Compensation Structure Development


Bilal Ahmed

Documented by: Bilal Ahmed

This project has been undertaken in order to highlight the Human Resource Practices of “Ufone”. It’s all about YOU its all about “Ufone”, a company very highly spoken of these days. A company paying more attention to its customer’s delights rather then the customer’s satisfaction. Ufone is a company starting from scratch and has shown utmost performance in the last seven years. Ufone owes its success to its employees believing that providing employees with job satisfaction motivates them to work hard and provide better results.

Company Introduction
Ufone PTML is a wholly owned subsidiary of PTCL established to operate cellular telephony. The company commenced its operations, under the brand name of Ufone, from Islamabad on January 29, 2001 During the year, as a consequence of PTCL’s privatization, 26% of its shares were acquired by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL, the management of Ufone has also been handed over to Etisalat. During the year July 2005 to June 2006, Ufone continued on the path to success. The Company further expanded its coverage and has added new cities and highways. Ufone has network coverage in more than 3475 locations and across all major highways of the country. Ufone currently caters for International Roaming to more than 200 live operators across 121 countries and introduced International roaming facility for Prepaid subscribers in Saudi Arabia, United Kingdom, United Arab Emirates, Singapore, Portugal, Thailand, Cyprus, Bangladesh, Uzbekistan, Tunisia and Kuwait with lowest rates, featuring no security deposit and activation charges. GPRS Roaming facility is available with more than 100 Live Operators across 80 countries.

Mission Statement To become the best cellular communication option available in the country for “u”. Vision Statement In order to evolve with our customers and to keep pace with your needs, we rejuvenated and revamped our image by changing our visual identity. At Ufone we understand the value of words and the need to communicate effectively and efficiently at all levels of Documented by: Bilal Ahmed

society, which is why our primary focus is on U, our valued customers bring strength to our company. With a fresher look than is accepted and appreciated across the board by people of all ages, we aim to connect with you and provide you state of the art services. No matter who you are, where you are, what you want to say, how you want to say it or how you feel, you are our focus. Because at Ufone, it’s all about U,

Services line of Ufone
There are two basic products of Ufone “Ufone Prepaid” and “Ufone Post pay”. Both of these products are available at their franchise for public.

 Prepaid  Post paid

Structure of Ufone When a company wants to compete in innovation, it needs to maximize flexibility. Flexibility is maximized by aggregating work into larger, holistic pieces that are executed by teams of higher wages, high skilled workers. Giving the units their own support systems and decision-making authority to take advantage of local opportunities in regional or specialized product markets also enhances flexibility.

Documented by: Bilal Ahmed



Administration & Procurem ent

CEO Secretariat

Commerci al

Customer Care

Human Resource



Access Networkin g Planning

Administr ation Corporate

Business Analysis


Customer Care (MNP

Human Resource T&D

Financial Control

IT Corporate

Core Networkin g Planning

Administr ation Procurem ent

Internal Audit

Commerci al Corporate

Quality Assurance & Retention

Human Resource Operation s

Finance Corporate

Data ware House & Software Support

Corporate Engineeri ng

General Administr ation

Governme nt Relations

Corporate Sales

Customer Coordinati on

Finance Legal & Taxation

Enterprise Solution & Security

Operation BSS

Dealer Sales

Customer Care (Service Centre)


Finance Operation

Enterprise Solution & Security

Operation NSS

Retail Sales

Customer Care (Franchise )


Finance Treasury & Planning

Mediation & Client System

Site Acquisitio n

RGM Support

Customer Care (Corp Services

Finance Accounts

Network Operation


Sales & Distributi on

Customer Care (Billing)

System Administr ation

Credit Management

Call Centre

Customer Care Training

Documented by: Bilal Ahmed

Keeping in view of all these factors the structure of Ufone is designed i.e. the overall Structure of the Ufone is Divisional (More flexible and innovative). Mainly Ufone has four regions and within those regions the structure is functional .The decision making authority is centralized at the top but within the regions it is decentralized i.e. regional heads have to inform top management before making any decision.

Division of branches geographically (Location)
This is what Ufone looks from the organizational hierarchy point of view. There are eight different departments each headed by a Project Director. They report directly to the CEO. There are four BU (Business Unit) each Project Director is responsible for these eight divisions. BUs are divided geographically into three divisions

 BU North (Peshawar to Jehlum) Islamabad (Head Office)  BU Central-1 (Gujranwala till Sialkot)  BU Central-2 (Multan till Rahim Yar Khan)  BUM South (Sindh and Balochistan) Departmental Division
In order to give a jump-start to the company, a comprehensive initiation plan has been made along with aggressive customer acquisition, care and retention strategies. Ufone has the best integration of eight departments each project director.

 Engineering  Administration  Business Analysis  Marketing & Sales  Customer Care  Human Resource  Finance  Information Technology
Documented by: Bilal Ahmed

Provision of quality service to the customers is of utmost importance for the progress of any service-based company. At Ufone the management is mindful of the same and has been constantly endeavoring to enhance the existing facilities. Therefore operations at Ufone are all planned and carried out in such a way so as to maximize operational efficiency, customer satisfaction and employees motivation. Although it is the subsidiary of the Pakistan Telecom Company Limited (PTCL), Ufone carries out its operations autonomously under the license of Pakistan Telecom Mobiles Limited (PTML). The company head office is established in Islamabad (F-7 Markaz), which serves as the center for all its strategic activities.

Human Resource Department at Ufone
UFONE considers their employees to be the asset of the company, so in order to retain their employees following practices are followed in the company. HR PRACTICES

 Recruitment and selection  Orientation  Training and development  Compensation and Benefits  Performance Appraisal
WORK FORCE HR at UFONE is divided into the following two major categories Permanent Employees (1500-2000 Approximately) Outsourced Employees (2000 Approximately)

 

Permanent employees
  HR Permanent employees are further divided into following two categories. Operation Training and Development

Operational Department

Documented by: Bilal Ahmed

It covers all the areas including hiring recruitment, selection and payroll etc. HR operation team manages all the employee activities gathers all the information and make use of it for further processes.

Training and Development
HR team of training and development make a performance evaluation of all the employees and the see where the gap occurs between the actual performance and the desired performance. Then training is designed for area which needs to be improved. On the job and off the job both the trainings are given according to the need of the employee.

Employee Benefit & Compensation  Training & Development  Employee Motivation  Retention of Employees  Career Planning/ Succession Planning  Employee Relations/ Communication  Employee Awards  Employee Events Management  Medical & Life Insurance COMPENSATION AND BENEFITS
Ufone follow the performance base pay structure and pay for their performance and work output.

The total returns which an employee gets against his or her work. It maybe: Employee Health Plans Employee Insurance Documented by: Bilal Ahmed

Employee Leave Employee Retirement Income Security Act Executive Compensation Maternity & Paternity Benefits Pension & Retirement Plans Wages & Salaries Workplace Programs Compensation strategies are usually market based and is linked with the performance with a greater emphasis on variable pay. Salary adjustment is based on the performance, market movement and internal/ external equity adjustment. Revision of compensation is based on total pay and monetization of benefits.

Documented by: Bilal Ahmed

Levels of Ufone: Hierarchy

Documented by: Bilal Ahmed




Senior Manager


Assistant Manager Senior Executive Permanent executive Outsourced Executive


10 Levels

Individual Salary Fixation:
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The Ufone seeks the market trend and try to compete with market for individual salary fixation but they also analyze their own financial positions and budgeting, it also varies from department to department.

Current Base Pay: (Job Based Structure and competitive)
The Ufone follows the job based structure, and compensate its employees for the work they have done, for their tasks and duties they performed, their work content, behaviour and for their responsibilities. To develop this structure Ufone conducts some surveys, to compete with others in the same industry. Work Analysis Evaluation & control Market trends Employee J.D Surveys Policy Lines

Total Compensation:
Example: 60% Basic Pay 30% House Rent 10% Utilities OPD Hospitalization Provident Fund Gratuity Bonuses Incentives 15-k 7.5-k 2.5-k 2 Gross salaries Employee siblings, Parents, Wife / Spouse and children’s 50% Employee, 50% Org If work for 10 Months 1.4% Of Gross salary Only Sales department depend upon their performance.

Assistant Manager Level: 25000 Car allowance + 200 Liter’s petrol / Month

Documented by: Bilal Ahmed

Manager level: Car + Blackberry Senior Manager: Islamabad Club Membership + BMW Car + House + Foreign Tours Further Ufone has developed some grades for employees. A H

A is the minimum grade and H is the maximum grade and they compensate their employees on the basis of their grades. Grade A 500 minutes + 500 Rs mobile usage. Same like this all other benefits.

After every Two years Ufone give the amount of Rs 6000 to lower level employees if they want to purchase a new mobile and this limit increases as grade increases. At each stage the amount is different.

Food Subsidy:
S.E, Exe, M.T so on Rs 65 Rs 95 Company A.M and Above 160 RS

The increments are totally based on the performance of the employees and their seniority level. If the scale is 15000-20000 then the increment is the 20% of the base pay, but if any employee shows the performance then this may increase up to 35% to 50%. Managers: Innovative ideas Silent Warriors

Recognition of The work:
On Jan 29 (anniversary of Ufone).

Documented by: Bilal Ahmed

Employees who is working in Ufone for seven years or more then seven years gets Cash Rewards, Trophy, badges and other things. Leave fair assistance 1 year Permanent Employees: Number of employees: Around 1500 – 2000 Minimum scale starts from 15000 – 20000 Maximum C.E.O (Not disclosed by the organization) UFONE focuses on providing a large number of the compensation and benefits to its employees in a form of the following categories: 20 holidays 40 leaves 1 Gross salary 2LFA’s

 Minimum wage: The minimum salary for “Drivers” is Rs.7000 for “Tea Boys” it
is Rs.6500, for Administrative Staff like HR, Finance, Marketing, etc it is Rs.20000 and for Engineering it is Rs.20000 to 25000.

 Medical Allowance: 1 gross salary per year is given to each employee; half is
given in mid of the year and remaining half will be given at the end of the year.

 Health Insurance: Like all other cellular companies Ufone also provides health
insurance policy to its employees.

 Loan Insurance: At Ufone loan insurance policy is also provided to their
employees through banks.

 Transport allowance: Rs 2500 are given to female employees only, if they travel
on local transport.

 House Rent: 10% of the basic salary is given to each senior/ executive level

 Overtime: All employees are entitle for the overtime more then 130 hours per
month .For overtime UFONE have specific formula that apply on the employees gross salary, due to which every employee have different per hour overtime rate.

 EOBI: EOBI is contributed as per the standard

Documented by: Bilal Ahmed

 Children Education allowance: 1 gross salary per year  Provident Fund: All permanent confirmed employees are eligible for
membership of Ufone Employee Provident Fund Scheme. An employee contributes 8.33% of month basic salary in a year and an equivalent amount is being contributed by the employer.

 Leaves: 7 Casual and 10 sick leaves are given to each employee at all level.  Travel Policy: Revised and categorized different levels such as the senior level,
the middle level and the junior level staff.

 Meal deduction Claims: Meal books are to be maintained of each employee who
issues it, their name, employee number, designation, signature and number of book and date at which it is issued has to be recorded. The reason for maintaining the record is that the company pays 60% of the expense came over the food while 40% has to be deducted from the employee’s salary.

 Expense Claim: The expense Claims are the expenses which an employee make
on the behalf of the company E.g. fuel used for business travel, overnight stays on a business tour etc, such claim are made while returning back to the office , after the whole process the HR pay them back the next month along with their salary.

 Overtime Claim: If an employee has worked for more than the regular time, they
claim for the overtime amount other than their salary which they receive the next month. Overtime claim have to be approved through HR department.

 Medical Claim: Different medical facilities are provided to employees at
different level of hierarchy, so if any employees make use of this facility they can claim for the amounts to be return next the month while submitting the hospital receipt. Their medical clearness is done by the HR department.

 Mobile deduction Claim: Such an expense claims which are made if an
employee has made long duration call for the official purpose and they have exceeded the limit given to them then they can make a claim by attacking a copy of mobile bill and if its valid then HR department approved it and pay the employee their claimed amount along with their monthly salary of the following month.

 Dispatching of Salary Slips: Vendor prepares the salary slip and dispatch it to
the HR department, further HR head office send it to the regional HR departments

Documented by: Bilal Ahmed

their concerned employees salary slip and they either give their employees through cash or transfer to their accounts.

Salary Surveys
Collections of salary and market data, it includes average salaries, inflation indicators, cost of living indicators, salary budget averages. Ufone conducts its own market survey and match its standards with other telecommunication companies specifically with Mobilink and telenor. (Research firms and personally) Job Evaluation Method The job evaluation method of Ufone is lined to appraisal system. Whenever the appraisal report of any employee is generated he is being paid according to his performance. The job is evaluated on the basis of appraisal reports. If any post is vacant those past performance on that post is evaluated and the market conditions are observed and then the job is evaluated. The value for the job is concerned with the performance report. The value of any job can be increased if the employee on certain post has performed very well and his appraisal report is very outstanding then according to his performance value of job is increased and this process is carried out by the HR department of Ufone. Moreover, the job evaluation is linked with the merit. Any person who is employed on merit and is performing very well will be given salary on the basis of his performance and merit. The job evaluation method was not very much good in the past but now it is linked to appraisal system of Ufone. The present basic salary structure of Ufone is based on Job description (Tasks and duties performed).

Job Analysis
Job analysis is systematic exploration of activities within a job. It is a technical procedure used to define the duties, responsibilities, and accountabilities of job. It is proved that job analysis is almost first activity of HR department to be done. Because on this, pay packages, compensations, job descriptions, job specifications, job evaluation etc are made. So at Ufone experts do job analysis. They construct “Job Analysis form”.

Documented by: Bilal Ahmed

Ufone Job Analysis Following steps should be taken by the Ufone. Step1: Obtain Documentary information such as procedure manuals and written instruction. Step 2: Ask about more general aspect such as the job purposes, the main activities. Step 3: Ask the jobholders about the job. Step 4: Observe the jobholders to see what they actually do. Information Collected in Job Analysis Work activities Worker-oriented activities Machines, tools, equipment, and work aids used Job-related tangibles and intangibles Work performance Job content Personal requirements for the job Why Ufone conducts job analysis The Ufone conducts the job analysis to get the right person for the right job at the right time. If the Ufone does not conduct the job analysis then there will be a huge chance of selecting the wrong person or to reject the right person who is suitable for the job. Knowing Who Does What Major duties or activities required Conditions under which the job is performed Job analysis procedure of the Ufone There are mostly following procedure of the Ufone about analysis of a job: • • Direct Observations Interviews

How Ufone formulate job description and specification In Ufone most of the announcements for jobs are being done through newspapers having wide circulation in the country. Whenever Ufone offers any job it also describes the

Documented by: Bilal Ahmed

responsibilities and duties with in a job to be performed. The HR people after analyzing any job that has become vacant makes a job description defining clearly what the jobholder will do and how it will be done. On the whole job description defines characteristics of job, environmental conditions and responsibilities of the job. The HR people define the job in such a way that it clearly describes the job and guides new employees what to do etc. now they are moving towards E-Recruitment also to ensure best candidates apply for the jobs and professional people are employed in the Organization. Job specification Ufone also has well developed criteria for each job in term of the job specification. In all the area of the jobs the pre- requisite for the job are defined for example: Qualification required for a job Skill required for a job Experience required for a job Job Description Human Resource Division analyzes each job and its required outcomes. Job analysis is done by analyzing the past experience and emerging trends. Ufone holds documents about terms, duties responsibilities, and specifications about each job. In job description Ufone define the following: Duties of HR manager is to select, hire and train employees Responsibilities are to update records and processing insuring claims Task is to complete the job related activities.

Documented by: Bilal Ahmed

JOB DESCRIPTION FORM To: HR From: Permanent: Grade: Date: Temporary: Date Required:

Job Title: Department: Brief Outline of Duties & Responsibilities:

If Temporary Specify the Period: From: Education & Qualification Req: Experience Required: Special Knowledge, Skills, personality, requirements: To:

If a replacement, complete the following: Employee to be replaced: Job Title: Date Separated Reason for Separation

If increase in approved staff level, complete the following: Justification of increase:

Is position in Business Plan: Yes ( ) No ( )

Explain why is not possible to avoid this increase by office re-arrangements?

HR Views

Initiated by: Immediate Supervisor:

Recommended by:

Verified by:

Approved by:

Department Head

General Manager HR&A

Chief Executive

Documented by: Bilal Ahmed

Objective of the Performance Management: The basic objective for performance UFONE employees circles around the following:

 To look at Performance system as a means to an end  Setting an individual’s goal  Aligning goals across the company  Ensuring employees get coaching from managers  Determining merit pay  Identifying training and development needs  Providing data for promotion decision  Input from multiple source on worker performance
The Performance Appraisal Process: The Performance appraisal system used by UFONE for reviewing the performance status of its employee starts with identifying specific appraisal goals set by each Group for each cadre. After this a detail job analysis is done with looking in account the job expectation and then matching the actual performance with the desired performance. Afterward the performance is appraised according to the set standards and this appraisal is not done by the supervisor alone, their major focus is on taking into the account the employee’s perspective as well. Therefore whenever the appraisal is done employee is fully participative in the process. Performance Appraisal Method Use by UFONE UFONE is using 180-Degree Performance Appraisal Method. Within this method, managers, peers, customers or colleagues are asked to complete questionnaire on the employee being assessed. In UFONE, performance of an employee is appraises twice a year. Once in June while other in December. In the questionnaire there are five sections and in each section there are five questions related to the performance of employee. There are total 100 points from which an employee gets. Documented by: Bilal Ahmed

Rewards Related to Performance There is also a reward related to performance of the employees. For “Customer Facilitation Agents” there 50% pay is based on their performance which is assessing every moth by their managers. For other employees like in administration, engineering, finance, marketing, etc their performance is assessed after every six and they get increased Rs.5000 in their salary as a reward. In each case employee have to show consistent performance to win reward next time.

Documented by: Bilal Ahmed

Documented by: Bilal Ahmed

Documented by: Bilal Ahmed

Documented by: Bilal Ahmed

Documented by: Bilal Ahmed

Performance appraisal: 360°
Behavior Results Total Total 500 Marks Best Good Average 20% 80% 100% >400 >300 >250

A bell shaped distribution comes out to show the performance Compensation Responsibilities of Ufone HR Department

 Compensation Administration (designing and installing job evaluation program,
pay structure, analyzing jobs and their dollar-worth, maintaining suitable records, wage and salary surveys of the labor market).  Health and Safety (health programs, safety programs, Medical facility).  Employee relations (wages, rates of pay, hours of work, conditions of employment, negotiation, contract interpretation and administration, grievance handling, allocation of overtime).  Benefits and Services (insurance programs, Transportation facility, sick leave pay plans, loan funds, LFA salary, Yearly bonus programs along with special bonuses for achieving high targets).

Employees Reaction to the system
As mentioned above that Ufone follow the job based and competitive structure, so this thing is in the nature of human that to react against any system because by implementing structure every body in the organization thinks that he or she is doing much and organization is not treating them well with the comparison of others. But at Ufone as we observed mostly of the permanent employees are quite satisfied with this system as compared to the contractual employees. Their reaction towards the system is cooperative because of their appraisal system; the Ufone performance appraisal system is very

Documented by: Bilal Ahmed

effective after every six months every body knows that what their score is. Ufone is a performance oriented organization so they compensate their employees on the basis of their performance so every body know that if they show the results then the organization will compensate them good if not then they will never expect, This is a good approach for performance oriented organizations to implement the system like this because of this system every body interests involves in it. And the Ufone also adopted the Competitive approach for compensation, because of this system every employee know what the other organizations are paying for the same job and what they are getting is fair or not. Some are not satisfied because they think that we are very senior and the organization should have to compensate us for our seniority not for our work done, (Loyalty factor involves).

Principal fault lines and some suggestions for improvement
While answering a question the manager of H.R expressed his thoughts that the employees who are hired by third party and working in organization on contractual basis, the manager answered “we don’t want them so we are not bound to compensate them equally in comparison with our permanent employees”. In our point of view as we see the organization size figures that show there are more then 2000 employees are on contractual basis which are more then the 55% of the overall size of the organization. And all those employees are not much satisfied because of these criteria and they are a big part of the organization, they are stressed with their job because they are getting only salary not benefits or any other compensation tools against their work. This thing shows that there is a lack of motivational factor among contractual employees and cause increase in turnover rate. These things increase the cost of new hiring and training of new employees. We observed another important point with the prospective of Human Resource practices that in organization the concept of relational return is not very satisfactory but this matter a lot in organizations like Ufone. Third setback is that they have some problem with their payroll; the organization size is more the 4000 employees but they have only two executives who are working for the pay roll and on the compensation so there are many troubles to run the payroll accurately and compensate every one fairly on the basis of their performance, because of work burden. We think the Ufone should have to focus on the contractual employees and needs to motivate them by compensating fairly, with communication and make them understand that what they are getting is fair. They have to provide them some necessary benefits, bonuses and incentives according to their J.D. Ufone should have to start some career development programs to attract and retain most valuable employees, once if the employee feels that they have some career growth in the organization they are motivated and loyal to the organization. HR Department must also forecast for long-term Human Resource needs. It is also found that no referral bonus was given to contractual employees who refer competent, skilled and knowledgeable candidate. The HR Department must convince the

Documented by: Bilal Ahmed

higher management to give such bonus which not only motivated the employees but the organization can in this way get competent, skilled and experienced worker which may participate in the success of the organization. Ufone HR Department must clearly communicate its promotion policy to all employees.

Documented by: Bilal Ahmed

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