms of the percentile generated is up to 60% higher. EFU Life does not operate in a bureaucratic environment as they feel it would hinder the performance of employees throughout, rather it is a decentralized environment in which everybodys is invested with the power to take decisions and feel respected, therefore, the company treats each and everyone as an asset whether it is a management trainee or the board of directors. In the wake of all these capabilities, EFU is the fastest growing life insurance company locally even though it has been sixteen years since their commencement. This has made them capable of getting various awards including, The 25th Corporate Excellence Award 2008 and is one of the 25 companies listed in the stock exchange. Lastly, the HR department has nothing to do with salaries as it is for talent management and HR management only, thus, salaries negotiation and approval is dependent on the department heads only.

6.0 Merit Based Increment

EFU life assurance Limited has always been the front runner in providing better working conditions and environment to their employees to grow themselves in this changing competitive world. EFU is big and fastest growing Insurance Company in Pakistan. This organization consists of different departments such as Personal Insurance sales, Bancassurance, Takaful and many others. The Pay

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structure of all these departments differ as per the requirement of the jobs and their merit based increment system differ. The direct sales department, which involves in direct sales of life insurance policies to the customers, is divided in two departments one is direct sales force and other is Managerial Staff. The direct sales team work on direct commission base they are not awarded with any fixed salary that is why there is no concept of increment of remuneration in their salary. Their commissions are fixed with certain percentages and do not change over the years. The managerial staff of sales force is compensated both on the basis of commission as well as fixed salaries. These managers are evaluated according to fixed criterion and their performances are continuously checked through proper procedures. The increments of these managerial staff depend upon the productivity shown in the year. These managers are supposed maintain certain level of production over the years, if that level is not maintained then the person will be demoted to lesser rank post. The production linked system is the main criterion for the merit based increment of managers in the sales departments. In EFU Life assurance certain levels of increment is predefined according to the level of productivity. For Instance a manager shows a phenomenal productivity growth of 35 percent then he will get increment of salary according to that level and if another person shows growth of 10 percents in its productivity then he will get increment of that level. In the beginning of the year certain targets of Productivity growth are set and if any manager fail to achieve those targets than decrease in salary or demotion are most likely to be done by the company. EFU Life Assurance Ltd is an organization which is operating in the Pakistan for last 16 years and they are preparing themselves for competing in the 21 century and they have applied every practice in order to ensure the performance level of their employees. They have applied different ranking method in order to project the performance of the employees over the year and this will help in setting the future targets for the employees EFU does have other departments other than sales department and these departments include bancassurance, Marketing, Client services, Customer relationship and many other departments. The employees of these departments are working on the fixed pay scale and their increment is based on performance appraisal conducted at the end of the year. In order to determine the performance of each employee in the organization a performance evaluation form is given to the department head and he is supposed to fill that form on behalf of the employees working under him. If the performance appraisal shows a satisfying performance patterns than a proper increment in salary is done if not than increment is not done and the person is shifted to the probation list of the organization.

7.0 Benefits in Addition to Salary

In addition to the basic salary EFU Life also provides side benefits such as, provident Fund and Gratuity Fund to its employees. These are actually the post

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Human Resource Management Report

retirement benefits which are being vested when the employee is working and then on their retirement these benefits are rewarded to them. Provident Funds are managed by EFU Life in a manner that, a percentage amount is contributed by the employee from its basic salary and organization itself also contributes the same percentage of the amount into the employees account. The established percentage is 8.33% which is also taken as 1/12; it means that every month an assigned percentage of contributions will be made by the organization and as well as by the related employee for the provident fund. This contribution keeps on pooling in by the organization and is then invested. Later, the returns on the investments are also contributed by the organization into the employees accounts for Provident fund. This could be explained clearly from the structure below: Provident Funds = Employees Investment + Employers Investment+ Earning on Investments It says that provident fund is made up of three major factors of contribution which holds, employees, employers and earning on investments. If an employee doesnt get retired but he/she resigns the job then how much ever the amount all the accumulated amount of provident fund is rewarded to the employee. As far as, Gratuity Fund is considered it is the additional benefit to salary which is not made by the contribution of the employees salary but only by the contribution of organization. Every month an assigned percentage of its salary, which is 8.33% in case of EFU Life is contributed. Gratuity Fund = Employers Contribution (8.33% of the organizations Salary) An employee will be eligible of receiving of gratuity fund if he/she has been employed for five years at least, but it is not applicable in case of sudden death.

8.0 Fringe Benefits

EFU has provided fringe benefits to almost all of its employees. This is the reason why there is a sense of economic security in the employees of the organization. From the unit manager to the senior most level, all of the employees enjoy these fringe benefits. Some of the benefits that employees can get are: Car Petrol allowance Pension Utilities Insurance Health Insurance Mobile Phone cards

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Human Resource Management Report

The benefits and their value increases with every higher designation in the hierarchy and this is based on the performance of each employee; higher the productivity, greater the benefits employees can reap. EFU assures all of its employees by making different life and health insurance plans available to the employees. An employee at a higher level can be covered with an insurance plan of higher value. This gives a sense of security to the families of these employees as well through these insurance plans. Cars Following are the vehicles provided by the company at different levels: Sales Person No vehicle, own transport Business Development Manager(BDM), Executive Development Manager(EDM) Performance based

Unit Manager

No vehicle provided, performance based

Assistant Branch Suzuki Mehran manager(ABM) Branch Manager(BM) Suzuki Cultus (simple)

Senior Branch Suzuki Cultus (Loaded) Manager(SBM) Group Manager(GM) Senior Manger Regional Manager(RM) -Toyota Corolla Xli -Honda City Group -Toyota Corolla GLi -Honda City Auto -Toyota Corolla SE Saloon -Honda Civic VTi

The vehicles are totally maintained by the company. All the vehicles are surveyed and checked for any faults on a regular basis, thus providing its employees a safe drive. Moreover, all of the vehicles are insured by EFU itself. Petrol allowance

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Human Resource Management Report

Sales Person Business Development Manager(BDM), Executive Development Manager(EDM)

No petrol allowance Health- Low Petrol- Rs1000-3000 per month

Unit Manager

Petrol- Rs.1700-3500

Assistant Branch Petrol- Rs.3500-5000 manager(ABM) Branch Manager(BM) Petrol-Rs.5000-8000

Senior Branch Petrol- 150-200 liters Manager(SBM) General Manager(GM) Senior Manger Petrol-200-300 liters

General Petrol-300-400 liters

Regional Manager(RM)

Petrol-400-500 liters

The fuel expenses are given to all the employees at the different levels. The amount of fuel provided to each one depends on which level the employee stands on. An employee at a higher level receives greater compensation for fuel as compared to an employee at a lower level. At the lowest sales level, there is no wage set. Instead they work on a commission basis which accounts for 40% of the sales they make. On reaching the target levels set by the organization, a sales person can receive greater benefits by reaching to higher levels in the hierarchy. The benefits provided by the company to UM, ABM, BM are quite low. This helps in giving the employee an advantage to perform and increase its productivity

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Human Resource Management Report

since it is the main factor that helps in reaping more of the benefits provided by the company. Moreover, there is a yearly raise in the salary and some of the benefits. This is done by reviewing the performance levels of the employees quarterly and evaluating them and hence, increasing the benefits accordingly. The employees at the senior levels enjoy greater benefits. These benefits are greater in value. Apart from this, experience of an individual is a crucial factor. This is because the benefit of different departments also depends on the experience of the employee, how long the employee has been in the company or a related field.

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