RESEARCH PROJECT ON

COMPENSATION STRUCTURE

Dewan Farooque Motors ltd.

By: Muhammad Rafique

MBA (Rno: 220046)

Submitted to: Mr. Muhammad Sarmad

DECLERAT !"

I hereby declare that this research pro ect e!titled "CO#PENSATION STR$CT$RE RE%IE& ON 'E&AN (AROO)$E #OTORS ltd* is do!e by me+

AC,NO&-E'.E#ENTS
A## $rai%e for A#mi&h'( Allah for &uidin& me in hard%hi$% and a## re%$e)' for Holy Prophet (*ea)e Be +$on ,im) for %ho-in& me 'he #i&h' of 'ru'h. $a( %$e)ia# &ra'i'ude 'o m( re%$e)'ed pare!ts -ho ha.e an im$or'an' im$a)' on m( 'hin/in& and 'heir ad.i)e and in%i&h'% )on'ri0u'ed 'o numerou% im$ro.emen'%. a#%o $a( %$e)ia# &ra'i'ude 'o Mr%.Sadaf Rafiq 1Assista!t HR ma!a/er2 -ho he#$ me -i'h ho' %ou# in )om$#e'in& 'hi% re%ear)h $ro3e)'. 4ina##(5 -ou#d #i/e 'o 'han/ m( Cour%e n%'ru)'or5 1#r+#uhammad Sarmad* for &i.in& me 'hi% o$$or'uni'( 'o #earn 'hin&% $ra)'i)a##( and -ho%e &uidan)e i% a )on%'an' %our)e of in%$ira'ion for me5 -hi)h ena0#ed me 'o a))om$#i%h 'he a%%i&nmen'.

'E'ICATION
Thi% hum0#e effor'% dedi)a'ed 'o m(

(ATHER
6ho did hi% 0e%' 'o u$#if' me0 And 'o m(

#OTHER
6ho%e hear'fe#' $ra(er% and -e## -i%he% Made me able to reach at this sta/e+ And dedi)a'e 'o m(

S$BJECT TEACHER
&ho /i1e me opportu!ity to ma2e the Pro ect report by acti1ely i!1ol1i!/ i! practical 3or2 a!d appreciate my e44orts+

TABLE OF CONTENTS
DECLERATION........ 2 DEDICATION .... 3 ACKNOWLEDGEMENT ....04 1. INTRODUCTION 1.1 About com !"#...0$ 1.% Ou& m'(('o"..0) 1.* +RD..............0) 1.4 Ou& ob,-ct'.-(..................0) 1./ Ou& A((u&!"c- ...00 1.$ Ou& comm'tm-"t..........00 1.) Com -"(!t'o" (t&uctu&- u(-1...02 1.0 S'3"'4'c!"c- o4 t5- &o,-ct &- o&t.....14 1.2 Ob,-ct'.-( o4 t5- &o,-ct &- o&t ....14

2. T!ORO"#! RE$IE%
%.1 P&ob6-m( '" com -"(!t'o" (t&uctu&-.1/ %.% M!"!3-m-"t .'-7 o'"t o" &ob6-m(.12 %.* Em 6o#--( .'-7 o'"t o" &ob6-m(.%0 %.4 A1.!"t!3-( o4 Com -"(!t'o" (t&uctu&-....%1 %./ D'(!1.!"t!3-( o4 com -"(!t'o" (t&uctu&-...%*

&

RESEARC+ PRO8ECT ON COM'EN(ATION AND )ENEFIT( (TR"CT"RE RE$IE% DE%AN FAROO* MOTOR( Lt1.

COMPAN9 INTRODUCTION:
D-7!" F!&oo;u- Moto&( L'm't-1 +s a 'a,+stan+ -anu.a/turer o. auto-o0+les under l+/en/e to !1unda+ Motor Co-2an1 and 3+a Motors Cor2orat+on s+n/e 1445. T6e /o-2an1 +s t6e -anu.a/tur+n7 /on/ern +s a su0s+d+ar1 o. Dewan Mus6taq #rou28 6eadquartered +n 3ara/6+ w+t6 an asse-0l1 2lant lo/ated +n (u9awal. Its annual /a2a/+t1 +s 2 8 un+ts 2er 1ear8 e:2enda0le to 4 8 un+ts 2er 1ear. . Its est+-ated 2ro9e/t /ost +n/lud+n7 total .+:ed /ost8 +s Rs. 144834 8

Dewan Farooq -otors 2ro;+des a /o-2re6ens+;e8 /o-2et+t+;e8 re-unerat+on 2a/,a7e t6at +s /o-2ara0le to t6at 2ro;+ded 01 auto-o0+le +ndustr+es and ot6er lead+n7 +nternat+onal auto-o0+le lead+n7 +ndustr+es .or equ+;alent 2os+t+ons. To ensure t6+s /o-2et+t+;eness8 Dewan Motors re7ularl1 re;+ews /o-2ensat+on and 0ene.+ts a7a+nst t6e rele;ant e-2lo1-ent -ar,et. Our /o-2ensat+on and 0ene.+t a22roa/6 +s trans2arent8 /ons+derate o. +nternal equ+t18 and 2ro;+des re7ular o22ortun+t+es .or t6e Inst+tute to re/o7n+<e and reward wor,2la/e 2er.or-an/e. Dewan Farooq -otors awards annual -er+t +n/reases +n re/o7n+t+on o. 2ro;en 2er.or-an/e a7a+nst a7reed 7oals. In add+t+on8 Nat+onall1 Re/ru+ted (ta.. re/e+;e re7ular +n.lat+on ad9ust-ents. (tart+n7 )ase 'a1 +s deter-+ned on t6e 0as+s o. 9o0 a//ounta0+l+t+es and res2ons+0+l+t+es8 +n add+t+on to qual+.+/at+ons and e:2er+en/e8 and +s +n l+ne w+t6 /o-2an1=s salar1 0ands. Our /o-2re6ens+;e 0ene.+ts 2a/,a7e8 w6+/6 d+..ers a//ord+n7 to t6e 2os+t+on /ate7or18 de-onstrates our /o--+t-ent to 1ou and 1our de2endents. >

Ou& M'(('o" ?To 2ro;+de a .oru- .or e:/6an7e o. +deas and ,nowled7e w+t6 t6orou76 tra+n+n7 and de;elo2-ent o. +nd+;+duals +n t6e .+eld o. 0us+ness so t6at t6e1 are well equ+22ed to .a/e t6e d1na-+/ 7lo0al en;+ron-ent.? +um!" R-(ou&c- D-.-6o m-"t T6e 7rou2 +s deter-+ned to esta0l+s6 a 2lat.or- w6ere +t /an 2ro;+de t6e ,nowled7e and s,+lls to +ts e-2lo1ees so t6at t6e1 w+ll 0e t6e tor/60earers o. t6e or7an+<at+on to-orrow. DEDC +s an +n@6ouse -ana7e-ent de;elo2-ent or7an+<at+on .or e:/ellen/e +n tra+n+n7. It 6as 0een esta0l+s6ed w+t6 t6e e:2l+/+t 2ur2ose o. ensur+n7 or7an+<at+onal 7rowt6 and de;elo2-ent and to ser;e t6e need .or w+sdo- +n /or2orate de/+s+on@-a,+n78 t6us 2la1+n7 an +-2ortant role +n t6e lon7@ter- su//ess o. Dewan Mus6taq #rou2. Ou& Ob,-ct'.-(

To s2ar, new and +nno;at+;e +deas +n t6e +nd+;+duals so t6at t6e1 are /o-2et+t+;e enou76 to .a/e t6e 7lo0al e/ono-+/ and -ar,et en;+ron-ent. To equ+2 DM# +nd+;+duals w+t6 a t6orou76 understand+n7 o. -ana7er+al and te/6nolo7+/al s,+lls +n a -anner t6at 6as a 2ro.ound e..e/t on t6e+r 2ersonal+t1 and /6ara/ter.

To 0u+ld leaders6+2 qual+t+es +n +nd+;+duals so t6at t6e1 /an -a,e use o. +t e..+/+entl1 and e..e/t+;el1 +n order to -a,e e;er1 un+t 2rodu/t+;e. To 6el2 to 0r+n7 a0out a 2arad+7- s6+.t 01 /reat+n7 a d1na-+/ and 2os+t+;e learn+n7 en;+ron-ent and /6an7+n7 our /or2orate /ulture. To 6el2 DM# to /o2e w+t6 ,nowled7e@0ased e/ono-1. To 2ro;+de DM# sta.. w+t6 0as+/ /on/e2tual tra+n+n7 and +-2art latest -ana7er+al /on/e2ts A s,+lls8 so as to -a,e t6e- ?,nowled7e wor,ers? and on@l+ne to deal w+t6 t6e /6allen7es o. -odern 0us+ness.

T6e /ore o. DEDC tra+n+n7 2ro7ra--e +s t6at t6e /on/e2ts and tra+n+n7 t6at are +-2arted s6ould 0e t6orou76l1 a22l+ed and .urt6er 7rowt6 and de;elo2-ent o. an +nd+;+dual s6ould 0e related t6rou76 tra+n+n7 and de;elo2-ent.

Ou& A((u&!"c%e 0el+e;e t6at DM# -e-0ers are our -ost 2re/+ous resour/e8 our 6u-an /a2+tal. %e also 0el+e;e C6u-an 2ro7ressC to 0e t6e wort6+est o. 7oals t6rou76 re/ru+t+n78 de;elo2+n78 -ot+;at+n78 reward+n7 and reta+n+n7 2ersonnel o. e:/e2t+onal /o-2eten/e and 2ro;+d+n7 t6e- w+t6 a 6ealt61 wor,+n7 en;+ron-ent8 /o-2et+t+;e /o-2ensat+on8 e:/ellent o22ortun+t+es .or 7rowt6 and a 6+76 de7ree o. 9o0 se/ur+t1. Ou& Comm'tm-"t %e are /o--+tted to sur2ass /o-2et+t+on 01 unleas6+n7 t6e /onstru/t+;e /reat+;e a0+l+t+es and ener7+es o. our 7rou2Cs e-2lo1ees.

Com -"(!t'o" St&uctu&Co-2ensat+on stru/ture +s 0a/,0one o. !R de2art-ent +n an1 /o-2an1. Dewan Farooq -otors also stru/tured a .ollow+n7 un+que /o-2ensat+on stru/ture 2lan. D-.-6o ! &o3&!m out6'"-.

(et an o09e/t+;e .or t6e 2ro7ra-. Esta0l+s6 tar7et dates .or +-2le-entat+on and /o-2let+on. Deter-+ne a 0ud7et.

D-('3"!t- !" '"1'.'1u!6 to o.-&(-- 1-('3"'"3 t5- com -"(!t'o" &o3&!m.

Deter-+ne w6et6er t6+s 2os+t+on w+ll 0e 2er-anent or te-2orar1. Deter-+ne w6o w+ll o;ersee t6e 2ro7ra- on/e +t +s esta0l+s6ed. Deter-+ne t6e /ost o. 7o+n7 outs+de ;ersus loo,+n7 +ns+de.

D-.-6o ! com -"(!t'o" 5'6o(o 5#.

For- a /o-2ensat+on /o--+ttee D2resu-a0l1 /ons+st+n7 o. o..+/ers or at least +n/lud+n7 one o..+/er o. t6e /o-2an1E. De/+de w6at8 +. an18 d+..eren/es s6ould e:+st +n 2a1 stru/tures .or e:e/ut+;es8 2ro.ess+onal e-2lo1ees8 sales e-2lo1ees8 and so on De.7.8 6ourl1 ;ersus salar+ed rates8 +n/ent+;e@0ased ;ersus non /ont+n7ent 2a1E.

Deter-+ne w6et6er t6e /o-2an1 s6ould set salar+es at8 a0o;e8 or 0elow -ar,et. De/+de t6e e:tent to w6+/6 e-2lo1ee 0ene.+ts s6ould re2la/e or su22le-ent /as6 /o-2ensat+on.

Co"1uct ! ,ob !"!6#('( o4 !66 o('t'o"(.

Condu/t a 7eneral tas, anal1s+s 01 -a9or de2art-ents. %6at tas,s -ust 0e a//o-2l+s6ed 01 w6o-F

#et +n2ut .ro- sen+or ;+/e 2res+dents o. -ar,et+n78 .+nan/e8 sales8 ad-+n+strat+on8 2rodu/t+on8 and ot6er a22ro2r+ate de2art-ents to deter-+ne t6e or7an+<at+onal stru/ture and 2r+-ar1 .un/t+ons o. ea/6.

Inter;+ew de2art-ent -ana7ers and ,e1 e-2lo1ees8 as ne/essar18 to deter-+ne t6e+r s2e/+.+/ 9o0 .un/t+ons. De/+de w6+/6 9o0 /lass+.+/at+ons s6ould 0e e:e-2t and w6+/6 s6ould 0e none:e-2t. De;elo2 -odel 9o0 des/r+2t+ons .or e:e-2t and none:e-2t 2os+t+ons and d+str+0ute t6e -odels to +n/u-0ents .or re;+ew and /o--entG ad9ust 9o0 des/r+2t+ons +. ne/essar1.

De;elo2 a .+nal dra.t o. 9o0 des/r+2t+ons. Meet w+t6 de2art-ent -ana7ers8 as ne/essar18 to re;+ew 9o0 des/r+2t+ons. F+nal+<e and do/u-ent all 9o0 des/r+2t+ons.

E.!6u!t- ,ob(.

Ran, t6e 9o0s w+t6+n ea/6 sen+or ;+/e 2res+dentCs and -ana7erCs de2art-ent8 and t6en ran, 9o0s 0etween and a-on7 de2art-ents. $er+.1 ran,+n7 01 /o-2ar+n7 +t to +ndustr1 -ar,et data /on/ern+n7 t6e ran,+n78 and ad9ust +. ne/essar1. 're2are a -atr+: or7an+<at+onal re;+ew. On t6e 0as+s o. requ+red tas,s and .ore/asted 0us+ness 2lans8 de;elo2 a -atr+: o. 9o0s /ross+n7 l+nes and de2art-ents. Co-2are t6e -atr+: w+t6 data .ro- 0ot6 t6e /o-2an1 stru/ture and t6e +ndustr1 w+de -ar,et. 're2are .low /6arts o. all ran,s .or ea/6 de2art-ent .or ease o. +nter2retat+on and assess-ent. 'resent data and /6arts to t6e /o-2ensat+on /o--+ttee .or re;+ew and ad9ust-ent.

D-t-&m'"- 3&!1-(.

Esta0l+s6 t6e nu-0er o. le;els @ sen+or8 9un+or8 +nter-ed+ate8 and 0e7+nner @ .or ea/6 9o0 .a-+l1 and ass+7n a 7rade to ea/6 le;el.

Deter-+ne t6e nu-0er o. 2a1 7rades8 or -onetar1 ran7e o. a 2os+t+on at a 2art+/ular le;el8 w+t6+n ea/6 de2art-ent.

E(t!b6'(5 3&!1- &'c'"3 !"1 (!6!&# &!"3-.

Esta0l+s6 0en/6-ar, D,e1E 9o0s. Re;+ew t6e -ar,et 2r+/e o. 0en/6-ar, 9o0s w+t6+n t6e +ndustr1. Esta0l+s6 a trend l+ne +n a//ordan/e w+t6 /o-2an1 26+loso261 D+.e.8 w6ere t6e /o-2an1 wants to 0e +n relat+on to salar1 ran7es +n t6e +ndustr1E.

D-t-&m'"- !" !

&o &'!t- (!6!&# (t&uctu&-.

Deter-+ne t6e d+..eren/e 0etween ea/6 salar1 ste2. Deter-+ne a -+n+-u- and a -a:+-u- 2er/ent s2read. (lot t6e re-a+n+n7 9o0s. Re;+ew 9o0 des/r+2t+ons. $er+.1 t6e 2ur2ose8 ne/ess+t18 or ot6er reasons .or -a+nta+n+n7 a 2os+t+on. Meet w+t6 t6e /o-2ensat+on /o--+ttee .or re;+ew8 ad9ust-ents8 and a22ro;al.

11

D-.-6o ! (!6!&# !1m'"'(t&!t'o" o6'c#.

De;elo2 and do/u-ent t6e 7eneral /o-2an1 2ol+/1. De;elo2 and do/u-ent s2e/+.+/ 2ol+/+es .or sele/ted 7rou2s. De;elo2 and do/u-ent a strate71 .or -er+t ra+ses and ot6er 2a1 +n/reases8 su/6 as /ost@o.@l+;+n7 ad9ust-ents8 0onuses8 annual re;+ews8 and 2ro-ot+ons. De;elo2 and do/u-ent 2ro/edures to 9ust+.1 t6e 2ol+/1 De.7.8 2er.or-an/e a22ra+sal .or-s8 a -er+t ra+se s/6eduleE. Meet w+t6 t6e /o-2ensat+on /o--+ttee .or re;+ew8 ad9ust-ents8 and a22ro;al. &o.!6 o4 t5- b!('c (!6!&# &o3&!m.

Obt!'" to -<-cut'.-(= !

De;elo2 and 2resent /ost +-2a/t stud+es t6at 2ro9e/t t6e e:2ense o. 0r+n7+n7 t6e 2resent sta.. u2 to t6e 2ro2osed le;els. 'resent data to t6e /o-2ensat+on /o--+ttee .or re;+ew8 ad9ust-ent8 and a22ro;al. 'resent data to t6e e:e/ut+;e o2erat+n7 /o--+ttee Dsen+or -ana7ers and o..+/ersE .or re;+ew and a22ro;al.

Commu"'c!t- t5- 4'"!6 &o3&!m to -m 6o#--( !"1 m!"!3-&(.

'resent t6e 2lan to t6e /o-2ensat+on /o--+ttee .or .eed0a/,8 ad9ust-ents8 re;+ew8 and a22ro;al. Ma,e a 2resentat+on to e:e/ut+;e sta.. -ana7ers .or a22ro;al or /6an7e8 and +n/or2orate ne/essar1 /6an7es. De;elo2 a 2lan .or /o--un+/at+n7 t6e new 2ro7ra- to e-2lo1ees8 us+n7 sl+de s6ows or -o;+es8 l+terature8 6andouts8 et/. Ma,e 2resentat+ons to -ana7ers and e-2lo1ees. I-2le-ent t6e 2ro7ra-. Des+7n and de;elo2 deta+led s1ste-s8 2ro/edures8 and .or-s. %or, w+t6 !R +n.or-at+on s1ste-s sta.. to esta0l+s6 e..e/t+;e +-2le-entat+on 2ro/edures8 to de;elo2 a22ro2r+ate data +n2ut .or-s8 and to /reate e..e/t+;e -on+tor+n7 re2orts .or sen+or -ana7ers.

!a;e t6e ne/essar1 .or-s 2r+nted. De;elo2 and deter-+ne .or-at s2e/+.+/at+ons .or all re2orts. E:e/ute test runs on t6e 6u-an resour/es +n.or-at+on s1ste-. E:e/ute t6e 2ro7ra-.

12

Mo"'to& t5- &o3&!m.

Mon+tor .eed0a/, .ro- -ana7ers. Ma,e /6an7es w6ere ne/essar1. F+nd .laws or 2ro0le-s +n t6e 2ro7ra- and ad9ust or -od+.1 w6ere ne/essar1.

13

S'3"'4'c!"c- o4 t5- R-(-!&c5: > T6+s resear/6 6as a 7reat +-2ortan/e +n ,now+n7 t6e w6ole salar1 and 0ene.+ts stru/ture o. a /o-2an1. As t6+s re2ort /arr+es /r+t+/al anal1s+s o. t6e /o-2ensat+on and salar1 stru/ture8 +t w+ll 6el2 to 7+;e +n.or-at+on re7ard+n7 all t6e areas o. /o-2ensat+on and 0ene.+ts at DFM. It also .o/uses attent+on o. t6e -ana7e-ent on t6e area8 w6+/6 needs 7reater attent+on and -od+.+/at+on. It also 6el2s +n +dent+.1+n7 t6e wea,nesses o. t6e stru/ture8 w6+/6 needs to 0e -od+.+ed. It also 2ro;+des an outl+ne 2lan to re-o;e wea,nesses o. t6e /o-2ensat+on and 0ene.+t stru/ture and t6ere.ore +n/rease t6e o;erall e..e/t+;eness o. t6e /o-2ensat+on and 0ene.+ts stru/ture o. Dewan Farooq Motors.

Ob,-ct'.-( !"1 (co - o4 t5- Stu1#H T6e s/o2e o. t6e anal1s+s re;ol;es around t6e .ollow+n7 -a+n o09e/t+;esH Co-2ensat+on (1ste- o. t6e or7an+<at+on To Cal/ulate /or2orate 2er.or-an/es related to e-2lo1ee -ot+;at+on

14

PROBLEMS OF COMPENSATION STRUCTURE

A su//ess.ul /o-2ensat+on 2lan -ust .o/us on a/6+e;+n7 /o-2an1 7oals 01 dr+;+n7 t6e r+76t 0e6a;+ors +n e-2lo1ees. For +nstan/e8 +. t6e 0us+ness a+-s to se/ure re2eat 0us+ness and wor, sa.el18 t6e 0onus s1ste- s6ould /o-2ensate e-2lo1ees .or 7ood /usto-er ser;+/e8 sa.e wor, 2ra/t+/es and 2ro.+ta0+l+t1. )onuses 0ased solel1 on 2ro9e/t andAor /o-2an1 2ro.+ta0+l+t1 do not dr+;e +-2ortant 0e6a;+ors Dsu/6 as sa.et18 /usto-er ser;+/e and sat+s.a/t+on8 .ollow+n7 0est 2ra/t+/es and +nter@/o-2an1 tea-wor,E t6at lead to lon7@ ter- /o-2an1 su//ess. Lon7@ter- su//ess +s t6e end result o. do+n7 t6e r+76t t6+n7s /ons+stentl1. E-2lo1ees -a1 0e/o-e an7r1 w+t6 t6e /o-2an1 0e/ause t6e+r own e:2e/tat+ons .or 0onuses are not -et. Morale +s 6urt w6en e-2lo1ees wor, 6ard all 1ear8 1et t6e 2ro.+ts o. t6e /o-2an1 st+ll la7 0e/ause e-2lo1ees are wor,+n7 +ne..+/+entl1. Contra/tors t6at 7enu+nel1 tr1 to reward 6ard@wor,+n7 e-2lo1ees are .rustrated w6en t6e1 real+<e t6e1 un+ntent+onall1 /reated a ne7at+;e /o-2an1 at-os26ere. "n.ortunatel18 t6+s +s w6at -an1 /o-2an+es .a/e w6en t6e1 +n/orre/tl1 des+7n and +-2le-ent +n/ent+;e /o-2ensat+on 2lans. PROBLEMS T6rou76 resear/6 I 6a;e sear/6ed out .ollow+n7 2ro0le-s .a/ed 01 Dewan Farooq -otors +n +ts /o-2ensat+on stru/ture. 1. S!6!&# &ob6-m: 1. (alar+es are not set a//ord+n7 to +n.lat+on. 2. No +n/re-ent and u2dat+n7 2lan. 3. No 2er.or-an/e 0ased salar1G wor,ers are -ostl1 seen to 0e de -ot+;ated. %. B-5!.'o&

1&

One o. t6e -a9or 2ro0le-s w+t6 9o0 0ased 2a1 stru/ture +s t6at +t rewards t6e wron7 t12e o. 0e6a;+or. For +nstan/e8 +t en/oura7es e-2lo1ees to ta,e on -ore res2ons+0+l+t1 .or 7reater 2a18 0ut +t does not reward t6e- .or ta,+n7 +n+t+at+;e or ta,+n7 a leaders6+2 role +n de;elo2+n7 ot6er ne/essar1 s,+lls. )e/ause e-2lo1ees are 2a+d 0ased on t6e+r 9o0 le;el8 t6e1 are not t12+/all1 rewarded .or t6e+r 2er.or-an/e. %6+le t6e1 -a1 6a;e to -eet /erta+n 2er.or-an/e standards8 t6e need to e:/eed t6ose e:2e/tat+ons does not e:+st. For e:a-2le8 a .+rst 1ear e-2lo1ee w6o e:/eeds standards w+ll not 0e rewarded -ore t6an an e-2lo1ee w6o 6as 0een on t6e 9o0 .or .+;e 1ears and 0arel1 -eets e:2e/tat+ons. T6e .+rst 1ear e-2lo1ee w+ll not 6a;e an1 +n/ent+;e to /ont+nue to e:/eed standards dur+n7 t6e+r re-a+n+n7 1ears o. e-2lo1-ent. Or7an+<at+onal (tru/ture 'ro0le-s Anot6er 2otent+al 2ro0le- w+t6 a 9o0 0ased 2a1 stru/ture +s t6at +t /an lead to an or7an+<at+onal stru/ture 0ased on /entral+<ed /ontrol and 6+erar/61. *. P&ob6-m( 7't5 O&3!"'?!t'o"!6 C5!"3One -a9or 2ro0le- +n a 9o0 0ased 2a1 stru/ture +s t6at +t /an /reate an or7an+<at+on t6at +s too r+7+d to /6an7e w+t6 t6e t+-es. CEO notes t6at as t6e world -o;es towards an +n/reas+n7l1 7lo0al e/ono-1 and /o-2an+es atte-2t to /o-2ete w+t6 one anot6er +n t6e 7lo0al -ar,et2la/e8 t6e1 need to /onstantl1 e;aluate and /6an7e t6e+r or7an+<at+on +n su/6 a wa1 t6at +t -eets t6e needs o. +ts tar7et -ar,et. In a 9o0 0ased 2a1 stru/ture8 t6e or7an+<at+on +s -ore r+7+d and 6+erar/6+/all1 0ased so -u/6 so t6at +t /an retard /6an7e and t6e a0+l+t1 o. t6e ent+re or7an+<at+on to /6an7e and ada2t.

1>

4. Poo& Commu"'c!t'o" 7't5 Em 6o#--( 'oor /o--un+/at+on a0out t6e 2lan de-oral+<es 2ersonnel. Mana7e-ent -ust /o--un+/ate t6e .ollow+n7 d+re/tl1 to ea/6 2art+/+2ant +n t6e 2lan.

T6e a-ount o. t6e 0onus tar7eted .or t6at e-2lo1ee w+t6 t6e understand+n7 t6at +t w+ll 0e 2a+d onl1 +. 0ot6 t6e e-2lo1ee and /o-2an1 -eet all t6e+r o09e/t+;es. Co-2an1 o09e/t+;es t6at -ust 0e a/6+e;ed 0e.ore t6e 0onus +s 2a+d De.7.8

a/6+e;+n7 so-e t6res6old o. 2ro.+ta0+l+t1 and -eet+n7 sa.et1@related7oalsE. /. B-(t P&!ct'c-( Do Not E<'(t Co-2an1 la/,s well@de.+ned I0est 2ra/t+/esJ +n t6e .+eld or does not dr+;e .+nan/+al 2er.or-an/e t6rou76 strate7+/ or 0us+ness 2lann+n78 +-2le-ent+n7 a 9o0 0ased salar1 2lan alone w+ll /6an7e l+ttle. T6e 0otto- l+ne +s e-2lo1ees -a1 wor, 6arder8 0ut t6e+r 6ard wor, -a1 not s+7n+.+/antl1 +-2a/t 2ro.+ta0+l+t1. T6e1 w+ll /ont+nue to +nstall wor, un2rodu/t+;el18 and t6e /o-2an1=s 0us+ness strate71 w+ll re-a+n .lawed. $. T5- P6!" '( I"-44-ct'.- !t D&'.'"3 t5- R'35t B-5!.'o&( )est 2ra/t+/es are well de.+ned 0ut e-2lo1ees do not .ollow t6e- /ons+stentl18 +t +s t6e sa-e as 6a;+n7 no 2ro/esses at all. T6e ult+-ate 7oal +s 2ro.+ta0+l+t1 and 2ro;+d+n7 an adequate return on +n;est-ent to s6are6olders. "nless t6e /o-2an1 6as a -ar,et n+/6e or 2er.or-s ne7ot+ated wor, t6at 2ro;+des e:traord+nar1 2ro.+ta0+l+t18 t6e /o-2an1=s 0est /6an/e o. su//ess /o-es w6en +ts 2eo2leH

wor, sa.el1G wor, e..+/+entl1 01 us+n7 0est 2ra/t+/esG 2rodu/e qual+t1 wor,G sat+s.1 /usto-ersG -ot+;ate su0ord+natesG and /o--un+/ate well w+t6 ot6ers.

1B

). T5- Com !"# +!( ! Poo& Em 6o#-- P-&4o&m!"c->E.!6u!t'o" P&oc-(( T6e e-2lo1ee e;aluat+on 2ro/ess +s a 2a+n.ul e:er/+se +n -an1

/o-2an+es.(u2er;+sors -ust wr+te a s6ort su--ar1 o. a su0ord+nate=s 2er.or-an/e on su09e/t+;e +ssues t6at o.ten .ound +n Dewan Farooq Motors ltd areH

9o0 ,nowled7eG 2ro0le- sol;+n7G 2ro.ess+onal+s-G -ot+;at+onG and +ntera/t+on w+t6 ot6ers

T6e e;aluat+on 2ro/ess was not t+e w+t6 t6e /o-2ensat+on 2lan. T6e -etr+/s +dent+.+ed .or ea/6 2os+t+on s6ould 0e -ean+n7.ul. E;aluat+ons are o. l+ttle ;alue unless t6e1 are s+-2le to /reate and 2ro;+de 2er+od+/ .eed0a/, Dat least quarterl1E to t6e e-2lo1ee. Ot6er +ssues su/6 as sa.et18 /usto-er ser;+/e8 qual+t18 and de;elo2+n7 su0ord+nates are essent+al to t6e lon7@ter- 2ro.+ta0+l+t1 o. t6e /o-2an1 and o.ten are +n/luded as -easures o. su//ess and 2er.or-an/e.

15

M!"!3-m-"t .'-7 o'"t o" P&ob6-m(:

Mana7e-ent o. Dewan Farooque Motors 7a;e .ollow+n7 ;+ews on t6ese /o-2ensat+on 2ro0le-s. Co-2an1 +s us+n7 9o0 0ased /o-2ensat+on stru/ture and +s not +n sta0le 2os+t+on so +t +s not 2oss+0le to -a,e a 2er-anent /o-2ensat+on 2lan.'rodu/t+on also 0een low 01 t6e +n.luen/e o. #o;ern-ent t6rou76 t6e+r new restr+/t+ons and 2ol+/+es.Mana7e-et 6a;e a//e2ted t6at t6ere no 2a1 des+7ned w+t6 res2e/t to +n.lat+on. Co-2an1 6a;e sto22ed 2rodu/t+on s+n/e last -ore t6en & 1ears 0ut t6e1 6a;e assure t6at +t +s now +n runn+n7 2os+t+on and 6a;e started wor,+n7 so +t w+ll -a,e 0etter 2lans and stru/tures. In t6ese <ero 2rodu/t+on da1s /o-2an1 was 2a1+n7 salar+es to t6e+r e-2lo1ees a//ord+n7 to a de/+ded rat+o w+t6out wor,+n7 and re;enue 7enerat+on. One o. t6e sen+or Mana7e-ent 2ersonnel quoted .ollow+n7 ;+ews on t6ese /o-2ensat+on 2ro0le-s. !e quoted8 Co-2an1 +s runn+n7 +n de.+/+t 2os+t+on now and was do+n7 0etter 0e.ore a de/ade a7o and /o-2an1 6a;e no su/6 reser;es to -a,e t6e 0etter stru/tures. T6ere +s a 0etter 0ene.+t stru/ture +n our /o-2an1 as /o-2ared to ot6er lo/al /o-2an+es. Co-2an1 was 2a1+n7 0ene.+ts to e-2lo1ees +n t6ese <ero 2rodu/t+on da1s. T6ere was a 7ood and 2er-anent /o-2ensat+on stru/ture +n t6e /o-2an1 w6en +t was new and was +n 7ood 2rodu/t+on 2os+t+on8 0ut now +t +s tr1+n7 +ts 0est to /o-e +n 0etter 2rodu/t+on 2os+t+on and -a,e 2er-anent stru/tures.

14

Em 6o#--( .'-7 o'"t o" t5-(- &ob6-m(:

I 6a;e also 7one to t6e e-2lo1ees to 7et t6e+r ;+ews a0out /o-2ensat+on stru/tures 01 2ersonal +nter;+ew and also 7ot ;+ews 01 s-all quest+oner. one o. t6ese e-2lo1ees na-ed A0dul #6a.oor8 6e +s wor,+n7 as store -ana7er s+n/e last 14 1ears8 told -e t6at /o-2an1 6a;e no 0etter set0a/,s +n e-2lo1ee /o-2ensat+on. Current /o-2ensat+on stru/ture +s not 0ene.+/+al .or wor,ers.Mr.#6a.oor also told t6at /o-2an1 6a;e /losed +ts 2rodu/t+on .or -ore t6en 1 1ears 0ut now started +ts 2rodu/t+on a7a+n and 6o2e.ull1 w+ll set 0est /o-2ensat+on stru/ture. It +s -ostl1 o0ser;ed t6at /o-2an1 +s us+n7 9o0 0ased /o-2ensat+on stru/ture. One anot6er e-2lo1ee o. DFM told -e t6at e-2lo1ees w6o are not rewarded .or t6e+r 9o0 2er.or-an/e -ostl1 qu+t 0e/ause t6e1 .eel t6at t6e+r /ontr+0ut+ons are not ;alua0le to t6e /o-2an1. Ko0@0ased 2a1 does not reward t6e 0est e-2lo1ees .or t6e+r wor,8 t6+s /an a..e/t 6ow e-2lo1ees are e;aluated. %6en e;aluat+n7 e-2lo1ee 2er.or-an/e8 e-2lo1ers t6at 6a;e 9o0@0ased 2a1 stru/tures are l+-+ted +n 7+;+n7 2a1 ra+ses t6at ta,e t6e wor,er=s s,+lls and e:2er+en/e +nto a//ount. One anot6er o. Dewan Farooq Motor=s e-2lo1ee Mr.(anaulla6 6e +s wor,+n7 as F+nana/e Ass+stant8 told -e t6at /o-2ensat+on 2lan 6as l+-+ted 0ene.+ts w+t6 su09e/t to d+..erent /ond+t+ons.

A1.!"t!3-( o4 Com -"(!t'o" (t&uctu&-:

As we ,now t6at Co-2ensat+on re.ers to 2a1-ents8 su/6 as salar+es8 wa7es and 0onuses8 t6at reward e-2lo1ees .or t6e+r 9o0@related 2er.or-an/e. Dewan Farooque Motors us+n7 JOB5BASE' CO#PENSATION STR$CT$RE+ 8ob>b!(-1 com -"(!t'o" (t&uctu&-@ or 9o0@0ased 2a18 +s t6e -ost trad+t+onal t12e o. /o-2ensat+on s1ste- +n w6+/6 2a1 +s set on t6e 0as+s o. t6e 9o0 +tsel.. E-2lo1ees are re-unerated on t6e 0as+s o. t6e 9o0s t6e1 are /urrentl1 2er.or-+n7. Ko0@0ased /o-2ensat+on +s +n /ontrast to s,+ll@0ased 2a18 w6+/6 awards e-2lo1ees on t6e 0as+s o. t6e+r s,+ll and ,nowled7e le;el. Ko0@0ased /o-2ensat+on stru/ture 6as se;eral ad;anta7es des2+te 0e+n7 touted as an outdated /o-2ensat+on stru/ture.

Em 6o#-- P&omot'o"( !"1 P!# R!'(-( Ko0@0ased /o-2ensat+on -ot+;ates e-2lo1ees to 2er.or- 0etter and t6us -o;e u2 t6rou76 or7an+<at+onal ran,s o;er t+-e. E-2lo1ees re/e+;e +nstant 2a1 +n/reases as t6e+r 9o0 2er.or-an/e +-2ro;es or t6e+r 9o0 /6an7es. Cr+ter+a .or a 2a1 ra+se +s .a+rl1 stra+76t.orward8 and e-2lo1ees are aware t6at +-2ro;ed 2er.or-an/e leads to 6+76er 2a1 7rades. S-"'o&'t# Ko0@0ased /o-2ensat+on e-26as+<es 9o0 s2e/+al+<at+on and sen+or+t1. Ko0 s2e/+al+<at+on re.ers to t6e de2t6 o. 9o0@related ,nowled7e8 e:2er+en/e and e:2ert+se an e-2lo1ee 0r+n7s to a tas,. Ind+;+dual e-2lo1ees are s2e/+al+sts +n t6e+r des+7nated tas,s and are rewarded a//ord+n7 to 2er.or-an/e. Ko0@0ased /o-2ensat+on stru/ture rewards e-2lo1ee sen+or+t1 and /o-2ensates t6e- on t6e 0as+s o. len7t6 o. ser;+/e. T6+s /o-2ensat+on stru/ture assu-es t6at an e-2lo1ee 0e/o-es -ore ;alua0le to an or7an+<at+on w+t6 t+-e. E!(# to A1m'"'(t-& In a 9o0@0ased /o-2ensat+on stru/ture8 t6e 9o0 +tsel. 0e/o-es t6e un+t o. deter-+n+n7 0ase 2a1. !u-an resour/e 2ro.ess+onals esta0l+s6 -+n+-u- and -a:+-u- 2a1 a-ounts .or

21

ea/6 9o0 and /o-2ensate e-2lo1ees 0ased on t6e+r 2er.or-an/e. E-2lo1ee 9o0 e;aluat+on deter-+nes e-2lo1ee 2er.or-an/e. T6+s stru/ture +s eas1 to ad-+n+ster 0e/ause +t .o/uses on allo/at+n7 2a1 s1ste-at+/all1 and ensur+n7 t6at t6e -ost +-2ortant 9o0s are 2a+d -ore. St!b6- !"1 P&-1'ct!b6Ko0@0ased /o-2ensat+on stru/tures are sta0le and 2red+/ta0le s+n/e t6e1 del+neate and -a2 /lear@/ut 9o0 and 2a1 2ro7ress+ons. T6e s1ste- +s unl+,el1 to /ause de@-ot+;at+on8 d+sru2t+on and d+s/ontent a-on7 e-2lo1ees.

22

D'(!1.!"t!3-( o4 Com -"(!t'o" (t&uctu&-:

I"c&-!(-1 O -&!t'"3 Co(t( Ko0@0ased 2a1 stru/tures /an +n/rease a /o-2an1=s o2erat+n7 /osts8 w6+/6 +s anot6er d+sad;anta7e. For e:a-2le8 t6e /o-2an1 -a1 6a;e to 6+re a /onsult+n7 .+r- to /ondu/t /o-2ensat+on aud+ts. T6e 0us+ness -a1 also 6a;e to re;+se +ts 2a1 7rades e;er1 1ear8 w6+/6 requ+res -ore ad-+n+strat+;e sta... E.!6u!t'o"( I. 9o0@0ased 2a1 does not reward t6e 0est e-2lo1ees .or t6e+r wor,8 t6+s /an a..e/t 6ow e-2lo1ees are e;aluated. %6en e;aluat+n7 e-2lo1ee 2er.or-an/e8 e-2lo1ers t6at 6a;e 9o0@0ased 2a1 stru/tures are l+-+ted +n 7+;+n7 2a1 ra+ses t6at ta,e t6e wor,er=s s,+lls and e:2er+en/e +nto a//ount. T6e .a/t t6at an e-2lo1ee=s 2er.or-an/e -a1 0e su2er0 /arr+es less we+76t +n su/6 stru/tures. Tu&" O.-& E-2lo1ees w6o are not rewarded .or t6e+r 9o0 2er.or-an/e -a1 qu+t 0e/ause t6e1 .eel t6at t6e+r /ontr+0ut+ons are not ;alua0le to t6e /o-2an1. For e:a-2le8 an e-2lo1ee w6ose /ontr+0ut+ons result +n an +n/rease +n earn+n7s or new /l+ents w+ll want to 0e rewarded. E-2lo1ees /an 0e rewarded w+t6 2a1 ra+ses or 0onuses. I. t6e e-2lo1ee re/e+;es ne+t6er8 6e -a1 see, e-2lo1-ent w+t6 ot6er /o-2an+es.

23