INTRODUCTION

Human Resource is the most vital resource for any

organization. It is responsible for each and every
decision taken, each and every work done and each
and every result. Employees should be managed
properly and motivated by providing best remuneration
and compensation as per the industry standards. The
lucrative compensation will also serve the need for
attracting and retaining the best employees.
Compensation is the remuneration received by an
employee in return for his/her contribution to the
organization. It is an organized practice that involves
balancing the work-employee relation by providing
monetary and non-monetary benefits to employees.
Compensation is an integral part of human resource
management which helps in motivating the employees
and improving organizational effectiveness.

COMPONENTS OF COMPENSATION
SYSTEM
Compensation systems are designed keeping in
minds the strategic goals and business objectives.
Compensation system is designed on the basis of
certain factors after analysing the job work and

responsibilities. Components of a compensation system

are as follows:

TYPES OF COMPENSATION
Compensation provided to employees can direct in
the form of monetary benefits and/or indirect in the
form of non-monetary benefits known as perks, time
off, etc. Compensation does not include only salary but
it is the sum total of all rewards and allowances
provided to the employees in return for their services. If
the compensation offered is effectively managed, it
contributes to high organizational productivity.
Direct compensation
Indirect compensation
Direct compensation refers to monetary benefits
offered and provided to employees in return of the
services they provide to the organization. The monetary
benefits include basic salary, house rent allowance,
conveyance, leave travel allowance, medical
reimbursements, special allowances, bonus, Pf/Gratuity,

etc. They are given at a regular interval at a definite

time.
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, a week, a month, etc. 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.
Conveyance
Organizations provide for cab facilities to their
employees. Few organizations also provide vehicles and
petrol allowances to their employees to motivate them.
Leave Travel Allowance
These allowances are provided to retain the best talent
in the organization. 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.
Medical Reimbursement
Organizations also look after the health
conditions of their employees. The
employees are provided with medi-claims
for them and their family members. These
medi-claims include health-insurances and
treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons
to motivate them and provide them the social security.
The bonus amount usually amounts to one months
salary of the employee.

Special Allowance
Special allowance such as overtime, mobile allowances,
meals, commissions, travel expenses, reduced interest
loans; insurance, club memberships, etc are provided
to employees to provide them social security and
motivate them which improve the organizational
productivity.

Indirect compensation refers to non-monetary

benefits offered and provided to employees in lieu of
the services provided by them to the organization. They
include Leave Policy, Overtime Policy, Car policy,
Hospitalization, Insurance, Leave travel Assistance
Limits, Retirement Benefits, Holiday Homes.

Leave Policy
It is the right of employee to get adequate number of
leave while working with the organization. The
organizations provide for paid leaves such as, casual
leaves, medical leaves (sick leave), and maternity
leaves, statutory pay, etc.
Overtime Policy
Employees should be provided with the adequate
allowances and facilities during their overtime, if they
happened to do so, such as transport facilities,
overtime pay, etc.
Hospitalization
The employees should be provided allowances to get
their regular check-ups, say at an interval of one year.
Even their dependents should be eligible for the mediclaims that provide them emotional and social security.

Insurance
Organizations also provide for accidental insurance and
life insurance for employees. This gives them the
emotional security and they feel themselves valued in
the organization.
Leave Travel
The employees are provided with leaves and travel
allowances to go for holiday with their families. Some
organizations arrange for a tour for the employees of
the organization. This is usually done to make the
employees stress free.

Retirement Benefits
Organizations provide for pension plans and other
benefits for their employees which benefits them after
they retire from the organization at the prescribed age.
Holiday Homes
Organizations provide for holiday homes and guest
house for their employees at different locations. These
holiday homes are usually located in hill station and
other most wanted holiday spots. The organizations
make sure that the employees do not face any kind of
difficulties during their stay in the guest house.
Flexible Timings
Organizations provide for flexible timings to the
employees who cannot come to work during normal
shifts due to their personal problems and valid reasons.

IMPORTANCE OF COMPENSATION
MANAGEMENT:
Compensation and Reward system plays vital role
in a business organization. Since, among four Ms, i.e.
Men, Material, Machine and Money, Men has been most
important factor, it is impossible to imagine a business
process without Men. Every factor
contributes to the process of
production/business. It expects return
from the business process such as rent
is the return expected by the landlord,

capitalist expects interest and organizer i.e.

entrepreneur expects profits. Similarly the labour
expects wages from the process.
Labour plays vital role in bringing about the process of
production/business in motion. The other factors being
human, has expectations, emotions, ambitions and
egos
Labour therefore expects to have fair share in the
business/production process. Therefore a fair
compensation system is a must for every business
organization. The fair compensation system will help in
the following:
o

An ideal compensation system will have positive

impact on the efficiency and results produced by
employees. It will encourage the employees to
perform better and achieve the standards fixed.
It will enhance the process of job evaluation. It will
also help in setting up an ideal job evaluation and
the set standards would be more realistic and
achievable.
Such a system should be well defined and uniform.
It will be apply to all the levels of the organization
as a general system
The system should be simple and flexible so that
every employee would be able to compute his
own compensation receivable.
It should be easy to implement, should not result in
exploitation of workers.
It will raise the morale, efficiency and cooperation
among the workers. It, being just and fair would
provide satisfaction to the workers.

Such system would help management in complying

with the various labour acts.
Such system should also solve disputes between
the employee union and management.
The system should follow the management
principle of equal pay.
It should motivate and encouragement those who
perform better and should provide opportunities for
those who wish to excel.
Sound Compensation/Reward System brings peace
in the relationship of employer and employees.
It aims at creating a healthy competition among
them and encourages employees to work hard and
efficiently.
The system provides growth and advancement
opportunities to the deserving employees.
The perfect compensation system provides
platform for happy and satisfied workforce. This
minimizes the labour turnover. The organization
enjoys the stability.
The organization is able to retain the best talent by
providing them adequate compensation thereby
stopping them from switching over to another job.
The business organization can think of expansion
and growth if it has the support of skilful, talented
and happy workforce.
The sound compensation system is hallmark of
organizations success and prosperity. The success
and stability of organization is measured with paypackage it provides to its employees.

NEED OF COMPENSATION
MANAGEMENT

A good compensation package is important to

motivate the employees to increase the
organizational productivity.
Unless compensation is provided no one will come
and work for the organization. Thus, compensation
helps in running an organization effectively and
accomplishing its goals.
Salary is just a part of the compensation system,
the employees have other psychological and selfactualization needs to fulfil. Thus, compensation
serves the purpose.
The most competitive compensation will help the
organization to attract and sustain the best talent.
The compensation package should be as per
industry standards.

TELECOMMUNICATION SECTOR IN INDIA

India has emerged as one of the youngest and
fastest growing economies in the world today. One of
the sectors that has shown the signs of profitability and
contributed significantly to the country's economy is
the telecom industry. In fact, the Indian telecom market
has gained recognition as one of the most lucrative
markets globally. The vast rural market holds a huge
potential to drive the future growth of the telecom
companies. Further, the government's initiatives for
increasing the telecom connectivity in rural areas are
also likely to aid the telecom service providers to
extend their services in the unconnected rural areas.
Customer Centricity
Telecommunications companies recognize that
becoming customer centric is key to their long term
competitive advantage, as many players offer similar
features. Customer centricity depends on having a
single view of the customer data that gives clear insight
into the customer behaviour, purchasing patterns, and
segmentation. Telecom organizations need access to
data that is accurate, reusable, and productive, so that
they can create a holistic, real-time view of their
customers.
Opportunities
With the arrival of 3G, various operators in India are
particular about providing faster and more robust

Internet, better access of data services including ecommerce, social networking, audio-video
conferencing, and many other broadband applications
with very high speed. The deployment of 3G services is
also likely to help the emergence of new VAS. The
demand for value added services is likely to surge
given that 'Gen Y' are more inclined to use the smart
phones and adopt the VAS services. Moreover, with the
implementation of mobile number portability, the
service providers need to focus more on developing
VAS as a service differentiator to retain their existing
customers besides attracting the new ones.
Knowledge is Power
Most telecommunications companies face 3 significant
challenges: Increasing responsiveness to the industry
convergence and consolidation; improving customer
acquisition and retention; and, effectively managing
within the regulatory environment. Addressing these
challenges requires clean, consistent, and accurate
data integrated from disparate sources across the
enterprise, including network, product, ordering,
provisioning, equipment, customer, financial and billing
systems.
Convergence, Consolidation, and Competition
Today, numerous industry challenges are forcing
telecom companies to streamline operations and
increase competitive agility. These challenges include:

Convergence of Services: Telecom companies

are bundling broadband, voice, wireless, video and
other emerging technologies together, as well as a
variety of value added content, in an effort to
remain competitive, offer seamless services and
attract more customers.

Industry Consolidation: Ongoing mergers and

acquisitions have resulted in duplicate systems and
applications across the organization, which have
made it difficult to integrate data, realize cost
benefits and capitalize on new revenue
opportunities.

Increased Competition and Diminishing

Revenue Streams: With new players entering the
market, telecommunications companies are
competing strongly and selling products and
services beyond their core offerings and at much
cheaper prices. This is resulting in less revenue
from traditional sources, more pressure on profit
margins, and an urgency to find new revenue
streams by investing in new technologies such as
VoIP or fixed/mobile convergence.

To combat these challenges and improve operational

efficiency, telecom organizations are investing in new IT
applications that support product and service bundles,
enhancing or replacing their existing operational
support systems (OSS) and business support systems
(BSS), consolidating redundant systems, implementing
automated service provisioning and customer self
service, et
The success of the telecommunications sector had
been limited to the urban areas till now. Conventionally,
voice services have been the key driver for the
development of the sector, and the telecom operators
will also benefit from the introduction of 3G services in
the long term. While broadband connectivity and
mobile VAS services are likely to open up newer
markets, implementation of new technologies and
applications by the telecom players will ensure
complete efficiency in the business operations.

COMPENSATION MANAGEMENT TRENDS

IN TELECOMMUNICATION SECTOR
Indian telecommunication sector is witnessing a growth
rate of more than 25%. With the upcoming of new
upgraded technologies such as 3G, the sector will be
experiencing a growth rate of more than 100%. Public
players and private players are competing with each
other and are developing themselves to produce more
quality and deliver advanced technologies. Top players
in the segment such as Bharti Airtel, Reliance
Communications, Tata Teleservices, Idea Cellular,
Hutchison, Essar, Nokia, Siemens, LG, Motorola, etc are
investing in new projects to accommodate the 3G
technology.
With the
business
expansion and
globalization of
Indian

organizations more and more recruitments are taking

place in the sector. The sector has also provided jobs in
marketing, installation and construction segments.
Immense competition has led the organizations hire
more and more skilled labour, be it for upgrading their
technologies or marketing their products. Organizations
are offering most competitive packages to attract and
retain talented human resource.

COMPENSATION PACKAGE FOR NEW ENTRY

Compensation provided to fresh management
graduates is also very lucrative. The sector is open
for CA, CS, accountants, MBA in finance and
commerce graduates.
Effective Communication Skills
Sound Technical Knowledge
Strong Commitment Level
Strong Analytical Skills

Apart from pay packages marketing people also get

high incentives and perks. The industry provides for
special allowances such as annual bonus, house rent
allowances, mobile allowances, transportations,
travel leaves, paid vacations, etc.

COMPENSATION PACKAGE FOR EXPREINCED

Telecommunication provides for excellent growth
opportunities. In the global competitive environment
experienced people have an upper hand in selecting
an organization. Organizations need to offer most
competitive packages and heavy perks to attract and
retain
the
talented
work
force.
Effective communication skills, good analytical skills
and sound technical knowledge are must to have a

respectable position in telecommunication sector.

Organizations such as Idea Cellular, Tata Teleservices,
Reliance Communications, Bharti Airtel, Nokia,
Siemens, ericcson, Motorola, etc are advancing their
technologies and providing most competitive
compensation packages.

People working in telecommunication sector are

asked to work at
stretch
and
in
pressure. Also, the
level of experience
determines
ones
level
of
compensation
package and position
in the industry.

ABOUT THE COMPANY

Mahanagar Telephone
Nigam Limited (MTNL) is the
leading telecommunication
company in India. It was
established in the year if 1986.

MTNL was set up by the Government of India to

upgrade the quality of telecom services, expand the
telecom network, and introduce new services and to
raise revenue for telecom development needs of
Indias key metros. MTNL with a market share of about
13% of the National telecom
Network has a customer base of 5.92 million. The
Govt. of India currently holds 56.25% stake in the
company.
MTNL service provider in the metro cities
of Mumbai and New Delhi in India. The company was
a monopoly until 1992, when the telecom sector was
opened to other service providers. Transparency makes
us different- is the motto of the company. In recent
years, MTNL has been losing revenue and market share
heavily due immense competition in Indian telecom
sector
Acquisitions / Strategic Alliances:
MTNL has formed a Joint Venture company in Nepal
by the name of United Telecom Ltd. (UTL) in
collaboration with Telecom Consultants India
Limited (TCIL) in 2001 for providing WLL based
basic services in Nepal.
MTNL has set up its 100% subsidiary.
Mahanagar Telephone Mauritius Limited(MTML) in
Mauritius, for providing basic, mobile and
international long distance
PRODUCTS AND SERVICES:
Landline
Wireless
Broadband
Tri band services
International Calling

COMPENSATION STRUCTURE OF THE

COMPANY

PARTICULARS
GROSS SALARY
BASIC PAY
HOUSE RENT
ALLOWANCE
TRANSPORT
ALLOWANCE
INDUSTRAIL DEARNESS
ALLOWANCE
FOOD ALLOWANCE
MEDICAL
REIMBURSEMENT

% ON THE BASIS
OF GROSS SALARY
100%
54%
16%
1.5%
25%
0.5%
3%

MONTHLY BREAK UP PAYSLIP OF THE EMPLOYEE

OF MTNL AUGUST 2011
PARTICULARS
EARNINGS:
BASIC PAY
HRA
TRANSPORT ALLOWANCE
INDUSTRAIL DEARNESS
ALLOWANCE
FOOD ALLOWANCE
MEDICAL REIMBURSEMENT
DEDUCTIONS:
INCOME TAX
PROFESSIONAL TAX
GPF CONTRIBUTION
MTNL SOCIETY
LIC GILS
MTNL KAMGAR SANGH
NET EARNINGS

MONTHLY INCOME
25640
7692
750
12102
225
1169
47578
2121
200
10000
7812
210
25
20368
27210

FMCG SECTOR IN INDIA

Products which have a quick turnover, and
relatively low cost are known as Fast Moving Consumer
Goods (FMCG). FMCG products are
those that get replaced within a year.
Examples of FMCG generally include a
wide range of frequently purchased
consumer products such as toiletries,
soap, cosmetics, tooth cleaning
products, shaving products and
detergents, as well as other nondurables such as glassware, bulbs,
batteries, paper products, and plastic
goods. FMCG may also include pharmaceuticals,
consumer electronics, packaged food products, soft
drinks, tissue paper, and chocolate bars.
Indias FMCG sector is the fourth largest sector in
the economy and creates employment for more than
three million people in downstream activities. Its
principal constituents are Household Care, Personal
Care and Food & Beverages. The total FMCG market is
in excess of Rs.85, 000 Crores. It is currently growing at
double digit growth rate and is expected to maintain a
high growth rate. FMCG Industry is characterized by a
well established distribution network, low penetration
levels, low operating cost, lower per capita
consumption and intense competition between the
organized and
unorganized segments.
The Rs.85, 000-crore
Indian FMCG industry is
expected to register a
healthy growth in the
third quarter of 2008-09
despite the economic

downturn. The industry is expected to register a 15%

growth in 2008-09 as compared to the corresponding
period last year.

COMPENSATION MANAGEMENT TREND

IN FMCG SECTOR
Salary package is the core aspect for attracting and
retaining employees. The immense growth in the sector
has caused the compensation packages in the industry
increase at a rapid pace. The compensation packages
in the industry are reaching the same roof as of IT
sector in the country. The industry is booming and this
has led the medical institutes to offer lucrative
packages to attract and retain skilled medical
practitioners.
In recent study it was revealed that medical tourism is
increasing in India. It is expected that the Indian
healthcare industry will grow by more than 40% in the
next 5 years. This has caused more and more
companies are entering the sector which is demanding
more and more professionals.
Hence, the organizations offer most competitive
packages to acquire the best talent around. It has been
found that that there are many MNCs in the Indian
healthcare industry who want to put the management
on a global scale.

COMPENSATION STRUCTURE
The compensation package includes the following
components. Apart from the regular components,
medical
practitioners
are also
provided with
the special
benefits
mentioned
below.

COMPENSATION STRUCTURE FOR TOP

MANAGEMENT:
Organizations understand that only compensation
package will not help them retain their talented
workforce but they need to provide excellent working
atmosphere, growth opportunity, and space for
experimentation. The individual satisfaction level must
also be maintained. They should take measures to
motivate employees. Like other industries in healthcare
industry too, the non-technical staff such as marketing
team are receiving lucrative packages.
Top Management Compensation Structure
The organizations are offering lucrative compensation
packages to their senior management. They try to
balance the packages provided to the technical

professionals and non-technical professionals by

offering annual bonuses and variable pay plans
Companies are becoming competitive when it comes to
luring top executives with a mix of high basic salary,
incentives, Employee Stock Ownership Plan and
deferred pay. They are also looking at performancebased salaries, with variable pay as a percentage of
salaries on the rise.

Significant increase has been in salary packages in the

industry. The average increase in salary in the sector
has been reported as 12% in the year 2006.

Organizations have offered car and accommodation

benefits to their senior and middle management
employees. Given below is the average increase in the
salary in the industry at various segments:

The compensation in the industry also depends on

the specialized area. Compensation is decided with
respect to the individuals contribution to the
organization.

ABOUT
COMPANY
Caring for the world, one person at a time... inspires
and unites the people of Johnson & Johnson. They
embrace research and science - bringing innovative
ideas, products and services to advance the health and
well-being of people. Employees of the
Johnson & Johnson Family of Companies work with
partners in health care to touch the lives of over a

billion people every day, throughout the world.

J&J Family of Companies comprises:
The worlds sixth-largest consumer health
company
The worlds largest and most diverse medical
devices and diagnostics company
The worlds fifth-largest biologics company
And the worlds eighth-largest pharmaceuticals
company
They have more than 250 operating companies in 60
countries employing approximately 116,000 people.
Our worldwide headquarters is in New Brunswick, New
Jersey, USA.
Johnson & Johnson was founded more than 120
years ago on a revolutionary idea: Doctors and nurses
should use sterile sutures, dressings and bandages to
treat peoples wounds. Since then, they have brought
to the world, new ideas and products that have
transformed human health and well-being.
J&J Family of Companies is organized into several
business segments comprised of
franchises and therapeutic
categories - Consumer Health Care,
Medical Devices & Diagnostics and
Pharmaceuticals.
In the 50 years of operating in India, Johnson &
Johnson Limited, India has gained a reputation for
delivering high-quality products. Today, they employ
more than 2000 people and the businesses span
Consumer, Medical Devices and Diagnostics,
Pharmaceuticals and Vision Care. Johnson & Johnson
India is an employer of choice and is a recipient of
several awards, which recognize it as one of the best
employers in India.

Product line:

Baby products
Health care products

Medical devices

Medicines

Mother care products

COMPENSATION STRUCTURE OF THE

COMPANY

PARTICULARS

% ON THE
BASIS OF GROSS
SALARY
100%
62%
28%

GROSS SALARY
BASIC PAY
HOUSE RENT
ALLOWANCE
SUPER ANNUATION
10%
ALLOWANCE
MONTHLY BREAK UP PAYSLIP OF THE EMPLOYEE
OF MTNL AUGUST 2011
PARTICULARS
EARNINGS:
BASIC PAY
HRA
SUPPER ANNUATION
ALLOWANCE

MONTHLY INCOME
15833
7125
2375
25333

DEDUCTIONS:
STATUTORY P.F
PROFESSIONAL TAX
INCOME TAX
NET EARNINGS

1900
200
1285
3358
21975

SUBMITTED BY:
KANCHAN NARANG
ROLL NO. 35