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STUDY OF COMPENSATION MANAGEMENT IN HDFC BANK http:/mbanetbook.blogspot.com/
TABLE OF CONTENTS
Acknowledgement Certificate 1. Introduction Objective 1.2 Limitation 1.3 Scope
Research methodology 2. Details of the Project 2.1 Introduction to compensation management Company Profile 2.2 Introduction to HDFC bank Technology used in bank Business strategy SWOT analysis 3.
8-15 16 17-19 20-22 23-25 26-27
Discussion of observations, results and conclusions 28-41 3.1 Observation tables, Graphs, Test reports. 3.3 Conclusions 3.5 References
This project attempts to understand the objectives:-
To understand in details how to establish pay rates to different level of employee. To understand the impact of compensation management on performance level. A comparative study of the compensation management strategies followed in different banks.
Everything has some pros and cons and so certain limitations of this study that we could observe are as follows: The area of project work is banking sector so, the data or result may be approximate as the conclusion is based on the survey method i.e. primary & secondary source (filling of questionnaire from the employees) may be hypothetical (imaginary) data.
The organizations which have been studied and surveyed are not providing us with full information which has hampered the result and conclusion. Exact data was not been provided.
The scope of this project is to study of the compensation management strategies in HDFC bank & to evaluate the behaviour & performance of employee on their work.
INTRODUCTION A Research 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 acquiring the information needed to conduct the research effectively.
TYPE OF DATA COLLECTED There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources.
PRIMARY SOURCES Questionnaire consists of a set of questions presented to respondents. Because of its flexibility, it is by far the most common instrument used to collect primary data.
SECONDARY SOURCES These include books, the internet, the company website etc,
INTRODUCTION OF COMPENSATION MANAGEMENT
Compensation Management is an integral part of the management of the organization. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. To be effective, the managers must appreciate the value of competitive pay, their human resources, and have an investment view of payroll costs. It is of prime importance for an organization to maintain pay levels that attract and retain quality employees while recognizing the need to manage payroll costs. The literal meaning of compensation is to counter-balance. In the case of human resource management, compensation is referred to as money and other Benefits received by an employee for providing services to his employer. Money and benefits received may be in different forms-base compensation in money and various benefits, which may be associated with employee's service to the employer like provident fund, gratuity, insurance scheme and any other payment which the employee receives or benefits he enjoys in lieu of such payment. "Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity” Compensation is a tool used by management for a variety of purposes to further the existence and growth of the company.
` Objectives of Compensation management are: 1. Optimizing Cost of Compensation: Compensation management aims at optimizing cost of compensation by establishing some kind of linkage with performance and compensation. Motivating Personnel: Compensation management aims at motivating personnel for higher productivity. 3. Monetary compensation has its own limitations in motivating people for superior performance. In the present day context.Attracting and Retaining Personnel: From organization’s point of view. Internal consistency involves payment on the basis of criticality of jobs and employees' performance on jobs. 2. Consistency in Compensation: Compensation management tries to achieve consistency-both internal and external-in compensating employees. 4. Not only have they required persons who are well qualified but they are also retained in the organization. the compensation management aims at attracting and retaining right personnel in the Organization Not only they require persons who are well qualified but they are also retained in the organization. There is no dirth of personnel at operative levels but the problems come at the managerial and technical levels Particularly for growing companies. 1 . managerial turnover is a big problem particularly in high knowledgebase Organizations.
Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows: SCOPE OF COMPENSATION MANAGEMENT 1 .` Components of Compensation System Compensation systems are designed keeping in minds the strategic goals and business objectives.
` Compensation management helps to determine the relative worth of a job in an organization in a systematic. incentives and rewards and benefits. The basic wage. incentives and benefits attached worth the pay. the rewards . It also helps in estimating the basic pay for each job in accordance with the importance of the job in the organizational hierarchy . 1 . together form the compensation package of an employee. consistent and accurate manner.once a basic pay is determined . positions and performance are also determined .
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The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. The bonus amount usually amounts to one month’s salary of the employee. These medi-claims include health-insurances and treatment bills reimbursements. mobile allowances. a week. It is the money an employee receives from his/her employer by rendering his/her services House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. The employees are provided with medi-claims for them and their family members. Leave Travel Allowance These allowances are provided to retain the best talent in the organization. a month. club memberships. etc are provided to employees to provide them social security and motivate them which improve the organizational productivity. Few organizations also provide vehicles and petrol allowances to their employees to motivate them. Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. reduced interest loans. travel expenses. Medical Reimbursement Organizations also look after the health conditions of their employees. Conveyance Organizations provide for cab facilities to their employees. Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day.` Direct Compensation Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. meals. commissions. 1 . insurance. etc. Special Allowance Special allowance such as overtime.
vision and dental plans.` Indirect Compensation Benefits contributions may include: Medical Insurance Prescription Drug Insurance Dental Insurance Group Life Insurance Long-Term Disability Insurance Accidental Death Benefits Tax contributions may include: Disability (Medicare) Worker Compensation Insurance.g. retirement benefit plans (pension. Unemployment Insurance Retirement contributions may include: Severance Award. profit sharing. group insurance (health. retirement benefits. most kinds of employee benefits are taxable to at least some degree. stationery. perks are given to employees who are doing notably well and/or have seniority. social security. Common perks are company cars. and other specialized benefits The purpose of the benefits is to increase the economic security of employees.. and—when multiple choices exist—first choice of such things as job assignments and vacation scheduling They may also be given first chance at job promotions when vacancies exist. adoption assistance. hotel stays.). free refreshments. vacation (paid and non-paid). and so on).). prescription. hotels and resorts. movies and theme park tickets. sick leave. Voluntary or Involuntary Retirements Benefits such as VRS etc. group-term life and long term care insurance plans. discounted shopping. 403(b)). Where an employee exchanges (cash) wages for some other form of benefit. etc. Fringe benefits can also include but are not limited to: (employer-provided or employer-paid) housing. this is generally referred to as a 'salary sacrifice' arrangement. Fringe Benefits or Perks Employee benefits and (especially in British English) benefits in kind (also called fringe benefits. legal assistance plans. 1 . tuition reimbursement. child care benefits. allowances for lunch. health and dependent care flexible spending accounts. funding of education. 401(k). The term perks is often used colloquially to refer to those benefits of a more discretionary nature. perquisites. perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries. life etc. income protection. medical. wellness programs. dental. In most countries. and possibly other miscellaneous employee discounts (e. Often. daycare. Employee benefits in the United States might include relocation assistance. leisure activities on work time (golf.
On-the-Job Training.There are many alternatives to a traditional 5 day.Allowing employees to relax their dress code at work. 1 .When an employer understands the needs employees have to juggle in their lives. Casual Dress . 8-hour work schedule. Developmental Opportunities . Work/Life Balance .Showing workers how to perform tasks by observing others.` NON FINANCIAL COMPENSATION Non-financial compensation is different incentives given to employees that are not in the form of direct pay. Alternative Work Schedules .Training and other opportunities for employees to expand their knowledge and improve their skills.
000employees 41.` COMPANY PROFILE Headquarters Bombay Area.190 mil [INR] (38%) 1994 http://www.hdfcbank. India Industry Type Status Company Size 2007 Revenues Founded Website Banking Public Company Operating 40.com 1 .
the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. as part of the RBI's liberalization of the Indian Banking Industry in 1994. HDFC Bank began operations in 1995 with a simple mission: to be a “World Class Indian Bank.” We realized that only a single minded focus on product quality and service excellence would help us get there. Since its inception in 1977. HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. India. a strong market reputation. large shareholder base and unique consumer franchise. 1 . Its outstanding loan portfolio covers well over a million dwelling units. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC was ideally positioned to promote a bank in the Indian environment. we are proud to say that we are well on our way towards that goal. with its registered office in Mumbai. Today. With its experience in the financial markets.` INTRODUCTION OF HDFC BANK The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'.
Moreover. Customers in over 500 locations are also serviced through Telephone Banking. The Bank at present has an enviable network of over 1412 branches spread over 528 cities across India. All branches are linked on an online real-time basis. professional integrity. Visa Electron/Maestro. the Bank has branches in the centers where the NSE/BSE has a strong and active member base.` Business Focus HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. consistent with the bank's risk appetite. Being a clearing/settlement bank to various leading stock exchanges. The Bank also has a network of about over 3295 networked ATMs across these cities. corporate governance and regulatory compliance. Plus/Cirrus and American Express Credit/Charge cardholders. and to achieve healthy growth in profitability. HDFC Bank's business philosophy is based on four core values Operational Excellence. HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard. Product Leadership and People. 1 . Customer Focus. The bank is committed to maintain the highest level of ethical standards. Distribution Network HDFC Bank is headquartered in Mumbai. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments.
41.` Capital Structure Share capital of HDFC Bank As on 31st March.48.38% 17.774.69 % Bank shareholders 5.38. 2009 Paid-up capital Rs. 1 . 550 crore Rs.090/- Bank's equity ADS Depository Foreign Institutional Investors (FIIs) 19.70 % 27.425.
And there are create competition between the private sector banks and public sector bank. more and more changes are taking the part into it. 1 . After the policy of liberalization and RBI initiatives to take the step for the private sector banks. Banks are service industries and today IT gives the innovative Technology application to Banking industries. New technology changed the mind of the customers and changed the queue concept from the history banking transaction. New private sector banks to withstand the competition from public sector banks came up with innovative products and superior service. Private sector banks are today used the latest technology for the different transaction of day to day banking life. And world also converted into the flat from the globe. HDFC BANK is the very consistent player in the new private sector banks.` TECHNOLOGY USED IN HDFC BANK In the era of globalization each and every sector faced the stiff competition from their rivals. As we know that Information Technology plays the vital role in the each and every industry and gives the optimum return from the limited resources. HDFC BANK is the leader in the industries and today IT and HDFC BANK together combined they reached the sky. Today there are different channels are available for the banking transactions.
` HDFC BANK PRODUCTS PERSONAL BANKING Loan Product Deposit Product Investment & Insurance • Auto Loan • Loan Against Security • Loan Against Property • Personal loan • Credit card • 2-wheeler loan • Home loans • Tractor loan • Health Care Finance • Education Loan • Gold Loan Cards • • • • Saving a/c Current a/c Fixed deposit Safe Deposit Lockers • Mutual Fund • Bonds • Knowledge Centre • Insurance • General and Health Insurance • Payment Services Access To Bank • Credit Card • Debit Card • Net Safe • Merchant • Net Banking • One View 1 .
• Prepaid Card • • • • ----------------------------Forex Services ----------------------------• Product & Services • Trade Services • Forex service Branch Locater • RBI Guidelines Prepaid Refill Bill pay Direct Pay Electronic Funds Transfer • Online Payment of Direct Tax ` • ATM • Phone Banking • Branch Network 1 .
Continue to develop new product and technology is the main business strategy of the bank.` BUSINESS STRETEGY HDFC BANK mission is to be "a World Class Indian Bank". Maintain good relation with the customers is the main and prime objective of the bank. consistent with the Bank's risk appetite. Bank is committed to do this while ensuring the highest levels of ethical standards. and to achieve a healthy growth in profitability. professional integrity. benchmarking themselves against international standards and best practices in terms of product offerings. corporate governance and regulatory compliance. technology. The objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments. 1 . service levels. risk management and audit & compliance.
• Develop innovative products and services that attract the targeted customers and address inefficiencies in the Indian financial sector. • Continue to develop products and services that reduce bank’s Cost of funds. • Maintain current high standards for asset quality through disciplined credit risk management. 1 . • • Focus on high earnings growth with low volatility.` HDFC BANK business strategy emphasizes the following : • Increase market share in India’s expanding banking and financial services industry by following a disciplined growth strategy focusing on quality and not on quantity and delivering high quality customer service. Leverage our technology platform and open saleable systems to deliver more products customers and to control operating costs.
Exec. Member of Credit Approval Committee and Member of Risk Monitoring Committee Mr. Market Risk & Investor Relations. Member of Investors Grievance (Share) Committee. Harish Engineer Head of Wholesale Banking. Deepak S. Member of Fraud Monitoring Committee. Aditya Puri Managing Director. Director and Member of Risk Monitoring Committee. Director and Member of Customer Service Committee.` KEY EXCUTIVE Mr. Mr. Director. Member of Premises Committee. Parekh Exec. Mr. Paresh Sukthankar Head of Credit. Jagdish Capoor CEO Mr. Chairman 1 . Exec.
competitors. Customer service staff needs training. Sectorial growth is constrained by low unemployment levels and competition for staff 1 . • Good place to work • Lower response time with efficient and effective service.` SWOT ANALYSIS STRENGTH. etc Management cover insufficient. Processes and systems. • Great Brand Image • Products have required accreditations. • Dedicated workforce aiming at field. • High degree of customer satisfaction. • Superior customer service vs. making a long-term career in the WEAKNESSES • • • • • Some gaps in range for certain sectors.
1 .` Opportunities • • • • • • Profit margins will be good. Great risk involved Very high competition prevailing in the industry. High volume/low cost market is intensely competitive. New specialist applications. Vulnerable to reactive attack by major competitors. Fast-track career development opportunities on an industry-wide basis. Threats • • • • • Legislation could impact. Lack of infrastructure in rural areas could constrain investment. An applied research centre to create opportunities for developing techniques to provide added-value services. Could extend to overseas broadly. Could seek better customer deals.
Commissions.` QUESTIONNAIRE FILLED BY EMPLOYEES 1.Overtime Pay. 3. 1 . retirement. What types of compensation are available? Analysis: There are two type of compensation are available are direct or indirect compensation. Who handle the compensation management department in your organization? _______MANAGER__________________________________________ Analysis: The manager handle the compenstation management department in their organization. leaves. Direct includes Base Pay. Bonuses. Travel/Meal/Housing Allowance and indirect compensation includes vacation. taxes. When was your organization established? 2.
` 4. a) Base Pay c) Travelling/meal/housing allowance b) Commissions d) Any other S ales 0% 20% 0% Base Pay Com issions m Travelling/m eal/housing allowance Anyother 80% Analysis: This graph shows that company provide compensation to their employees on the basis of base pay & Travelling/meal/housing allowance. 1 . On what basis company provide compensation to their employees.80% of employee prefer Travelling/meal/housing allowance & only 20% of employee prefer base pay.
6. 1 .` 5. 67% of employee prefers monetary benefits & only 33% of employee are happy & satisfied with non monetary benefits like rewards. a) Monetary c) Motivation b) Rewarding d) Holiday packages Analysis: From the chart above we find that. Are you satisfied with the compensation you receive. What kind of compensation you prefer. In this company neither the employee are motivated nor are they satisfied with holiday package as compensation.
What do you think that HDFC is providing better compensation package to the employees.` a) Yes b) No Analysis: From the chart given above we can clearly see that 80% of employees are satisfied with the compensation they receives & only 20% of employees are dissatisfied with the compensation they receives. 7. 1 .
1 . HDFC is providing better compensation package to the employees out of 10 employee % of employees are satisfied with the compensation they get and % of employee are dissatisfied with the compensation provided by the company.` a) Yes b) No If “NO” than which organization do you think? Analysis: Yes. Is there different type of compensation for different type of services. 8.
there are different types of compensation for different type of services like direct and indirect compensation provided to the employee of the organization for increasing their motivation and retention of employees. 1 .` a) Yes b) No 100% 0% YES NO Analysis: Yes.
Here we can see that 90% of employees are satisfied with monetary value rather than 1 . a) Yes b) No Analysis: From the chart given above we can clearly see that the cash is still king there because everyone is satisfied with the monetary motivation and not by non monetary motivation.` 9. Is cash still king in employee compensation.
` 10. a) Yes b) No Analysis: In this organization compensation is based more on individual contribution because every employee is single entity there and they are judge on the basis of self performance. 1 . Is Compensation based more on group performance and less on individual contribution.
benefits. 12. a) Yes b) No Analysis: Yes. and employee attitudes. benefits. compensation. there are procedure of receiving formal feedback by employees on Company policies. 1 . It also helps in improving employee and management relationship number of ideas helps in choosing the better option from them which will be more effective and beneficial for the organisation.` 11. In your organization employees receive effective performance appraisal. and employee attitudes. compensation. It helps in bringing out new ideas. Is there any procedure of receiving formal feedback by employees on Company policies.
1 . in our organization employee receive effective performance appraisal because it give pleasure to the employee by rewards and they also get motivated which leads to the effective performance.` a) Yes b) No S ales YES NO Analysis: Yes.It enhances effectiveness of employees and boosts the confidence level of employees.
tanning help in improving the performance of employee. It also provides practical knowledge. Are you getting training for improving the performance. 1 . It helps in developing skills & motivation level of employees. It helps in increase in the performance & motivation level of employee and also enhance effectiveness of employees. It is necessary for the organization to provide training to their employees for better performance and update employee time to time.` 13. a) Yes b) No c) can’t say Analysis: Yes.
Are you free to give ideas to the higher management. a) Yes b) No Analysis: Yes.` 14. 1 . the employees are free to give ideas and suggestions to the higher management. By this new and different ideas are bring out of the box and this help in taking better decision which may be beneficial for the organization. It also boosts the confidence level of employees and their ideas are entertained so they get motivated also.
The products of HDFC bank have good credibility in the region. The employees are motivated because of the environment of the organization.` FINDINGS The compensation management policy is good in HDFC bank. The employee of the organization is satisfactory to the employees. 1 .
contribution. skill and competence. It has businesses spread out across the globe.` CONCLUSION HDFC is first life insurance Company in India. The company faces a large amount of competition. The project was very satisfying experience for me. REFERENCES 1 . The Compensation Committee reviews the overall compensation structure and policies of the Bank with a view to attract. The Bank's compensation policy is to provide a fair and consistent basis for motivating and rewarding employees appropriately according to their job / role size. reviewing compensation levels of the bank's employees. It also helped me in enriched my knowledge also. not only practically and academically. retain and motivate employees. consider grant of stock options to employees. performance.
HDFC. www.google.` Personnel management“Dr.com www.prof. C.com www.com QUESTIONNAIRE 1 . Mamoria” Ex.B.wikipedia.and head of department.
What types of compensation are available? 3. Is cash still king in employee compensation? a)Yes b) No b) No 10. Are you satisfied with the compensation you receives? a) Yes b) No 7. .` 1. What do you think that HDFC is providing better compensation package to the employees? a) Yes b) No If “NO” than which organization do you think.Is there different type of compensation for different type of services? a) Yes 9. What kind of compensation you prefer? a) Monetary c) Motivation b) Rewarding d) Holiday packages 6. 8. When was your organization established? ______________________________________________________________ 2. On what basis company provide compensation to their employees? a)Base Pay b)Commissions d)Any other c)Travel/Meal/Housing Allowance 5. Is Compensation based more on group performance and less on individual contribution? 1 . Who handle the compensation management department in your organization? ________________________________________________________ 4.
employee attitudes? a) Yes b) No 12.` a)Yes b) No 11. In your organization employee receive effective performance appraisal? a) Yes b) No 13. Are you free to give ideas to the higher management? a) Yes b) No 1 . Is there any procedure of receiving formal feedback by employees on Company policies. compensation. Are you getting training for improving the performance? a) Yes b) No c) can’t say 14. benefits.
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