Chapter I

INTRODUCTION
Chapter - I

Introduction

Workforce in an organization is the most important thing and valuable

resource which can take the organization to greater heights. In order, to retain

the workforce and make them productive, organizations worldwide aim to

provide benefits and compensation. Employee benefits and compensation are the

most important aspects which provide a sense of satisfaction and trust towards

the organization. Employee satisfaction can be assured only when the employee

feels that all their demand and requirements was fulfilled to a larger extent.

Compensation can be either monetary or non-monetary components. It

refers to an employee’s basic salary and additional benefits, such as Allowances

(Dearness Allowance, House Rent Allowances, Travelling Allowance, Uniform

Allowance, Commission, Educational Allowance, Health insurance, Retirement

plans and Performance bonuses). The compensation packages which a business

offers to employees could be affected the company’s recruitment rate, retention

rate and employee satisfaction. Several federal laws insist the company should

offer benefits and compensation. A business owner should device the benefit

and compensation package keeping in mind the current competitive market and

existing federal laws.

Compensation is not only salary, but also the direct and indirect rewards

and benefits given to an employee, which in turn creates a healthy environment

and increase the contribution of the employee towards the organization.

Organizations should carefully create a well structured compensation and

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reward, program with a good balance of wages, benefits and rewards in order to

support an organization to remain competitive in today's labour market and

ensure sustainability in the future.

Employee Compensation

Employee compensation means that an employee receives in exchange

for the service they provide to their employer such as Dearness Allowance,

House Rent Allowances, Travelling Allowance, Uniform Allowance,

Commission, Educational Allowance, Health Insurance, Retirement Plans and

Performance Bonuses. It is the extra income an employee can expect to receive

when working in an organization.

Employee Benefits

Indirect and non-cash compensation paid to an employee is also called as

employee benefits. Some benefits are mandated by law (such as social security

and workers compensation), others vary from firm to firm or industry to industry

(such as Health Insurance, Life Insurance, Medical Plan, Holiday Pay, Pension,

Gratuity, Safety Measures, Over Time pay, Maternity Benefits and Fringe

Benefits).

Today the employees are not willing to work only for the cash alone, they

expect an 'extra' income. That extra income is known as employee benefits also

known as fringe benefits. An employee benefit is a non-financial form of

compensation offered in addition to salary in order to enrich worker’s lives.

Impact of Compensation and Benefits in the Organization

The compensation and benefits strategy is not only important just for the

competitive advantage, it also supports the HRM Processes and make them more

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effective to retain the best employee in the industry. (when measured and

benchmarked).

The compensation and benefits strategy has a stronger influence on the

performance of the whole Human Resources (i.e Selection, Recruitment,

Training and Deployment) and serves as a good vehicle to manage the

performance of Human Resources. It has to be managed carefully. It should not

destroy the performance of the whole organization.

Recruitment and Compensation

The recruitment can be based on the excellent HR Marketing Policies, by

offering the competitive salary packages. It would be externally competitive and

fully aligned with the policies and the compensation strategy internally.

Ultimately it provides the opportunities to recruit the best top talents from the

job market.

Motivation and Compensation

The salary and bonus are extremely important to motivate the employees

and managers. The motivation is not about the compensations, but the

compensation should support the general motivation framework in the

organization.

When the compensation strategy is not in line with the job market, even

the best managers in the world are not able to keep highly motivated teams, The

employees usually aware of the common level of salaries prevailing in the

industry and when the organization is giving below the average, it has to

compensate the difference in other area. But, when the difference is too high, the

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compensation by a different motivation tool does not work and the employees

start to feel demotivated as they receive no equal value for their effort.

Talent Development and Compensation

The compensation and benefits provide a key support to the talent

management processes in the organization. The employee with special talent has

to be benefited by the compensation strategy as they definitely expect higher

salary than the average employees. The skilled employee had to feel that the

organization is giving a special compensation provision to compensate them.

The top talented cannot live on the promises for a long period. The

compensation package had to be collaborated closely with the career advisors

and career development specialist to give the right mix of the career

opportunities and the compensation strategies for the top talented employees.

Retention and Compensation

Retaining productive employees are critical for running a successful

business. It helps to save the company norms, the cost and also helps to maintain

an efficient and knowledgeable workforce. The entire employee expects health

insurance and retirement packages from employers as their minimum benefits.

Companies that offer these benefits have the chance of retaining workers. Other

processes to retain employees are giving regular promotions, which not only

provide an employee with a high salary, but also the ability to take more

responsibility in the workplace.

Compensation Laws

Certain law are there to regulate the compensation and wages that small

business offer to the employees. The Fair Labour Standard Act regulates the

federal minimum wage, child labour, overtime wages and equal pay. The Equal

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Pay Act, prohibits employers from basic compensation to the employee depend

upon the gender. Under the Equal Pay Act, a company may decide basic

compensation on seniority or merit. Managers of small business must keep their

companies in compliance with above laws. Failing to comply with compensation

laws can result in a company facing penalties.

IMPORTANCE OF COMPENSATION AND BENEFITS

An ideal compensation plan and benefits must have a positive impact on

the efficiency and results produced by employees. It encourages employees to

perform better and achieve more. It also improves the process of job evaluation.

It also helps to set up an ideal job evaluation standard and the set standards

would be more realistic and achievable. The compensation plan has to be clearly

defined and it must be carried out uniformly to all the employees at various

levels of the organization and it must be simple and flexible. An employee

would be able to compute their own compensation and benefits receivable on

their own.

Compensation and benefits raise the morale, efficiency and cooperation

among the workers. Which being just and fair to provide satisfaction to the

employees. It would help management in complying with the various labour

acts. It will solve disputes between the employee union and management as a

result it will motivate and encourage the employee to perform better and it must

also provide opportunities for those who wish to excel.

Sound Compensation and benefits bring peace in the relationship of

employer and employees. It creates a healthy competition among them and

encourages employees to work hard and efficiently. This system provides

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growth and advancement opportunity to the deserved employee. Perfect

compensation and benefits provide platform for happy and satisfied workforce.

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 is

supported by skillful, talented and happy workforce. The sound compensation

and benefits system is the hallmark of organization’s success and prosperity. The

success and stability of an organization is measured with pay-package it

provides to its employees.

Advantages of Compensation and Benefits

A well designed compensation and benefits plan helps to attract, motivate

and retain talent in the firm. It would be benefited the organization in the

following ways.

1. Job gratification:

Employees are satisfied with their jobs due to the benefits and

compensation provided by the organization.

2. Enthusiasm:

All the employee’s needs are different. Some of them want money so they

work for the company which gives them higher pay. Some value achievement

more than money, they would associate themselves with firms which offer

greater chances of promotion, learning and development. Benefits and

compensation plan satisfying the workers’ need is more likely to motivate them

to act in the desired way.

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3. Low Absenteeism:

Employees should feel happy in the office environment and should enjoy

the compensation and benefits they receive. This results in lack of absenteeism.

4. High Revenue:

Employees will not prefer to work in an organization if the organization

fail to offers them fair, little rewards. Rewards of an organization should give the

employee, what they think that they are eligible to get in as appreciation for their

work.

Textile Dyes Industry in Emerging Economies

Emerging economies see immense potential in the world of textile dyes.

Since, our country is richer in terms of natural resources, emerging economies

indulge in the production of natural as well as synthetic dyes in large quantities.

China has become the largest market for textile dyes owing to its vast textile

production. Manufacturing of textiles dyes is main contribution of far-east Asia.

India's contribution to the world dyeing industry is more than 5 percent1.

Indonesian batik cloth producers and other textiles manufacturers in Southeast

Asia are increasingly switching to organic dyes.

These countries, which were less developed as compared to their

counterparts in the west, largely adopted natural dyeing techniques. The use of

machines in this process was minimal. Dyeing was labour intensive and time

consuming process. But as the economies progressed, the processes began to get

automated. Even the dyes and chemicals used in the printing process were not

limited to pure dyes. Synthetic dyes were used in emerging economies in large

quantities

1
www.fibre2fashion.com

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 Textile dyeing technique started in the Bronze Age. When compared this

to the 21st century, these constitute an important segment of the whole business

of speciality chemicals. Dyes that are used by the textile industry are now mostly

synthetic. They are mostly derived from two sources namely, coal tar and

petroleum-based intermediates. These dyes are marketed as powders, granules,

pastes or liquid dispersions. The concentration of active ingredients typically

ranges from 20 to 80 percent. These are now characterized as new dyes and they

are regularly developed for meeting the demands of new technology, different

kinds of fabrics, detergents, advances in dyeing machineries, along with

overcoming the serious environmental concerns posed by some existing dyes.

Another important fact that almost all the products are subjected to seasonal

demand and variation. Industrial textile dyes must rise up to meet all these new

and specific technical requirements.

The Indian textile industry is another important economic activity in the

country, in terms of employment generation (after agriculture). It represents

major sources of export earnings for the country. Abundant availability of raw

materials such as cotton, wool, silk and jute, as well as a skilled workforce, had

made the country a sourcing hub. It is the world's second largest producer of

textiles and garments. The Indian textiles industry accounts for about 24 percent

of the world's spindle capacity and eight percent of global spindle capacity. The

sector contributes about 14 percent of industrial production, approximately, four

percent to the Gross Domestic Product (GDP), and 27 percent of the country's

foreign exchange inflows. It provides direct employment to over 45 million

people.

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 People come from rural areas from all over Tamilnadu to work at Tirupur

district. The wages are settled based on every day work without many benefits.

12 hours (one and half shift) a day and six days of working in the week are

common in firms when export commitments need to be fulfilled on time. This

also gives them the incentive to earn more at the end of the day. When

production schedules are so tight, labour are asked to work even 16 to 18 hours

a day. Women, young boys and girls are considered for less skilled jobs.

Available workers are highly skilled in the course of working and also has the

ability to work in different jobs.Wages for the permanent workers are settled in

consultation with the representations of the labour and employees by the local

associations taking into account the government regulations, inflation and length

of service.

In the industry to reduce the process of maintaining a large work force to

complete the work they started giving the job work (part of their process) to

another company (or) their sister concern to do their work. This arrangement is

called ‘in-contracting’ that helps the entrepreneurs to be free from responsibility.

The employee working in the sister concern, wages and bonus are settled by the

contractor with local norms and statutory minimum wages. The future of the

knitwear industry depends on its capacity to accelerate the pace of

modernization, improve quality and productivity which will help to reduce

costs2. All these require concentration on developing the skills of manpower,

both entrepreneurs and labour. The range and depth of training programmes

should be expanded and imparted through local institutions – which may help

the labour force to familiarize to use of sophisticated machines and their

2
Afshan, N., Chakrabarti, D., & Balaji , M. (2014). Exploring the relevance of employee productivity-
linked firm performance measures: An empirical study in India. Journal of Transnational Management,
19(1), 24-37.

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technology. This target must concentrate at all levels of processes such as

knitting, bleaching, dyeing, calendaring, printing and packing. There is a need

to provide thrust to the basic education level among the people in and around

Tirupur that may help to develop a mutually beneficial relationship and provide

a conducive environment for growth and development of the industry.

Considering the needs of industry in future, Tirupur Exporters

Association (TEA) in collaboration with Government of India, Small Industries

Development Bank of India (SIDBI) and other internal resources have launched

National Institute of Fashion Technology (NIFT) to provide, mass training of

skilled persons for various operations in the industry,development of creative

man-power for fashion design, development of supervisory and middle level

managerial personal for both technical and non-technical functions, training of

export marketing executions, theoretical knowledge with practical orientation for

high level executives, design studio to help exporters in computer aided designs,

testing facility center for applied Research and interaction with industry to

disseminate technical information.

About 65 per cent of the workforces in the textile industry are women,

and it can therefore be imagined that textile industry in Tamilnadu has made a

significant contribution to the empowerment of ‘women by providing them with

economic independence. The textile industry has a huge employment potential

and in Tamilnadu alone the industry employs 2,00,000 workers. The knitwear

industry which is relatively high labour intensive and the fabricators (job

working units) generally avoid labour laws on health, insurance, and provident

fund, as they are not subject to labour laws due to their small size operations.

However, the workers get higher wage than the minimum wage and the workers

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have the liberty to shift jobs and seek employment in other firms. During peak

seasons, the factory employs additional labour who are paid very high wage.

Since this type of work is not continuous, most of the owners prefer to employ

workers on a piece rate system. This system of employment is suitable for the

prevailing production environment which assumes higher productivity3. The

direct employment generated in Tirupur cluster is estimated to be 1,00,000

distributed to skilled, semi skilled and unskilled workers and another 1,00,000

people are employed in activities which relate to the forward, and backward

linkages within the industry such as cotton ginning, yarn, spinning, embroidery,

calendaring, heat setting, compacting, printing of different types, label making,

ballooning, stuttering, button making, dyeing, zip making, plastic hangers

making, polythene bag making, packing and the numerous other related service

activities which are increasing in number. These workers mainly from

neighbouring villages and from agricultural districts that face severe

unemployment problem. Wages are settled mostly on piece rate basis, however

wide wage differences exist due to variations in the nature of work and the

stages of knitwear production. The wage is paid on a piece rate basic per

kilogram of knitted product. For design, knitting relatively higher piece rate per

kilogram is fixed as the job requires more experience skill and consumers for

more time. The knitting job is mainly meant for male workers only. These jobs

are supervised by experienced hands who are paid mostly on fixed monthly

wages. The laborers engaged in stitching called as power table workers who are

paid depending on the stitching over lock, interlock, and body stitching.

3
Agarwala, R. (2006). From work to welfare: A new class movement in India. Critical Asian Studies,
38(4), 419-444.

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 The helpers who assist them are paid less wages. Cutting masters are also

paid high and regular wages as it involves careful exercise. This process has

given job opportunities only for highly skilled employee.

Significance of the study

Benefits and compensation are the better ways and means to enhance the

employees and to ensure their work culture in the organization. The workforce

in the Indian context is mostly traditional in nature and has no training towards

alternative sources of employment and this workforce has to depend on what

they know, than what they want. The industrial base employment is an

attraction after industrialization and has been very slow, over the time it has

picked up, due to slow down in agricultural operations and growth in the

population. The emergence of secondary sectors like mining, housing,

construction and textiles which are oriented towards trade and commerce have

been an alternative employment for the unskilled or semi-skilled labour force.

One such is the dyeing industry which is more attached to weaving and

garmenting. There are more than 1000 dyeing units in Tirupur area and due to

environmental issues some of these units were closed and today there are 730

units functioning and these units employ unskilled labour force. Thus an attempt

is made by the researcher to study and understand the employee benefits and

compensation available to these employees in dyeing units operating in Tirupur

Statement of the problem

Global competition determining the success of an organization depends

up on the skilled and knowledgeable work force. Companies always want to

attract, retain and motivate human brains to meet their objectives. Today

employees i.e manpower) are regarded as company’s assets so they need to be

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efficiently and effectively managed. One of the tools companies uses to attract,

retain and motivate its people by giving compensation and benefits.

Tirupur dyeing industry is an ever demanded and most, profitable one in

Tamilnadu. Tirupur industries make huge profit compare to other businesses.

But the reality is that the employees’ economic and social status does not grow.

So this industry oriented has factories affected employees retention and low

level of productivity. It is because of the employee’s compensation and benefits

does not match according to the work and the price index rate. So the industry

faces employee retention, grievances and low level of productivity. The

management has to take necessary steps to overcome the problems and improve

the compensation and benefits packages for employees.

A modest attempt has been made in this research is to study the benefits

available to them and the compensation provided to them by the particular sector

namely the dyeing units in Tirupur.

Objectives of the study

The following objectives are framed by the researcher for this research:

1. To examine the socio-economic conditions of employees working in

dyeing units in Tirupur.

2. To identify the perception of employees compensation in industries at

Tirupur.

3. To analyse the level of satisfaction of employees regarding the benefits

and Compensation provided by the management of industries at Tirupur.

4. To determine the general problems faced by the dyeing industries in

Tirupur.

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5. To analyse the association between employee benefits and compensation

in industries at Tirupur.

6. To find pitfalls and to offer suggestions to improve the performance of

the employees keeping in view the goals of the organization.

Hypotheses of the study

The following hypotheses are framed by the researcher for this research

• There is no significant association between age of the respondents and

their overall benefits and compensation

• There is no significant difference between gender of the respondents and

their overall benefits and compensation

• There is no significant difference between marital status of the

respondents and their overall benefits and compensation

• There is no significant difference between educational qualification of the

respondents and their overall benefits and compensation

• There is no significant difference between type of family of the

respondents and their overall benefits and compensation

• There is no significant difference between size of family of the

respondents and their overall benefits and compensation

• There is no significant difference between department of the respondents

and their overall benefits and compensation

• There is no significant difference between designation of the respondents

and their overall benefits and compensation

• There is no significant difference between working experience of the

respondents and their overall benefits and compensation

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• There is no significant difference between exposure of training of the

respondents and their overall benefits and compensation

• There is no significant difference between monthly income of the

respondents and their overall benefits and compensation

• There is no significant difference between gender of the respondents and

their ranking about environmental issues, legal awareness, health issues,

grievances, work pressures and job security

• There is no significant difference between type of the employee and their

ranking about environmental issues, legal awareness, health issues,

grievances, work pressures and job security

• There is no significant association between various dimensions of

benefits and compensation of the respondents and their overall benefits

and compensation

• There is no significant association between benefit of the respondents and

their compensation

• There is a significant relationship between various dimensions of benefits

and compensation of the respondents and their overall benefits and

compensation

Research Methodology

Research methodology is a systematic way to solve a problem. It is a

science of studying how research is to be carried out. Essentially, the procedures

by which researchers go about their work of describing, explaining and

predicting phenomena are called research methodology. In this research,

methodology includes Universe of the study and sampling design. The present

study is descriptive in nature.

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 Universe of the study

The universe consists of all survey elements that qualify for inclusion in

the research study. The precise definition of the universe for a particular study is

set by the research question, which specifies who or what is of interest. The

universe may be individuals, groups of people, organizations or even objects. In

this study it covers the textile dyeing industries functioning with in the

jurisdiction of Tirupur Corporation. There are innumerable industries

functioning in study area. Hence the researcher was not able to ascertain the

exact population of the study.

Sampling

Ten (10) units were chosen for the study. From these ten units, the sample

size was selected based on the proportionate random sampling method. From the

total sample 30% was taken for the data collection. Here the following table

reveals that the sample size to get proportionate:

S. No Name of the company Men women total Men Women sample

1. Victus dyeing 180 10 190 54 3 57
2. Allwin textile processing 150 - 150 45 - 45
mills
3. Parvathi Dyeing 160 10 170 48 3 51
4. Sai Textile Processors 170 24 194 51 7 58
5. Sri Valli Textiles 135 5 140 40 2 42
6. KPM Textile processing 260 20 280 78 6 84
Mills
7. Sri Lakshmi Textile 200 20 220 60 6 66
processors
8. Jeyavishnu textiles 190 50 240 57 15 72
9. MS Dyeing 70 10 80 21 3 24
10. Divya colours 105 15 120 31 5 36
Total 1620 164 1784 485 50 535

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 The sample size of the present study is 535, which is selected by using

proportionate random sampling. The proportion is displayed in the above table.

Pilot Study

To initiate the work a pilot study was carried out by the researcher in

twenty (20) dyeing units from Tirupur district. The researcher personally visited

twenty units and collected data using the interview schedule. This had helped the

researcher to work out the strategies to identify the important areas to be covered

for the collection of data relating to the study. Based on this the refinement of

interview schedule was made for final administration to the respondents.

Method of data Collection

This study is based on both primary and secondary data. For the

collection of primary data an interview schedule that covers all the supportive

elements of employee benefits and compensation was prepared and was

administered to the selected sample respondents for response. The secondary

data were collected through books, journals, magazines, periodicals, government

and research publications, planning commission document, newspapers,

previous study documents and web sites sources.

Tools of Analysis

The data collected were processed further with the help of the Statistical

Package for Social Science (SPSS) to analyzes and interpret the data in the

study. The following statistical tools namely, percentage analysis, mean and

standard deviation, Karl Pearson coefficient correlation, Chi-square, Student‘t’

test, One way ANOVA, Mann Whitney and Wilcoxon test to arrive at

meaningful conclusions.

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Limitations of the study

Some of the difficulties encountered by the researcher were:

• Finding the required respondents during their working hours is difficult

owing to the availing of personal leave by them.

• Contacting respondents, getting them free from work and motivating

them to answer the questionnaires took more time

• The results arrived from interpretation of data may not be applicable to

other industries

• Cent percent generalization from the data may not be advisable.

Chapter scheme:

Chapter I deals with the introduction and design of the study. Here the

researcher gives a brief introduction of the topic, statement of the problem,

objectives of the study, methodology, limitations of the study and the chapter

scheme.

Chapter II deals with the concepts and review of related literature. Here

the researcher has highlighted various reviews relating to the study made in the

past by various persons on the same topic or on the related topic and its deals

with employee welfare: an over view, in this chapter a detailed over view of the

employee welfare is discussed.

Chapter III deals with the back ground of the study area and its

prospects and potentials of this area towards the development of the particular

area of business.

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 Chapter IV deals with analysis of data: in this chapter the researcher has

consolidated the research outcomes and has tabulated them in a sequential order

for the better understanding of the concept of the study.

Chapter V deals with the findings, suggestions and conclusion: the most

accurate and specific findings of the study are given along with the appropriate

suggestions and conclusions drawn by the researcher from the study.

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