1

A STUDY ON EFFECTIVENESS OF EMPLOYEE

COMPENSATION AT ACE GLASS CONTAINERS LTD.,
PUDUCHERRY

PROJECT REPORT

Submitted by
A.GAYATHRIDEVI
REGISTER NO: 27348311

Under the guidance of

Mr. D. SARAVANAN, MBA, M.Phil, M.F.C, M.H.R.M, (Ph.d)
Faculty, Department of Management Studies

In partial fulfillment for the award of the degree

of
MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES

SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE
PONDICHERRY UNIVERSITY
PUDUCHERRY, INDIA
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MARCH 2008
SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE
PONDICHERRY UNIVERSITY

DEPARTMENT OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This to certify that the project work entitled A STUDY ON EFFECTIVENESS OF EMPLOYEE
COMPENSATION AT ACE GLASS CONTAINERS LTD., PUNDUCHERRY is a bonafide work
done by A.GAYATHRIDEVI [REGISTER NO: 27348311] in partial fulfilment of the requirement for
the award of Master of Business Administration by Pondicherry University during the academic year
2007-2008.

GUIDE HEAD OF THE DEPARTMENT

Submitted for Viva-Voce Examination held On _______________

EXTERNAL EXAMINER
1.
2.
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ACKNOWLEDGEMENT

I would like to express my heartfelt gratitude to our chairman Mr. N. KESAVAN, Sri Manakula
Vinayagar Engineering College for the extension of the college facilities which enabled me to complete
this project.

I feel obliged to our Managing Director Mr. M. DHANASEKARAN, Sri Manakula Vinayagar
Engineering College for his support and encouragement.

I would like to express my sincere thanks to our principal Dr.V.S.K.VENKATACHALAPATHY,

for providing the college facilities for the completion of this project.

I also thank Mr. S. JAYAKUMAR, H.O.D, Department of Management Studies, for his valuable
suggestion and assistance throughout the project.

I owe my achievement to the inspiration and kind guidance to my respected Mr. D.SARAVANAN,
Lecturer, Department of Management Studies, and I am thankful for her sincere guidance as my Internal
Guide to successfully complete my project.

I express my sincere thanks to the advisory committee members and staffs, Department of
Management Studies for their continuous monitoring and assessment.

I thank my external guide Mr. P. RAMAR, Senior Manager HR Department Ace Glass
Containers Ltd., Puducherry, who kindly granted permission to do this project report in his esteemed
organization.

I express my deep sense of gratitude to my family members and to my dear friends for their
support and encouragement during the entire course of study.
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ABSTRACT

In this project, titled A STUDY ON EFFECTIVENESS OF EMPLOYEE COMPENSATION AT

ACE GLASS CONTAINERS LTD. This aim is to attract and retain qualified and motivated employees.

The study based on compensation system is essential for every organization as it boosts morale and
inculcates commitment. It has a positive impact on the efficiency and output of workforce. It motivates an
average worker to perform better and achieve the set standards.

The study highlights the foundations of fringe benefits schemes, recognition systems, various
benefit facilities and job satisfaction of the employees in ACE Glass Containers Ltd.

The study is carried out in Puducherry. The duration of the study is one month .The population is
300 with the sample size of 100.

For this study questionnaire method is followed to collect the data and the research design is
descriptive. The collected data are tabulated and analyzed using various statistical tools.

This project helps to identify and give suggestion the area of employee compensation in ACE
GLASS CONTAINERS LTD.
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TABLE OF CONTENTS

LIST OF TABLES..i
LIST OF CHARTS..iii

CHAPTER TITLE PAGE NO

I INTRODUCTION
1.1 COMPANY PROFILE 1
1.2 INTRODUCTION TO THE STUDY 7

II REVIEW OF LITERATURE 8

III OBJECTIVES OF STUDY 23

IV RESEARCH METHODOLOGY 24

V DATA ANALYSIS AND INTERPRETATION 27

VI FINDINGS OF THE STUDY 42

VII 7.1 SUGGESTION AND RECOMMENDATIONS 43

7.2 CONCLUSION 44

VIII 8.1 LIMITATIONS OF THE STUDY 45

8.2 SCOPE FOR FURTHER STUDY 46

ANNEXURE
1. QUESTIONNAIRE
2. BIBLIOGRAPHY
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TABLE NO TABLES PAGE NO.

5.1.1 Respondents based on years of experience 27

5.1.2 Respondents based on monthly income 28

5.1.3 Factors induces to work in this organization 29

5.1.4 Employees opinion about work environment 30

5.1.5 Employees aware of fringe benefits scheme 31

5.1.6 Employees opinion about fringe benefits if hey work with 32

hazardous material

5.1.7 Employees rating about Bonus 33

5.1.8 Employees rating about Group Accident Insurance Policy 34

5.1.9 Employees rating about Medical Reimbursement 35

5.1.10 Employees rating about LTA 36

5.1.11 Satisfaction with the allowance 37

5.2.1 Analysis of opinion about monetary benefits and level of 38

recognition received from supervisor (observed count )

LIST OF TABLES
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5.2.2 Analysis of opinion about monetary benefits and level of 38

recognition received from supervisor (expected count)

5.2.3 Analysis of opinion about monetary benefits and level of

recognition received from supervisor (chi square 39
calculation)

5.3.1 Analysis of ranking given by the respondent regarding

the satisfaction level of benefit facilities (using 40
weighted average method)

Analysis of opinion of respondents regarding satisfaction

5.4.1 level of incentives provided and overall satisfaction with 41
their job [using rank correlation]

Analysis of opinion of respondents regarding satisfaction

5.4.2 level of incentives provided and overall satisfaction with 41
their job [rank correlation calculation]

LIST OF CHARTS
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TABLE NO TITLE PAGE NO.

5.1.1 Respondents based on years of experience 27

5.1.2 Respondents based on monthly income 28

5.1.3 Factors induces to work in this organization 29

5.1.4 Employees opinion about work environment 30

5.1.5 Employees aware of fringe benefits scheme 31

5.1.6 Employees opinion about fringe benefits if 32

hey work with hazardous material

5.1.7 Employees rating about Bonus 33

5.1.8 Employees rating about Group Accident 34

Insurance Policy

5.1.9 Employees rating about Medical 35

Reimbursement

5.1.10 Employees rating about LTA 36

5.1.11 Satisfaction with the allowance 37

CHAPTER - I

INTRODUCTION
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1.1 COMPANY PROFILE

1.1.1 HISTORY OF THE COMPANY:

Mr. C.K. Somany, a visionary entrepreneur laid the foundation of the HNG Group in 1952 with
the inauguration of Indias first fully automatic glass container manufacturing plant at Rishra, near
Calcutta (INDIA). The HNG Group was launched under the banner of Hindusthan National Glass
Manufacturing Co. Ltd., subsequently renamed Hindusthan National Glass & Industries Ltd. (HNGIL).

A NAME TO RECKON WITH:

HNG Group, the largest and most prolific producer of glass containers, operating at present
10 furnaces at five locations (Rishra, Bahadurgarh , Pondicherry, Rishikesh, & Nashik ) with 42
production lines. A fully integrated Group having its own foundry for casting, well equipped workshop for
moulds and spare parts and captive power plants and quarries for sand with fleet for finished goods
movement has given competitive advantage to its customers.

A MARKET LEADER:
In the 6 ml - 3200 ml segment, HNG Group is the undisputed market leader. Catering to
around 70% of the Domestic Market in the pharmaceutical, beverage, processed food, cosmetic and liquor
sectors covering industry majors like, CocaCola, Dabur, GlaxoWellcome, Nestle, Pepsi, Reckitt Benckiser
(India) Ltd., Smithkline Beecham, UB Group etc. Exports to South East, Middle East, Africa and First
World Countries in Europe & North America.

ON SUPER FAST GROWTH TRACK:

Its spirit to ascend newer parameters remains as insatiable as ever. The days ahead are
gleaming with promise. With modernisation, upgradation and foresight to meet the emerging and more
distinctive demands of the customers, the Group is all set for unprecedented achievements. With projected
planned investment of Rs.3000 million in the next three years. Touching life in more ways than one and in
total tune with the harmony of nature.

MILESTONES:
In order to keep pace with changing technology and demands, HNGIL set up another plant at
Bahadurgarh, near Delhi in 1964, which opened the gates of success for the Group. Turned around
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OWENS BROCKWAY (INDIA) LTD., a loss making Multinational Unit acquired in 2002, into a self
sustained profit making unit in the very first year itself. In October 2005 the Group has acquired the Glass
Division of L&T at Nashik, having one Furnace of 320 TPD melting capacity.

HNGIL has a wide and diversified customer base to its credit. The company offers premium glass
containers for every kind of application. HNGIL is an acknowledged market leader of today and
producing 6 million bottles per day ranging from 5 ml to 3200 ml containers for multifarious industries
like pharmaceuticals, beverages, processed foods, cosmetics, liquors etc.

The other Companies under the HNG wing are ACE Glass Containers Ltd. (ACE)., Glass
Equipment (India) Ltd. (GEIL), Ceramic Decorators Ltd. (CDL), Somany Foam Limited (SFL) and
Quality Minerals Ltd. (QML). Besides, there are number of Investment Companies, Partnership Firms and
Charitable Trusts which are also part of the HNG Group.

Ace Glass Containers Ltd.

Ace Glass Containers Ltd. has its manufacturing facilities at Rishikesh (Uttranchal), Nashik
(Maharashtra) and Pondicherry, Rishra (West Bengal), Bahadurgarh with 42 production lines. All the
units are equipped with fully automatic state-of-the-art manufacturing processes.

Glass Equipment ( India) Limited

GEIL's state-of-the-art technology accounts for manufacture of sophisticated equipment for glass
plants. It is also expert in manufacturing of critical spares for Glass container manufacturing industries
and provides solutions in setting up glass plants on a turnkey basis.

Ceramic Decorators Limited

CDL provides decorative printing on bottles with the latest machines and Lehrs.

Somany Foam Limited

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Project being set up at BHEL Industrial Area, Haridwar to manufacture all types of FOAM with an
Capital outlay of Rs.36 Crores. Commercial Production will commence from April 2006.

HNG Float Glass Limited

HNG group is planning to come up with an integrated 600 TPD Float Glass Project in the State
of Gujarat at a capital outlay of Rs.550 crores. The commercial production for architectural processing and
building glass will start by December 2007 and Float glass by October 2008.

1.1.2 ACE GLASS CONTAINERS LTD., PONDICHERRY

Ace Glass containers Ltd is 100% subsidiary of HNGIL. AGCL supplies bottles and jars for a
wide range of end users like soft drinks, beverages, food, cosmetics, and pharmaceuticals as well as for
wine and liquor. In addition to clear flint glass containers, AGCL produces green glass for soft drinks, beer
both within India and International Market.

AGCL has access to the best furnace and forming technology. To help meet the quality
objectives, AGCL is focusing process capability and seeking to reduce process variations through
statistical process control techniques. Success of Ace Glass container Ltd lies on the following:

1 Furnace; melting capacity 350 MT per day

Fully Automatic Batch Mixing Facility

4 Lines of Glass making IS Machines

On-site Printing facility with 3 decoration lines

On-line automatic OI inspection machines

On-site most modern Finished Goods Warehouse

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Sand Benefication plant, Foundry & Mould workshop

AGCL realizes how distinctive quality is important for the success of brands. For this, it has
invested in computer aided design facilities to work closely with the customers in developing a conceptual
design that takes best advantage of inherent beauty premium image for customers product.

1.1.3 Companys vision:

To strive to be major international producer of quality container glass by consistently

following and adopting the most modern methods and techniques in an environment friendly manner with
active involvement of its employees to meet the need of its customers and stakeholders so as to achieve
sustainable development and long term growth.

1.1.4 Pioneer in Glass container manufacturing in India.

Manufacturers of all varieties of glass bottles/vials. Manufacturing facilities are strategically

located at Rishra near Calcutta (since 1952) and Bahadurgarh near Delhi (since 1964), Rishikesh,
Pondicherry and Nashik with state-of-the-art induction furnace for manufacturing of castings in its own
foundry. HNGIL has incorporated its technology from the best suppliers in Europe and USA. HNG Group
operates 10 furnaces and 42 production lines with fully automatic IS (Individual Section) machines up to
12 Sections operating on Double and Triple Gob.

All the Plants have a thorough electronic inspection system right from the batch mixing till the
final packing. Quality control and R&D Sections are well equipped with sophisticated instruments
enabling production of international quality glassware.

Well-equipped workshop to manufacture moulds for bottles of all designs & shapes, backed up by
own Power Generating Plants.
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1.1.5 Major customers

1. UB Group
2. Hindustan Lever Ltd
3. COCA COLA (India)
4. PEPSICO (India)
5. Nestle India
6. Glaxo Smithkline Beecham India
7. Sabmiller
8. Shawallace
9. Bacardi Martin India
10. Emami Ltd.
11. Cadburys India Ltd
12. Amul
13. MGM
14. Shiva Distilleries Ltd
15. Calipso Foods Limited ( A major exporters of food in India)
16. Southern Agro Fine Limited

1.1.6 QUALITY ASSURANCE:

Quality Control and R&D sections are well equipped with sophisticated instruments such as
Atomic Absorption Spectrophotometer, Flame Photometer, Ramp Pressure Tester, Vertical Load Tester,
Profile Projector, Impact Tester and Automatic Thermal Shock Tester, which contribute to produce
international quality containers.

With a strong Quality Control System in place (ISO-900/2000), we have been able to achieve

Quick identification and rectification of defects

Substantial reduction in job changeover and job upbringing time

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Shift from-Break down Maintenance to Preventive Maintenance Philosophy.

Higher KCR of 148 in 2005 as against 129 in 2000

PTM increased from 76% in 2000 to 86% in 2005

The design cell of HNG group is equipped with CAD-CAM facilities for designing and
manufacturing moulds and mould accessories, and is ready to offer containers of unique shapes and sizes
in various colours. Amber, Flint and Green (including Georgia Green) are the different colours offered,
while sizes vary from 5 ml to 3200 ml. HNG group manufactures over 500 kinds of glass containers to
cater to a diverse range of applications.

1.1.7 QUALITY CHECKS:

Check over incoming raw materials and packing materials.

Tight Glass Density Control as a routine tool for glass properties monitoring.

Frequent Glass Analysis.

Tight on-line Quality Checks through. Computerized, Camera based and Light-based Automatic
Inspection Machines followed by visual inspection.

Strength Tests to control Thermal Shock Resistance, Internal Pressure, uniformity of glass
distribution, stacking strength and stress control (annealing).

Use of Statistical Quality Tools before final release of Products.

Strong feedback loop to minimize defects at manufacturing stage itself.

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1.2 INTRODUCTION TO THE STUDY

The study was conducted in ACE GLASS CONTAINERS LTD, Puducherry to find the
effectiveness of employee compensation.

The employee compensation programs are designed to do three things:

1. To attract capable employees to the organization,

2. To motivate them toward superior performance, and

3. To retain their services over an extended period of time.

The study on the effectiveness of employee compensation will raise the morale, efficiency and
cooperation among the workers. It, being just and fair would provide satisfaction to the workers. The
business organization can think of expansion and growth if it has the support of skillful, talented and
happy workforce.

The employee compensation influences vitally the growth and profitability of the company.

The study intends to find how effectively employee compensation system followed in the
organization.
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CHAPTER - II

REVIEW OF LITERATURE

2.1 Compensation:

An employees total compensation has three components. The relative proportion of each varies
extensively by firm. The first and largest element of total compensation is base compensation, the fixed
pay an employee receives on a regular basis, either in the form of a salary or as an hourly wage. The
second component of total compensation is pay incentives, programs designed to reward employees for
good performance. These incentives come in many forms including bonuses and profit sharing. The last
component of total compensation is benefits, sometimes called indirect compensation. Benefits encompass
a wide variety of programs the costs of which approach 41 percent of workers compensation packages. A
special category of benefits called perquisites, or perks, are available only to employees with some special
status in the organization, usually upper-level managers. Common perks are a company car, a special
parking place on company grounds, and company-paid country club member-ships.

Compensation is the single most important cost in most firms. Personnel costs are as high as 60
percent of total cost in certain types of manufacturing environments and even higher in some service
organization. This means that the effectiveness with which compensation is allocated can make a
significant difference in gaining or losing a competitive edge.

2.2 Wage and salary administration:

Employee compensation is a vital part of human resource management. Wages, salaries and other
forms of employee compensation constitute a very large component of operating costs. One of the
biggest factors affecting industrial relations is the salary or wage-the compensation an employee receives
for a fair days work. Majority of union management disputes relate to remuneration. No organization
can expect to attract and retain qualified and motivated employees unless it pays them fair compensation.
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Employee compensation, therefore, influences vitally the growth and profitability of the company. For
employees, pay is more than a means of satisfying their physical needs. It provides them a sense of
recognition and determines their social status. Remuneration is directly or indirectly one of the
mainsprings of motivation in our society. Wages and salaries have significant influence our distribution of
income, consumption, savings, employment and prices. This is all the more significant in an under-
developed country like India suffering from problems of concentration of income, inflation and
unemployment. Thus, employee compensation is a very significant issue from the view-point of
employers, employees and the nation as a whole.

2.3 Employee compensation may be classified into two categories:

(i) Base or primary compensation, and

(ii) Supplementary compensation

Base or primary compensation refers to basic pay in the form of wages and salaries. It is a
fixed and non-incentive payment on the basis of time expended on the job. Supplementary compensation
consists of incentives and variable payments, based on either individual output or output of the group as a
whole.

Administration of employee compensation is called compensation management or wage and salary

administration. It involves formulation and implementation of policies and programmes relating to wage,
salaries and other forms of employee compensation. It includes job evaluation, wage/salary survey,
development and maintenance of wage structure rules for administration of wages, profit sharing and
other incentives and control of payroll costs. The basic purpose of wage and salary structure and an
equitable labour cost structure.

2.4 Workers compensation:

Workers compensation provides medical care, income continuation, and rehabilitation expenses
for people who sustain job-related injuries or sickness. Workers compensation also provides income to
the survivors of an employee whose death is job-related.
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Workers compensation is designed to provide a no-fault remedy to workers who are injured on the
job. This means that even workers who provide were wholly at fault for their accidents can still receive a
benefit. Employers who provide workers compensation coverage cannot be sued by injured employees.

2.5 Employee remuneration:

Remuneration is the compensation an employee receives in return for his or her contribution to the
organization. Remuneration occupies an important place in the life of an employee. His or her standard of
living status in the society, motivation, loyalty, and productivity depends upon the remuneration he or she
receives. For the employer too, employee remuneration is significant because of its contribution to the
cost of production. Besides, many battles are fought between the employer and the employees on issues
relating to wages or bonus. For HRM too, employee remuneration is a major function. The HR specialist
has a difficult task of fixing wages differentials acceptable to employees and their leaders.

2.6 Components of remuneration:

An average employee in the organized sector is entitled to several benefits-both financial as well as
non-financial. To be specific, typical remuneration of an employee comprises-wages and salary,
incentives, fringe benefits, perquisites, and monetary benefits.

Wages and salary

Wages represent hourly rates of pay, and salary refers to the monthly rate of pay, irrespective of the
number of hours put in by an employee. Wages and salaries are subject to annual increments. They differ
from employee to employee, and depend upon the nature of job, seniority, and merit.

Incentives

It is also called payments by result, incentives are paid in addition to wages and salaries.
Incentives depend upon productivity, sales, profit, or cost reduction efforts.
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There are: (i) individual incentives schemes, and (ii) group incentives programmes. Individual
incentives are applicable to specific employee performance. Where a given task demands group effort for
completion, incentives are paid to the group as a whole. The amount is later divided among group
members on an equitable basis.

Fringe benefits

These include such employee benefits as provided fund, gratuity, medical care, hospitalization,
accident relief, health and group insurance, canteen, uniform, recreation and the like.

Perquisites

These are allowed to executives and include company car, club membership, paid holidays,
furnished house, stock option schemes and the like. Perquisites are offered to retain competent executives.

Non-monetary benefits

These include challenging job responsibilities, recognition of merit, growth prospects, competent
supervision, comfortable working conditions, job sharing, and flexitime.

2.7 Executive compensation

The pay packet of executives consists of several components such as the following:

(a) Straight Salary

(b) Bonus based on companys profits for commission as a percentage of profit.

(c) Stock options involving issue of the companys shares at a special price which is lower than
market value.
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(d) Fringe benefits or perquisites such as free furnished housing , servants, chauffer driven car, free
telephone, leave travel concession, newspapers and magazines, clubs membership, membership of
professional association, discount coupons, sponsorship to executive development programmes,
expense account, entertainment allowance, etc. Executive compensation depends on several
factors, some of which are as follows:

(i) Complexity of the job. Managerial jobs are more complex requiring higher skills and
greater responsibilities. These jobs call for creativity, innovation, decision making and other
skills. Job complexity differs with the nature of industry. For instance in high tech industries
like petrochemicals, payscales tend to be relatively higher.

(ii) Capacity to Pay. Large (sales volume) fast growing (increases in fixed assets) and
diversified companies generally pay higher remuneration to their executives than small and
stagnant companies.

(iii) Education and Experience. Professionally trained and experienced managers are
relatively short in supply. Therefore, higher remuneration is paid to them to young and
inexperienced executives.

(iv) Performance. Performance and efficiency are more significant in managerial jobs.
Executives who consistently outperform others are in great demand and companies are willing
to reward them substantially.

(v) Economic Environment. Liberalisation and globalisation in India has led to increase in
executive pay. Multinationals pay scales tend to be high and Indian firms are stepping up
managerial salaries to attract and retain executive talent.

(vi)Legislation. In India, managerial remuneration is subject to Government control under the

Companies Act. Statutory limits on the amount of remuneration payable to different categories
of managerial personnel of public limited companies and their subsidiaries have been laid
down.
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2.8 TRADITIONAL COMPENSATION

For the most part, traditional methods of compensation involve set pay levels (wage or salary) with
regular increases. Increases can be given for a variety of reasons, but are typically given for promotions,
merit increases, or cost of living increases. The Hay Group points out that there is less distinction today
between merit increases and cost of living increases: "Because of the low levels (3 to 4 percent) of salary
budget funding, most merit raises are perceived as little more than cost of living increases. Employees
have come to expect them." This "base pay" system is one that most people are familiar with. Often, it
includes a set salary or wage, a set schedule for merit increases, and a set benefits package.

2.9 CHANGES IN COMPENSATION SYSTEMS

As businesses change their focus, their approach to compensation must change as well. Traditional
compensation methods may hold a company back from adequately rewarding its best workers. When
compensation is tied to a base salary and a position, there is little flexibility in the reward system. Some
new compensation systems, on the other hand, focus on reward for skills and performance, with the work
force sharing in company profit or loss. One core belief of new compensation policies is that as employees
become employee owners, they are likely to work harder to ensure the success of the company. Indeed,
programs that promote employee ownershipand thus employee responsibility and emotional investment
are becoming increasingly popular. Examples of these types of programs include gain sharing, in which
employees earn bonuses by finding ways to save the company money; pay for knowledge, in which
compensation is based on job knowledge and skill rather than on position (and in which employees can
increase base pay by learning a variety of jobs); and incentive plans such as employee stock options plans
(ESOPs).

PAY FOR PERFORMANCE Probably the most popular of the newer concepts in compensation is the
easiest to understandcompensation based on performance. These programs, sometimes referred to as
variable pay programs, generally offer compensation incentives based on employee performance or on the
performance of a team. Pay for performance rewards high performance and does not reward mediocre or
low performance, and is the definition of the "merit" system.
In a true merit based system, there are a few conditions which must be satisfied for it to be meaningful:
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Employees must have control over their performance. If employees are overly dependent on the
actions and output of other employees or processes, they may have little control over their own
performance.

Differences in performance must mean something to the business. If there is little difference
between a high performer and a mediocre one, merit pay won't work.

Performance must be measured regularly and reliably. A clear system of performance appraisal,
with defined criteria that are understood by the employee and regularly scheduled meetings must
be in place.

2.10 Designing a compensation system:

An employee paycheck is certainly for its purchasing power. In most societies, however, person
earnings also serve as an indicator of power and prestige and are tied to feelings of self-worth. In other
words compensation affects a person economically, socio-logically, and psychologically. For this reason,
mishandling compensation issues is likely to have a strong negative impact on employees and, ultimately,
on the firms performance.

The wide variety of pay policies and procedures presents managers with a two-pronged challenge:
to design a compensation system that (1) enables the firm to achieve its strategic objectives and (2) is
molded to the firms unique characteristics and environment.

2.11 The nine criteria for developing compensation plan:

1. Internal versus External equity

Fair pay is pay that employees generally view as equitable. There are two forms of pay equity.
Internal equity refers to the perceived fairness of the pay structure within a firm. External equity refers to
the perceived fairness of pay relative to what other employers are paying for the same type of labor.

2. Fixed versus Variable pay

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Firms can choose to pay proportion of total compensation in the firm of base pay or in the form of
variable pay that fluctuates according to some preestablished criterion.

3. Performance versus Membership

A company emphasizes performance when a substantial portion of its employees pay is tied to
individual or group contribution and the amount received can vary significantly from one person or group
to another the most extreme forms of performance-contingent compensation are traditional piece-rate
plans and sales commissions. Other performance-contingent plans use awards for cost-saving suggestions,
bonuses for perfect attendance, or merit pay based on supervisory appraisals.

4. Job versus Individual pay

Most traditional compensation system assume that in setting base compensation a firm should
evaluate the value or contributions of each job, not how well the employee performs it. Under this system,
the job becomes the unit of analysis for determining base compensation, not the individual(s) performing
that job. This means that the minimum and maximum values of each job are set independently of
individual workers, who must be paid somewhere in the range established for that job.

5. Egalitarianism versus Elitism

Firms must decide whether to place most of their employees under the same compensation plan
(an egalitarian pay system) or to establish different compensation plans by organizational level and/or
employee group (an elitist system).

6. Below-market versus Above-market compensation

The below-market versus above-market compensation decision is crucial for two reasons. First,
employees pay relative to alternative opportunities directly impacts the firms ability to attract workers
from other companies. Pay satisfaction is very highly correlated with pay level, and dissatisfaction with
pay is one of the most common causes of employee turnover. Second, the choice has an important cost
component. The decision to pay above market for all employee group allows the firm to hire the cream of
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the crop, minimize voluntary turnover, and create a climate that makes all employees feel they are part of
an elite organization.

7. Monetary versus Nonmonetary awards

One of the oldest debates about compensation concerns monetary versus nonmonetary rewards.
Unlike cash or payments that can be converted into cash in the future (such as stocks or a retirement plan),
nonmonetary rewards are intangible. Such rewards include interesting work, challenging assignments, and
public recognition.

8. Open versus Secret pay

Firms vary widely in the extent to which they communicate openly about workers compensation
levels and company compensation practices. At one extreme, some firms require employees to sign an
oath that they will not divulge their pay to coworkers; the penalty for breaking to sign an oath is
termination. At the other extreme, every employees pay is a matter of public record; in public universities
this information may even be published in the student newspaper. Many organizations are somewhere in
between: they do not publish individual data but they do provide information on pay and salary ranges.

9. Centralization versus Decentralization of pay decision

Organization must decide where pay decisions will be made. In a centralized system, pay
decisions are tightly controlled in a central location, normally the HR department at corporate
headquarters. In a decentralized system, pay decisions are delegated deep down into the firm, normally to
managers of each unit.

2.12 Pay for Performance:

Most workers believe that those who work harder and produce more should be rewarded
accordingly. If employees see that pay is not distributed on the basis of merit, they are more likely to lack
commitment to the organization, decrease their level of effort, and look for employment opportunities
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elsewhere. Pay-for-performance system, also called incentives systems, rewards employee performance on
the basis of three assumptions:

1) Individual employees and work teams differ in how much they contribute to the firm not only in
what they do, but also in how well they do it.

2) The firms overall performance depends to a large degree on the performance of individuals and
groups within the firm.

3) To attract, retain, and motivate high performers and to be fair to all employees, a company needs to
reward employees on the basis of their relative performance.
2.13 Determining Employee Compensation
Author: Pam Newman
Year: 2007

1. Incentives and bonus plans need to have clear guidelines to minimize any confusion. They shouldn't be
seen as a guaranteed payment, but instead should be measured by performance of the individual, team or
company. If end-of-the-year bonuses are given every year regardless of performance, they no longer serve
as a motivating factor; they are expected payments. Incentives and bonus payments should be reserved for
employees who go above and beyond their everyday performance to help the company exceed its
profitability goals.

2. Understand the costs of a benefit plan before you offer it. Offering benefits is a nice incentive for
employees, but they can be a very costly burden to the company. So when assessing what benefits to add,
consider not only today's direct costs, but also long-term expenses. Adding and removing benefits can be
very demoralizing to your staff. So don't add anything you don't plan to continue long term. Of course,
unexpected situations can always arise that may affect your ability to continue offering a certain benefit,
but employees will become disgruntled when benefits are added and removed frequently.

3. You also need to calculate employer payroll taxes into your overall payroll budget. Employers incur
expenses, such as Social Security and Medicare tax, unemployment insurance for both state and federal
entities, and workers' compensation insurance.
 27

4. What type of position will the individual hold? Does it best correlate with direct payment on an hourly
or salaried basis or is commission a better arrangement? Employees in sales-related positions should have
commission as a part of their compensation package. Whether they're 100 percent commission or some
other combination depends on the circumstances. These types of positions are most successful when their
compensation is tied to their performance. It's a win-win for both the company and the employee.

5. Payroll budgeting is a necessity. There are many aspects to budgeting for a company, and a payroll
budget is one component that should be done as well. Payroll budgets need to include direct wage and
salary payments, commissions, bonuses, incentives, payroll taxes and insurance, along with any other
directly related costs the business incurs in the payroll function. There will only be so much money that
can be allocated to the complete compensation package and knowing that up front will help you in setting
your commission, incentive, bonus and raise strategies up front.

2.14 Compensation research past, present and future

Author: James H. Dulebohn and Stephen E. Werling
Year: 2007

Past compensation research has largely reflected organizational characteristics and personnel
practices that had an internal rather than an external focus. Internal labor markets typically characterized
organizations following WWII up until the 1980s. Consequently compensation research focused on issues
related to managing compensation in this type of structure that emphasized areas such as internal equity,
job evaluation, and individual reactions to pay. Recent changes in the environment have resulted in a
greater role of external factors, such as external labor markets, market pricing, and external
competitiveness, on compensation practice. While practitioners today have more of an external focus in
compensation system design, present compensation research has not kept pace. In the following paper we
argue there is a need to redirect future compensation research to include a consideration of external
factors.

2.15 Pay-for-Knowledge Compensation Plans

Author: Nina Gupta
Year: 1987
 28

In recent years, the U.S. business environment has been characterized by fierce international
competition and rapid technological change. This has been accompanied by a surge of workplace
innovations such as quality-of-work life programs, autonomous work groups, and employee stock
ownership plans, to name a few. One particular innovation which has received national attention is "pay-
for-knowledge' compensation plans, also referred to as skill-based pay or knowledge-based pay plans.1
Unlike traditional compensation systems which base employees' wages on the specific jobs they actually
do, pay-for-knowledge plans base wages on the repertoire of jobs that the employee is trained to do under
such plans at a base rate.

2.16 Health Insurance, Labor Supply, and Job Mobility

Author: Jonathan Gruber, Brigitte C. Madrian
Year: 2002

This provides a critical review of the empirical literature on the relationship between health
insurance, labor supply, and job mobility. We review over 50 papers on this topic, almost exclusively
written in the last 10 years. We reach five conclusions. First, there is clear and unambiguous evidence that
health insurance is a central determinant of retirement decisions. Second, there is fairly clear evidence that
health insurance is not a major determinant of the labor supply and welfare exit decisions of low income
mothers. Third, there is fairly compelling evidence that health insurance is an important factor in the labor
supply decisions of secondary earners. Fourth, while there is some division in the literature, the most
convincing evidence suggests that health insurance plays an important role in job mobility decisions.
Finally, there is virtually no evidence in the literature on the welfare implications of these results. We
present some rudimentary calculations which suggest that the welfare costs of job lock are likely to be
modest. Our general conclusion is that health insurance has important effects on both labor force
participation and job choice, but that it is not clear whether or not these effects results in large losses of
either welfare or efficiency.
 29

2.17 The Role of Organizational Justice in Pay and Employee Benefit Satisfaction,
and its Effects on Work Attitudes
Author: David B. Balkin
Year: 2000

The objective is to provide a complementary approach with regard to organizational justice in the
domain of compensation. It presents research undertaken on a sample of 285 employees in three different
Canadian organizations. The results reveal that employees distinguish clearly between pay satisfaction and
benefit satisfaction, and that distributive justice perceptions are better predictors of pay satisfaction than
procedural justice perceptions. This result is reversed for employee benefit satisfaction: Procedural justice
perceptions are better predictors than distributive justice perceptions. Lastly, the results show that
distributive justice perceptions with regard to pay play a more important role than procedural justice in job
satisfaction and satisfaction with the organization.

2.18 Innovative Compensation Practices in Nonprofit Organizations

Author: James E. Rocco
Year: 2000

If a formal management incentive program is not an option because of your size or limited
budget resources, you may wish to consider the adoption of certain innovative compensation programs
which are not very costly and can have a beneficial impact on employee morale. These include noncash
recognition programs, cash recognition programs such as spot awards, flextime/staggered hours, and a
flexible spending account. Based on our experience, many of these programs are highly valued by
employees since they provide flexibility. These plans incur little or no cost to the organization. Expert
compensation and legal advice may be needed and should be considered by nonprofit organizations before
implementing innovative compensation plans.

2.19 Cost of employee compensation in public and private sectors

Author: Bradley R. Braden and Stephanie L. Hyland
Year: 1993
 30

Much of the variation in the cost of compensation in the two sectors is due to differences in the
occupational mix and types of compensation packages provided. This article highlights differences in the
industry and occupational mix that influence average compensation costs in private industry and State and
local governments, and provides data on the hourly cost of compensation for specific groups of workers in
each sector.

2.20 Small Group Incentives

Author: Judith A. Honeywell-Johnson
Year: 1999

The effects of small group incentives indicate that equally-divided small group incentives
sustain high levels of productivity and employee satisfaction. Moreover, for groups of 2-12 members, their
effects have been comparable to those reported for individual monetary incentives. Although some studies
found that differentially divided group incentives resulted in higher performance than individual
incentives and equally-divided group rewards, they were perceived as less fair and satisfying, perhaps due
to their competitive nature. Few studies have examined the effects of group incentives on social
interactions or the performance of tasks that require interdependent contributions by group members.
While results pertaining to the effectiveness of small group monetary incentives have been consistent,
questions remain. Particularly important are studies of the relative effects of individual and group
feedback when incentives are provided, the effects of group incentives when there are distinct high and
low performers and their effects when pay differences between individual and group incentive conditions
are greater.

2.21 Integrating customer orientation, employee compensation and performance

management:
Author: Sven Tuzovic, Manfred Bruhn
Year: 2000

Compensation systems are an essential tool to link corporate goals such as customer
orientation with individual and organisational performance. While some authors demonstrate the positive
effects of incorporating nonfinancial measures into the compensation system empirically, companies have
encountered problems after linking pay to customer satisfaction. We argue that reasons for this can be
 31

attributed to the measurement of customer satisfaction as well as to the missing link between customer
satisfaction and customer retention and profitability in theses cases. Hence, there is a strong need for the
development of a holistic reward and performance measurement model enabling an organisation to
identify cause-and-effect relationships when linking rewards to nonfinancial performance measures. We
present a conceptual framework of a success chain driven reward system that enables organisations to
systematically derive a customer-oriented reward strategy. In the context of performance evaluation, we
propose to rely on integrated and multidimensional measurement methods.

2.22 Automation gives variable compensation a boost: enterprise incentive

management's timely feedback can help modify employee.
Author: Robb, Drew
Year: 2002

Enterprise incentive management (EIM) technology, an emerging category of software and services for
automating variable-pay processes, can be a powerful behavior modification tool as well as a means of
furthering HR's role as a critical business partner.
EIM analyzes, tracks and pays bonuses, commissions and other types of variable compensation. It collates
data from various systems to provide management with a comprehensive picture of payout versus
performance, and it does it more efficiently than unwieldy manual entry systems.

EIM's early roots began in sales compensation management, where it has long been harnessed to automate
calculations, taking into account commissions, accelerators, quotas and special promotions. Such
calculations can be cumbersome and can result in high spreadsheet error rates, once a sales force expands
beyond a handful of individuals, or commission system variables multiply.

Trimble Navigation Ltd., a Sunnyvale, Calif., maker of global positioning systems, has discovered the
need for EIM in complex record-keeping and report generation. Trimble two years ago implemented an
EIM system from Motive of Pleasanton, Calif., for its sales force, replacing a system that lacked
flexibility, could not handle special credit rules and did not provide formal reports, says financial analyst
Nam Trinh. The new system calculates commissions for agents and wholesalers, and it creates
commission reports, says Trinh. "At month end, the system e-mails clear, accurate performance reports to
salespeople and managers."
 32

While Trimble implemented an in-house EIM system, other companies prefer to outsource EIM functions.
Instead of purchasing software, they make their compensation data available to an external EIM systems
provider for processing and analysis.

CHAPTER III
OBJECTIVES

3.1 Primary Objective:

To study and measure the effectiveness of employee compensation followed in the ACE Glass
Containers Ltd.

3.2 Secondary Objectives:

i. To study whether the present compensation system motivates the employees to increase the
productivity.

ii. To identify whether compensation plan ensures health, safety, and welfare of employees.
 33

iii. To get the opinion from the employees about the present compensation plan and provide
suggestion for improvement.

iv. To suggest suitable measures for better compensation to accomplish the organization goals.

CHAPTER IV
RESEARCH METHODOLOGY

4.1 RESEARCH MEANING AND DEFINITION

Research is an art of scientific investigation. The advanced learners dictionaries of current

English lay are down the meaning of research as, a careful investigation or inquiry especially through
search for new facts in any branch of knowledge. Redman and Mory define research as a systematized
effort to gain knowledge.

4.2 RESEARCH DESIGN

 34

A research design stands for advance planning of the methods to be adopted for collecting the
relevant data and the techniques to be used in the analysis, keeping in view the objective of the research.

4.3 SAMPLING DESIGN

Sampling Unit : Employees

Sample Size : 100 nos.
Sampling Method : Simple Random Sampling

4.4 METHOD OF DATA COLLECTION:

4.4.1 Primary data

Primary data is afresh information that is collected for the first time during the period of
research. In this study primary data is colleted primarily to understand the existing compensation system
in the organization.

4.4.2 Secondary data

Secondary data studies whole company records and in addition a number of reference books,
journals, reports and internet were also used to formulate the theoretical model for the project study.

4.5 RESEARCH INSTRUMENT:

The data were collected by using questionnaire as an instrument.

4.6 TOOLS FOR ANALYSIS:

 35

Percentage Method
Chi-Square Test
Weighted Average Method
Rank Correlation
.
i. Percentage Method:

Percentages are often used in data presentation for simplifying numbers, reducing all of them
to a 0 to 100 range.

Percentage = No. Of Respondents X 100

Total No. Of Respondents

ii. Chi-Square Test:

The chi-square test is an important test amongst the several test of significance developed by
statisticians. It is used to test the significance of association between two attributes. It is a statistical
measure used in the context of sampling analysis for comparing a variance to a theoretical variance.
The formula for computing chi-square ( is as follows

iii. Weighted Average Method

In the Weighted Average Method, the weighted average can be calculated by the following
formula

XW = WX/X

Here XW represents the weighted average

 36

X1, X2, X3, X4,..Xn represents the value for variable values
W1, W2, W3, W4 Wn represents the weight age given to the variable.

iv. Rank Correlation

Rank Correlation is the technique of determing the degree of correlation between two variables
in case of ordinal data where ranks are given to the different values of the variables. This coefficient is
determined as under

Spearmans Coefficient of Correlation (or) r = 1- 6di2

n (n2-1)

Where di = difference between rank of the two variables;

n = number of pair of observations

CHAPTER V
DATA ANALYSIS AND INTERPRETATION

5.1 ANALYSIS USING PERCENTAGE METHOD

TABLE 5.1.1 RESPONDENTS BASED ON YEARS OF EXPERIENCE

 37

Sl.no Years No. of Respondents Percentage%

1 0-2 years 71 71
2 3-5 years 24 24
3 6-8 years 5 5
Total 100 100

Source: Primary Data

Inference

71% of respondents belong to 0-2 years of experience, 24% of respondents belong to 3-5 years
of experience and 5% of respondents belong to 6-8 years of experience.

CHART 5.1.1 RESPONDENTS BASED ON YEARS OF EXPERIENCE

TABLE 5.1.2 RESPONDENTS BASED ON MONTHLY INCOME

Sl.no Income No. of Respondents Percentage%

1 <5000 22 22
2 5000-10000 57 57
3 10000-15000 11 11
4 15000 and above 10 10
Total 100 100
 38

Source: Primary Data

Inference

22% of respondents belong to <5000 of monthly income, 57% of respondents belong to 5000-
10000 of monthly income, 11% of respondents belong to 10000-15000 of monthly income and 10% of
respondents belong to above 15000 of monthly income.

CHART 5.1.2 RESPONDENTS BASED ON MONTHLY INCOME

TABLE 5.1.3 FACTORS INDUCES TO WORK IN THIS ORGANISATION

Sl.no Factors No. of Respondents Percentage%

1 Money 71 71
2 Work environment 5 5
3 Nature of work 24 24
Total 100 100
 39

Source: Primary Data

Inference

71% of respondents said that money induces to work, 5% of respondents said that work
environment induces to work, and 24% of respondents said that nature of work induces to work in this
organization.

CHART 5.1.3 FACTORS INDUCES TO WORK IN THIS ORGANISATION

TABLE 5.1.4 EMPLOYEES OPINION ABOUT WORK ENVIRONMENT

 40

Sl.no Opinion No. of Respondents Percentage%

1 Agree 74 74
2 Strongly agree 16 16
3 Disagree 7 7
4 Strongly disagree 3 3
Total 100 100

Source: Primary Data

Inference

74% of respondents agree that work place is comfortable and safe, 16% of respondents
strongly agree that work place is comfortable and safe, 7% of respondents disagree with the work
environment and 3% of respondents strongly disagree with the work place is comfortable and safe.

CHART 5.1.4 EMPLOYEES OPINION ABOUT WORK ENVIRONMENT

TABLE 5.1.5 EMPLOYEES AWARE OF FRINGE BENEFITS SCHEME

 41

Sl.no Opinion No. of Respondents Percentage%

1 Yes 60 60
2 No 40 40
Total 100 100

Source: Primary Data

Inference

60% of respondents are said that they are aware of fringe benefits scheme and 40% of
respondents said that they are not aware of fringe benefits scheme.

CHART 5.1.5 EMPLOYEES AWARE OF FRINGE BENEFITS SCHEME

TABLE 5.1.6 EMPLOYEES OPINION ABOUT FRINGE BENEFITS IF THEY WORK WITH
HAZARDOUS MATERIAL
 42

Sl.no Response No. of Respondents Percentage%

1 Yes 13 13
2 No 87 87
Total 100 100

Source: Primary Data

Inference

13% of respondents are said that organization provide fringe benefits if employees work with
hazardous material and 87% of respondents said that organization does not provide fringe benefits if
employees work with hazardous material.

CHART 5.1.6 EMPLOYEES OPINION ABOUT FRINGE BENEFITS IF THEY WORK WITH
HAZARDOUS MATERIAL

TABLE 5.1.7 EMPLOYEES RATING ABOUT BONUS

 43

Sl.no Opinion No. of Respondents Percentage%

1 Effective 38 38
2 Very effective 34 34
3 Not effective 11 11
4 No opinion 17 17
Total 100 100

Source: Primary Data

Inference

38% of respondents are rated that bonus is effective, 34% of respondents are rated that bonus is
very effective, 11% of respondents are rated that bonus is not effective and 17% of respondents said no
opinion about the bonus.

CHART 5.1.7 EMPLOYEES RATING ABOUT BONUS

 44

TABLE 5.1.8 EMPLOYEES RATING ABOUT GROUP ACCIDENT INSURANCE POLICY

Sl.no Opinion No. of Respondents Percentage%

1 Effective 8 8
2 Very effective 15 15
3 Not effective 55 55
4 No opinion 21 21
Total 100 100

Source: Primary Data

Inference

8% of respondents are rated that Group accident insurance policy is effective, 15% of
respondents are rated that Group accident insurance policy is very effective, 55% of respondents are rated
that Group accident insurance policy is not effective and 21% of respondents said no opinion about the
Group accident insurance policy.

CHART 5.1.8 EMPLOYEES RATING ABOUT GROUP ACCIDENT INSURANCE POLICY

TABLE 5.1.9 EMPLOYEES RATING ABOUT MEDICAL REIMBURSEMENT

 45

Sl.no Opinion No. of Respondents Percentage%

1 Effective 12 12
2 Very effective 19 19
3 Not effective 21 21
4 No opinion 48 48
Total 100 100

Source: Primary Data

Inference

12% of respondents are rated that Medical reimbursement is effective, 19% of respondents are
rated that Medical reimbursement is very effective, 21% of respondents are rated that Medical
reimbursement is not effective and 48% of respondents said no opinion about the Medical reimbursement.

CHART 5.1.9 EMPLOYEES RATING ABOUT MEDICAL REIMBURSEMENT

 46

TABLE 5.1.10 EMPLOYEES RATING ABOUT LTA

Sl.no Opinion No. of Respondents Percentage%

1 Effective 24 24
2 Very effective 33 33
3 Not effective 26 26
4 No opinion 17 17
Total 100 100
Source: Primary Data

Inference

245 of respondents are rated that LTA is effective, 33% of respondents are rated that LTA is
very effective, 26% of respondents are rated that LTA is not effective and 17% of respondents said no
opinion about the LTA.

CHART 5.1.10 EMPLOYEES RATING ABOUT LTA

TABLE 5.1.11 SATISFACTION WITH THE ALLOWANCE

 47

Sl.no Opinion No. of Respondents Percentage%

1 Yes 64 64
2 No 36 36
Total 100 100

Source: Primary Data

Inference
64% of respondents are said that they are satisfied with the allowances provided by the
organization and 36% of respondents said that they are not satisfied with the allowances provided by the
organization.

CHART 5.1.11 SATISFACTION WITH THE ALLOWANCE

 48

5.2 ANALYSIS USING CHI-SQUARE

ANALYSIS OF OPINION ABOUT MONETARY BENEFITS AND LEVEL OF

RECOGNITION RECEIVED FROM SUPERVISOR
[USING CHI -SQUARE]

TABLE 5.2.1

OBSERVED COUNT

LEVEL OF RECOGINITION RECEIVED

FROM YOUR SUPERVISOR
Needs
Total
Good Fair Improvement

SATISFACTION Highly Satisfied 4 6 8 18

ABOUT Satisfied 8 8 5 21
Moderate 2 8 6 16
MONETARY
Dissatisfied 6 9 9 24
BENEFITS Highly Dissatisfied 7 8 6 21
Total 27 39 34 100

TABLE 5.2.2

EXPECTED COUNT

LEVEL OF RECOGINITION RECEIVED

FROM YOUR SUPERVISOR
Needs
Total
Good Fair Improvement

SATISFACTION Highly Satisfied 4.9 7.0 6.1 18.0

ABOUT Satisfied 5.7 8.2 7.1 21.0
Moderate 4.3 6.5 5.4 16.0
MONETARY
Dissatisfied 6.5 9.4 8.2 24.0
BENEFITS Highly Dissatisfied 5.7 8.2 7.1 21.0
Total 27.0 39.0 34.0 100.0

TABLE 5.2.3
 49

CHI SQUARE CALCULATION

Oi Ei (Oi-Ei)2 /Ei

4 4.9 0.17
6 7.0 0.14
8 6.1 0.59
8 5.7 0.93
8 8.2 4.88
5 7.1 0.62
2 4.3 1.23
8 6.2 0.52
6 5.4 0.07
6 6.5 0.04
9 9.4 0.02
9 8.2 0.08
7 5.7 0.30
8 8.2 4.88
6 7.1 0.17
= 14.64

NULL HYPOTHESIS:
Ho: There is no association between monetary benefits and level of recognition received from
supervisor.

Inference:
Calculated value = (Oi-Ei) 2 /Ei = 14.64
Degrees of freedom = (M-1) (N-1) = (5-1) (3-1) = 8
Tabulated value for 8 degrees of freedom at 5% level of significance is 15.51
The calculated value is lesser than tabulated value, therefore Ho is accepted.

5.3 ANALYSIS USING WEIGHTED AVERAGE METHOD

TABLE 5.3.1
 50

ANALYSIS OF RANKING GIVEN BY THE RESPONDENT REGARDING THE SATISFACTION

LEVEL OF BENEFIT FACILITIES
(USING WEIGHTED AVERAGE METHOD)

FACILITIES

Rank Weight Loan Leave Transport Canteen

facilities facilities facilities facilities

X W X1 WX1 X2 WX2 X3 WX3 X4 WX4

1 5 11 55 15 75 60 300 12 60

2 4 67 268 39 156 16 64 18 72

3 3 12 36 26 78 13 39 55 165

4 2 6 12 11 22 7 14 6 12

5 1 4 4 9 9 4 4 9 9

Total 100 375 100 340 100 421 100 318

CW 3.75 3.4 4.21 3.18

Rank 3 1 4 2

Inference:
The respondents rated that leave facilities as first, canteen facilities as second, loan facilities as
third and transport facilities as fourth.

5.4 ANALYSIS USING RANK CORRELATION

 51

TABLE 5.4.1

ANALYSIS OF OPINION OF RESPONDENTS REGARDING SATISFACTION LEVEL OF

INCENTIVES PROVIDED AND OVERALL SATISFACTION WITH THEIR JOB
[USING RANK CORRELATION]

Opinion of the Highly Satisfied Moderate Dissatisfied Highly

Respondents Satisfied Dissatisfied

Satisfaction with the 14 22 47 11 6

incentives

Satisfaction with the job 24 48 17 7 4

ANALYSIS OF OPINION OF RESPONDENTS REGARDING SATISFACTION LEVEL OF

INCENTIVES PROVIDED AND OVERALL SATISFACTION WITH THEIR JOB

TABLE 5.4.2

x xi y yi (xi-yi) 2
14 3 24 2 1
22 2 48 1 1
47 1 17 3 4
11 4 7 4 0
6 5 4 5 0
di2 = 6

r = 1- 6di2/ n (n2-1)

= 1 - 6(6)
5(52-1)

r = 0.7

Inference:
Satisfaction with the incentives provided and the overall job satisfaction are positively correlated.

CHAPTER - VI
 52

FINDINGS OF THE STUDY

1) Most of the respondents belong to the income level of 5000-10000, majority of the respondents are
male and most of the respondents are having experience of <2 years.

2) Majority of the respondents have said that money induces to work in ACE Glass Containers Ltd.

3) A majority of the respondents said that work place is comfortable and safe.

4) The percentage analysis shows that 60% of the employees were aware of fringe benefits schemes
followed in the organization.

5) Most of the employees are satisfied with the allowances provided by the organization.

6) A majority of the respondents are rated that bonus and LTA is effective.

7) Most of the respondents said that organization does not provide fringe benefits if employees work with
hazardous material.

8) There is no association between monetary benefits and level of recognition received from supervisor.

9) The opinion of the respondents regarding the employees benefit facilities, they rated leave facilities as
first, canteen facilities as second, loan facilities as third and transport facilities as fourth.

10) The opinion of the respondents regarding satisfaction with the incentives provided by the organization
and the overall job satisfaction are positively correlated.
 53

CHAPTER - VII
7.1 SUGGESTION AND RECOMMENDATION

From the study it was found that 40% of the employees were not aware of the fringe benefits
scheme, so the organization can make such awareness to the employees to motivate them.

Findings show that bonus and LTA is effective so the organization can also give importance to
medical reimbursement & group accident insurance policy.

Most of the respondent states that, they are not satisfied with the fringe benefits provided by the
organization, so the organization can provide such benefits in order to attract and retain the
qualified employees.

The organization can concentrate on recognition facilities, so that can help in improving
performance of the employees in a better way.
 54

7.2 Conclusion

The study conducted at ACE GLASS CONTAINERS LTD deals with the effectiveness of
employee compensation. In this present situation every organization should provide compensation to
motivate the employees.

The employee compensation will help to increase performance of an employee as well as concern.
The research found that monetary benefits can be improved for stimulating their morale and motivation.

The study reveals that the present fringe benefits scheme followed in the organization is found to
be moderate so it has to be improved to achieve the full satisfaction of the employees and to accomplish
the organization goals.
 55

CHAPTER - VIII
8.1 LIMITATIONS

The study is applicable only to ACE GLASS CONTAINERS LTD., PUDUCHERRY.

The sample size was only 100, which were limited considering the total strength.

Some of the information provided by the respondents might not be correct.

The study is not an exhaustive analysis of all aspects of the limit, but it concentrates on few
selected factors, which are related to employee compensation.
 56

8.2 Scope for further study

This study will encourage quality work performance and provide guidelines for pay adjustments to
attract, retain, and recognize employees to achieve organizational success.

It will be helpful for the organization to develop numerous ways of providing compensation in the
form of fringe benefits.

The study will be useful to motivate improved performance on the job and also it is effective to
retain the employees in the organization on a long-term basis.
 57

Annexure I

A STUDY ON EFFECTIVENESS OF EMPLOYEE COMPENSATION

AT ACE GLASS CONTAINERS LTD., PONDICHERRY

Questionnaire

1) Name of the respondent: ..

2) Age: .

3) Gender: Male / Female

4) Marital status : i) Married ii)Unmarried

5) Designation:

6) Experience: .

7) Monthly income Rs:

i) <5000 ii) 5000-10000 iii) 10000-15000 iv) 15000 and above

8) Education qualification:

i) I.T.I ii) Diploma iii) BE iv) Degree v) PG

 58

9) The environment of the workplace is comfortable and safe.

a) Agree [ ] b) Strongly Agree [ ]

c) Disagree [ ] d) Strongly Disagree [ ]

10) Among the following factor which induces you to work in your organization

a) Money [ ] b) working environment [ ]

c) Nature of work [ ] d) others [ ]

11) Your satisfaction about your monetary benefits.

a) Highly satisfied [ ] b) satisfied [ ]

c) Moderate [ ] d) Dissatisfied [ ]

e) Highly dissatisfied [ ]

12) Do you have any fringe benefits scheme in your organization?

a) Yes [ ] b) No [ ]

13) If yes, do you aware of that fringe benefits scheme.

a) Yes [ ] b) No [ ]

14) Does your organization provide any fringe benefits if you work with certain hazardous material.

a) Yes [ ] b) No [ ]

15) Does your organization provide any transport facilities?

 59

a) Yes [ ] b) No [ ]

16) Please rank the following fringe benefit schemes

Benefits Effective Very Not No

effective effective opinion

Bonus

Group accident insurance policy

Medical reimbursement

LTA
Facilities Highly Satisfied Moderate Dissatisfied Highly
satisfied dissatisfied

Loan facilities

17) Leave facilities Specif

y your
Transport facilities

Canteen facilities
satisfaction level
 60

18) The reimbursements of insurance claims are received in a timely manner.

a) Agree [ ] b) Strongly Agree [ ]

c) Disagree [ ] d) Strongly Disagree [ ]

19) How much you are satisfied with the incentives provided by the organization

a) Highly satisfied [ ] b) Satisfied [ ]

c) Moderate [ ] d) Dissatisfied [ ]

e) Highly Dissatisfied [ ]

20) Are you satisfied with the allowance provided by the organization

a) Yes [ ] b) No [ ]

21) The level of recognition received from your supervisor is

a) Good [ ] b) Fair [ ]
 61

c) Needs Improvement [ ]

22) Overall satisfaction with your job

a) Highly satisfied [ ] b) satisfied [ ]

c) Moderate [ ] d) Dissatisfied [ ]

e) Highly Dissatisfied [ ]

23) Any suggestion regarding employee benefit package..

Annexure II

BIBLOGRAPHY

Books referred

Edwin B.Flippo, Personnel Management Sixth Edition,

McGraw-Hill Publishers.

David B. Balkin and Robert L. Cardy, Managing Human resources Third Edition-2003
Prentice Hall of India Publishers, New Delhi.

Dr. C. B. Gupta, Human Resource Management Sixth Edition-2003,

Sultan Chand & Sons, Educational Publishers, New Delhi.

C.R.Kothari, Research Methodology Methods & Techniques Second Edition-2004,

New Age International Publishers.

Websites
www.citehr.com
 62

www.explore.com
www.hngindia.com