INTRODUCTION:

Benefits and Compensation are the two vital parts of employees what they get in return by
the service that they provide to their employers. It is necessary to know whether the
employees undervalue the cost of benefits that they are provided as an employer. I am strictly
agree if employee undervalues the cost of benefits as an employer we can cut their benefits
and add direct compensation.

COMPENSATION:

In each and every organization people work for to get something in return or they expect
something after completion of their work form employers. We must have heard a common
phrase: give and take. We must always things to people in exchange for what you give them.
Compensation refers to this Exchange, but in monetary terms. Compensation from the
employer an employee feedback for work. It's just the monetary value that employers
exchange for their employees with the services that employees provided.

Human Resource Management defines compensation in these words "employee

compensation refers to all forms of remuneration to workers and arising from their
employment." The expression ' all forms of remuneration "in the definition does not include
any non-financial benefits, but all the direct and indirect financial compensation.

BENEFITS:

Workers today are not prepared to work just for the money apart from money they expect
some other benefits. This is known as extra employee benefits. Also known as fringe
benefits, employee benefits are non-financial form of compensation offered in addition to
cash salary to employees to enrich life.

What benefits would the company offer to its employees? Problem arises when you begin to
decide what to give to whom and on what basis? Employee benefits are not performance-
based, they are membership-based. Workers receive benefits regardless of their
performances. Employee benefits as a whole have no direct influence on the performance of
employee, however, insufficient benefits

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 OBJECTIVES OF THE STUDY

The study has been conducted to get an insight into the practices being followed in
the various industries with respect to the following:

 To examine the various Compensation procedures that is being followed in the

organization.
 The step taken to bridge the identified through compensation benefits

 To study the impact of working conditions indirectly.

 To identify those incentives works as motivating factor.

 To identify that will Compensation Management improves the relationship between

employee and management.

SCOPE OF THE STUDY

The scope of the study consists of analyzing the Compensation Management given for
the employees at BIG BAZAAR, An analysis of the process was carried out and
recommendations were given accordingly. A questionnaire survey was conducted among
Mangers, Executives, Supervisors and Workmen covering the following departments.
 HR department.
 General administration department.
 Packing department.

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 NEED FOR THE STUDY

Competitive compensation packages ensure a company attracts the top talent available in the
industry. When deciding between potential job offers, employees often look to the
compensation package first. Benefits help ensure a prospective candidate sticks with a
company. As single employees marry and start families, benefits such as health and life
insurance become essential parts of living. Companies that provide these services for free or a
reduced cost as benefits entice employees to stay.

Many companies tie compensation directly to employee job performance through incentive
packages, such as bonuses and profit-sharing plans. This helps employees align their
professional goals with those of the company while rewarding top performers and providing
incentives for them to stay.

Competitive benefits and compensation packages often pay for themselves with the amount
of money the company saves on headhunting and training costs of acquiring new employees.
Compensation also ensures companies are compliant with federal labor laws such as the Fair
Labour Standards Act or the Equal Pay Act. A company with competitive compensation and
benefit packages is far more likely to recruit and retain great employees and position itself
ahead of the curve in its industry.

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 RESEARCH METHODOLOGY

The research, method of study explains the systematic way of finding the predetermined
objectives. Moreover this provides the clean path to accomplish and achieve clear solution
for the problem stated. The following are stages through which the research has passed to
obtain the conclusions:

1. Research Design:
In this study, the research design used is descriptive in nature as it describes the views,
opinions and perception of the employees.

2. Collection of Data:
This study uses both primary and secondary data. Primary data refers to the first hand
information that is collected through questionnaire and on personal interviews.
Secondary data refers to the data that is not originally collected but rather obtained from
published or unpublished sources, i.e., information about the performance of the
company, reports on the study, review of literature etc.

METHODS OF DATA COLLECTION:

Questionnaire is prepared and circulated to the employees to know their opinion on the
―Manpower planning in the organization. Questionnaire consists of close ended questions
which pre-specify all the answers and respondents make a choice among them. While
collecting the data, since women were not able to read the questionnaire personal interview
was conducted by translating the questionnaire into a language which is understandable by
them to know about the functions of human resources activities implemented in the
organization.

SAMPLING TECHNIQUE

The sampling technique used for the collection of information through the questionnaires is
the simple random sampling. And the sample size is 50 respondents.

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QUESTIONNAIRE DESIGN
The designed questionnaire consists of 12 to 13 questions, a combination of open ended and
close ended questions for employees.

ANALYSIS OF DATA
For the purpose of analysis, feedback is collected from the employees in the organization by
the way of questionnaire. Data collected is represented in the form of percentages in the form
of percentages and graphs and an analysis has been done on the basis of these percentages
and graphs.

LIMITATIONS OF THE STUDY

 Due to complex human behavior there is tendency that respondent fail to provide
accurate information.
 The study was conducted for a period of 45 days only.
 Scope of the study was limited
 Sample size taken was small and so it may not be actual representative of the
organization.
 Confidentiality of some information related to human resource plan cost lack of
actual and complete information.
 There was time constraint due to busy academic schedule of the college.
 Frame error has been observed because of in accurate and incomplete sampling
frame.

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 REVIEW OF LITERATURE

COMPENSATION MANAGEMENT
Compensation is a human resource strategy aimed at sourcing out maximum returns from the
available workforce. To do so, employees are rewarded for their contributions towards an
organization. The ultimate intention of compensation management is to offer rewards to
organization‘s employees for appropriate reasons. Compensation management entails issuing
monetary and non-monetary rewards to employees. Consequently, the employees‘ output
shoots to the positive.

Compensation management requires institution of relevant policies to ensure fair

remuneration. A recommendable compensation policy facilitates retention of the best talent
while also attracting new talent to the organization. Turnover minimization comes about as a
result of adoption of good compensation policies. Workforce analytics and employee benefit
administration supplement a compensation policy and motivate employees. A business
enterprise realizes efficiency and achievement of set goals and objectives from good
compensation management practices.

A business entity ought to formulate a good compensation system. Formulation should put
into consideration the strategic objectives and goals of the business. This means that a good
compensation system does not shun the sensitivity of a firm‘s financial and operational
system. Analysis of employees‘ responsibilities and job roles should be a key factor in
formulation of compensation management systems.

IMPORTANCE OF COMPENSATION MANAGEMENT

Compensation management is vital in acquiring the best workforce in the market. Moreover,
it acts as a basis for retention of the best one available. Without proper compensation
management, there will be no individuals willing to work for a business entity.

Motivation of employees determines its profitability. Profitability is subject to employees‘

output. Appropriate compensation management should focus on employee motivational
needs. If it addresses such needs, a business can realize increased productivity.

Compensation does not only mean meeting the salary obligations. It also requires a business
to address psychological needs. The workforce is more productive when all the remuneration

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and self-actualization needs are met. A compensation package should include all of the
things. As a result, a firm meets employee motivation needs.

Modern compensation management practices adopt specific software for handling the
compensation needs of each employee. They optimize stocks options, benefit budgets,
bonuses and salary to yield high returns levels per employee on every hour of work.
However, a business requires a good human resource management team as much as it
requires computer software and programs.

All in all, effective compensation management only serves for the benefit of the organization.
It directly determines the firm‘s profitability. Therefore, organizations should reserve special
attention towards compensation management.

WORKERS COMPENSATION:

The receipt of Workers‘Compensation is designed to compensate employees who suffer

work-related injuries or illnesses. Workers‘Compensation payments may be paid in lump
sums or in weekly payments over a period of time (periodic payments).
Workers‘Compensation benefits paid in lump sums or made for medical treatments and
expenses do not affect pensions.
An effective employee compensation framework is significant towards enhancing motivation
level of the employees of an organization. Stock options and post retirement benefits are
some of the components of the employee compensation framework.

Workers' Compensation laws are designed to protect employees who are hurt on the job.
These employees are provided with fixed monetary awards covered under workers
compensation, thus eliminating the need for excessive litigation.

If an employee is injured, the employee files a claim with the workers compensation
insurance company. Most laws require that you file a claim within 30 days of the accident, or
30 days after you learn of the injury (if it is a continuous, latent injury, such as an inability to
breath).

In general, workers compensation provides replacement income, medical expenses, and

vocational rehabilitation benefits. Usually, workers compensation will pay you two-thirds of
your salary while you are injured. You may also be eligible for life-long benefits or a lump
sum payment if you are permanently hurt while on the job.

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WORKERS COMPENSATION BENEFITS:
Income, medical, rehabilitation, death, and survivor payments to workers injured on the job.
State workers compensation laws, which date from early in the twentieth century, provide
that employers take responsibility for on-the-job injuries.

Compensation consists of pay and other economic and intangible benefits provided to the
employees of an organization in return for the services rendered by them. Benefits refer to all
financial compensation that is not directly paid to the employees. The areas that legally
require dispensing of benefits include social security and medical compensation.

Services rendered by individuals to organizations have to be equitably paid for. This

compensation generally comprises cash payments which include wages, bonus and shared
profits. Good compensation plans have a salutary effect on the employees. They are happier
in their work, co-operative with management and productivity is up. Although, there can be
both monetary and non monetary forms of compensation, it is the monetary and non
monetary forms of compensation which is the most basic element by which individuals are
attracted to an organization and are persuaded to remain in the organization.

Wages in the widest sense mean any economy compensation paid by the employer under
some contract to his workers for the services rendered by them. Remuneration are composed
of two parts. They basic salary and allowances. The basic wage is the remuneration, which is
paid or payable to an employee in the terms of his contract of employment for the work done
by him. Allowances are paid in addition to the basic wage to maintain the value of basic
wages over a period of time. Allowances include dearness allowance, bonus, overtime pay
etc.

EMPLOYEE BENEFIT:
Definition: Employee benefits and services include any benefits that the employee receives in
addition to direct remuneration. A formal definition is…..
―..Fringes embrace a broad range of benefits and services that employees receive as part of
their total compensation package…pay or direct compensation….is based on critical job
Factors and performance. Benefits and services, however, are indirect compensation because
they are usually extended as condition of employment and are not directly related to
performance.‖

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Employee benefits and services are alternatively known as fringes, service program me‘s,
employee benefits or hidden payroll.

COMPENSATION LAWS
There are many federal, state, and local employment and tax laws that impact compensation.
These laws define certain aspects of pay, influence how much pay a person may receive, and
shape general benefits plans.

The Fair Labour Standards Act (FLSA) is probably the most important piece of compensation
legislation. Small business owners should be thoroughly familiar with it. This act contains
five major compensation laws governing minimum wage, overtime pay, equal pay,
recordkeeping requirement, and child labour, and it has been amended on several occasions
over the years. Most of the regulations set out in the FLSA impact non-exempt employees,
but this is not true across the board.

The Equal Pay Act of 1963 is an amendment to FLSA, which prohibits differences in
compensation based on sex for men and women in the same workplace whose jobs are
similar. It does not prohibit seniority systems, merit systems, or systems that pay for
performance, and it does not consider exempt or non-exempt status.

In addition, the United States government has passed several other laws that have had an
impact, in one way or another, on compensation issues. These include the Consumer Credit
Protection Act of 1968 , which deals with wage garnishments; the Employee Retirement
Income Security Act of 1974 (ERISA ), which regulates pension programs; the Old Age,
Survivors, Disability and Health Insurance Program (OASDHI), which forms the basis for
most benefits programs; and implementation of unemployment insurance, equal employment,
worker's comp, Social Security, Medicare, and Medicaid programs and laws.

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.

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BENEFITS

Benefits are an important part of an employee's total compensation package. Benefits

packages became popular after World War II, when wage controls made it more difficult to
give competitive salaries. Benefits were added to monetary compensation to attract, retain,
and motivate employees, and they still perform that function today. They are not cash
rewards, but they do have monetary value (for example, spiraling health care costs make
health benefits particularly essential to today's families). Many of these benefits are
nontaxable to the employee and deductible by the employer.

Many benefits are not required by law, but are nonetheless common in total compensation
packages. These include health insurance, accidental death and dismemberment insurance,
some form of retirement plan (including profit-sharing, stock option programs, 401(k) and
employee stock ownership plans), vacation and holiday pay, and sick leave. Companies may
also offer various services, such as day care, to employees, either free or at a reduced cost. It
is also common to provide employees with discounted services or products offered by the
company itself. In addition, there are also certain benefits that are required by either state or
federal law. Federal law, for example, requires the employer to pay into Social Security, and
unemployment insurance is mandated under OASDHI. State laws govern worker's
compensation.

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 ownership—and 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).

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PAY FOR PERFORMANCE

Probably the most popular of the newer concepts in compensation is the easiest to understand
—compensation 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:

 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.

ADMINISTERING COMPENSATION PROGRAMS

Compensation programs and policies must be communicated clearly and thoroughly to

employees. Employees naturally want to have a clear understanding of what they can
reasonably expect in terms of compensation (both in terms of monetary compensation
MANAGEMENT) and performance appraisal. To ensure that this takes place, consultants
urge business owners to detail all aspects of their compensation programs in writing. Taking
this step not only helps reassure employees, but also provides the owner with additional legal
protection from unfair labour practices accusations.

EVOLUTION OF COMPENSATION

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Today’s compensation systems have come from a long way. With the changing
organizational structures workers’ need and compensation systems have also been changing.
From the bureaucratic organizations to the participative organizations, employees have
started asking for their rights and appropriate compensations. The higher education standards
and higher skills required for the jobs have made the organizations provide competitive
compensations to their employees.

Compensation strategy is derived from the business strategy. The business goals and
objectives are aligned with the HR strategies. Then the compensation committee or the
concerned authority formulates the compensation strategy. It depends on both internal

EVOLUTION OF STRATEGIC COMPENSATION

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TRADITIONAL COMPENSATION SYSTEMS

In the traditional organizational structures, employees were expected to work hand and obey
the bosses’ orders. In return they were provided with job security, salary increments and
promotions annually. The salary was determined on the basis of the job work and the years of
experience the employee is holding. Some of the organization provided for retirement
benefits such as, pension plans, for the employees. It was assumed that humans work for
money, there was no space for other psychological and social needs of workers.

CHANGE IN COMPENSATION SYSTEMS

With the behavioural science theories and evolution of labour and trade unions, employees
started asking for their rights. Maslow brought in the need hierarchy for the rights of the
employees. He stated that employees do not work only for money but there are other needs
too which they want to satisfy from there job, i.e. social needs, psychological needs, safety
needs, self-actualization, etc. Now the employees were being treated as human resource.

Their performance was being measured and appraised based on the organisational and
individual performance. Competition among employees existed. Were expected to work hard
to have the job security. The compensation system was designed on the basis of job work and
related proficiency of the employee.

TODAY’S MODERN COMPENSATION SYSTEMS

Today the compensation systems are designed aligned to the business goals and strategies.
The employees are expected to work and take their own decisions. Authority is being
delegated. Employees feel secured and valued in the organisation. Organisations offer
monetary and non-monetary benefits to attract and retain the best talents in the competitive
environment. Some of the benefits are special allowances like mobile, company’s vehicle;
House rent allowances; statutory leaves, etc

INTRINSIC COMPENSATION

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Intrinsic compensation represents employees’ critical psychological states that result from
performing their jobs. Job characteristics theory describes these critical psychological states.
According to this job theory, employees experience enhanced psychological states (that is,
intrinsic compensation) when their jobs rate high on five core job dimensions: skill variety,
task identity, task significance, autonomy, and feedback (1). Job that lack these core
characteristics do not provide much intrinsic compensation.

 Skill variety is the degree to which the job requires the person to perform different
tasks and involves different skills, abilities, and talents.
 Task from identity is the degree to which a job enables a person to complete an
entire job from start to finish.
 Task significance is the degree to which the job has an impact on the lives or work
of other people.
 Autonomy is the amount of freedom, independence, and discretion the employee
enjoys in determining how to perform the job.
 Feedback is the degree to which the job or employer provides the employee with
clear and direct information about job outcomes and performance.

EXTRINSIC COMPENSATION:

Extrinsic compensation includes both monetary and non-monetary rewards Compensation

professionals establish monetary compensation programs to reward employees according to
their job performance levels or for learning job-related knowledge or skills. As we will
discuss shortly, monetary compensation represents core compensation. Non-monetary
rewards include protection programs (for example, day care assistance). Most compensation
professionals refer to no monetary rewards as employee benefits or fringe compensation.

CORE COMPENSATION:

There are six types of monetary or core, compensation. The elements of base pay
adjustments are listed in Table.

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BASE PAY:

Employees receive base pay, or money, for performing jobs. Base pay is recurring; that is,
employees continue to receive base pay as long as they remain in their jobs. Companies
disburse base pay to employees in either one of two forms –as hourly pay or wage or as
salary. Employees earn hourly pay for each hour worked. They earn salaries for performing
their jobs, regardless of the actual number of hours worked. Companies measure salary on an
annual basis.

Companies typically set base amounts for jobs according to the level of skill, effort, and
responsibility required performing the jobs and the severity of the working conditions.
Compensation professionals refer to skill, effort, responsibility, and working conditions
factors as compensable factors because they influence pay level. Courts of law use these four
compensable factors to determine whether jobs are equal per the equal pay Act of 1963.
Compensation professional’s use.

JOB ANALYSIS OF COMPENSATION

Compensation, benefits, and job analysis specialists help conduct an organization’s
compensation and benefits programs. They also evaluate job positions to determine details
such as classification and salary.

Work Environment
Compensation, benefits, and job analysis specialists work in nearly every industry.
They typically work in offices.

How to Become a Compensation, Benefits, and Job Analysis Specialist

Compensation, benefits, and job analysis specialists need a bachelor’s degree, and
some specialists need related work experience.

Pay
The median annual wage for compensation, benefits, and job analysis specialists was
$59,090 in May 2012.

Job Outlook
Employment of compensation, benefits, and job analysis specialists is projected to
grow 6 percent from 2012 to 2022, slower than the average for all occupations. Job prospects
should be best for those with experience performing compensation analysis, benefits
administration, or other human resources work.

15
Similar Occupations
Compare the job duties, education, job growth, and pay of compensation, benefits,
and job analysis specialists with similar occupations.

JOB EVALUATION

Mississippi State University recognizes that staff positions may change in work
content or responsibilities. Therefore, a position may be evaluated for reclassification when
there has been a significant change in required job skills or responsibilities.

Procedure for Job Evaluation - New or Existing Postions

 A request to establish a new staff position or to evaluate an existing staff position

shall be initiated by the division, department, or unit head and submitted to Human
Resources Management through the use of the online Request for Position Evaluation
electronic form.
 A link and temporary password to the online job evaluation system will be sent to the
employee and the employee’s supervisor for existing positions or to the supervisor
requesting a new position for completion of the Job Evaluation Questionnaire.
 After the Job Evaluation Questionnaire is complete, Human Resources Management
staff will conduct a job study and/or evaluate the job. This process may include
interviews with the employee and/or the supervisor.
 The Director of Human Resources Management will review, approve, and
communicate the results of the job evaluation in terms of title and\or salary grade to
the applicable Dean/Director/Department Head.
 Human Resource Management’s assignment of title and/or salary grade will be
approved for implementation in the same manner as recommendations

ELEMENTS OF CORE COMPENSATION.

BASE PAY: 30,000 -45,000 INR

 Hourly pay : 5 US $ = 2,000 INR
 Annual Salary : Rs. 4,20,000 - Rs. 7,00, 000

How base pay is adjusted over time

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  Cost-of-living adjustments
 Seniority pay
 Merit pay
 Incentive pay
 Pay-for-knowledge and skill-based pay.

These compensable factors to help meet three pressing challenges, which we introduce late in
this chapter: internal consistency market competitiveness recognition of individual
contributions.

COST-OF-LIVING Adjustments (COLAs):

COLAs represent periodic base pay increases that are based on changes in prices as indexed
by the consumer price index (CPI). COLAs enable workers to maintain their purchasing
power and standard of living by adjusting base pay for inflation. COLAs are most common
among workers represented by unions.

Seniority Pay:

Seniority Pay systems reward employees with periodic additions to base pay according to
employees’ length of service in performing their jobs. These pay plans assume that
employees become more valuable to companies with time and that valued employees.

17
Merit Pay:
Merit Pay programs assume that employees’ compensation over time should be determined,
at least in part, by differences in job performance. Employees earn permanent increases to
base pay according to their performance. Merit pay rewards excellent effort or results,
motivates future performance, and helps employers retain valued employees.

INCENTIVE PAY

Incentive Pay or variable pay rewards employees for partially or completely attaining a
predetermined work objective. Incentive pay is defined as compensation (other than base
wages or salaries) that fluctuates according to employees’ attainment or some standard base
on a re-established formula, individual or group goals, or company earnings.

PAYS-FOR-KNOWLEDGE PLANS AND SKILL-BASED PAY:

Pay-for-knowledge plans reward managerial, service, or professional workers for

successfully learning specific curricula. Skill-based pay, used mostly for employees who
perform physical work, increases these workers’ pay as they master new skills. Both skill-
and knowledge-based pay programs reward employees for the range, depth, and types of
skills or knowledge they are capable of applying productively to their jobs. This feature
distinguishes pay-for-knowledge plans for merit pay, which rewards employees’ job
performance.

FRINGE COMPENSATION OR EMPLOYEE BENEFITS:

Earlier, we noted that fringe compensation represents non monetary rewards. Fringe
compensation or employee benefits include any variety of programs that provide pay time-
off, employee services, and protection programs.

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LEGALLY REQUIRED BENEFITS:

Legally required benefits are protection programs that attempt to promote worker
safety and health, maintain the influx of family income, and assist families in crisis. The key
legally required benefits are mandated by the Social Security Act of 1935, various state
workers’ compensation laws and the Family and Medical Leave Act of 1993. All provide
protection programs to employees and their dependents.

DISCRETIONARY BENEFITS:

Discretionary benefits fall into three broad categories: protection programs, paid time-off,
and services, Protection programs provided family benefits, promote health, and guard
against income loss caused by catastrophic factors such as unemployment, disability, or
serious illness. Not surprisingly, paid time-off provides employees with pay for time when
they are not working, such as vacation. Services provide enhancements such as tuition
reimbursement and day care assistance to employees and their families

HOW THE COMPENSATION FUNCTION FITS INTO HR

DEPARTMENTS:

Human resource practice do not operate in isolation. Every HR practice is related to others in
different ways. For example, Microsoft Corporation publicly acknowledges the relationships
between compensation and other HR practices.

ORGANISATIONAL CULTURE:

Organizational culture is an organization’s system of shared values and beliefs that produce
norms of behavior (9). These values are apparent in companies’ organizational and work
structures. Also, organizational culture influences HR systems designs, including
compensation.

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TRADITIONAL HIERARCHY

The Traditional design of U.S. companies emphasizes efficiency, decision making by

managers, and dissemination of information from the top of the company to lower levels,
illustrates is the intermediary for the company’s chief executive officer and the vice
presidents of the functional areas. Within the functional areas, the decision making flow
downward from the vice president to managers of specialties within the functions.

NATURE OF COMPENSATION

Compensation offered by an organization can come both directly through base pay and
variable pay and indirectly through benefits.

 Base pay: It is the basic compensation an employee gets, usually as a wage or

salary
 Variable pay : it is the compensation that is linked directly to performance
accomplishments (bonuses, incentives, stock options).
 Benefits: These are indirect rewards given to an employee or group of employees
as a part of organizational membership (health insurance, vacation pay, retirement
pension etc.)

The most important objective of any pay system is fairness or equity.

The term equity has three dimensions.

a) Internal equity: This ensures that more difficult jobs are paid more.
b) External equity: ‘this ensures that jobs are fairly compensated in comparison to
similar jobs in the labour market.
c) Individual equity: It ensures equal pay for equal work, i.e., each individual’s pay
is fair in comparison to others doing the same/similar jobs.
In addition, there are other objectives also. The ultimate goal of compensation
administration (the process of managing a company’s compensation programme)
is to reward desired behaviours and encourage people to do well in their jobs.
Some of the important objectives that are sought to be achieved through effective
compensation management are listed below:

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 a) Attract talent: Compensation needs to be high enough to attract talented people.
Since many firms compete to hire the services of competent people, the salaries
offered must be high enough to motivate them to apply.
b) Retain talent: If compensation levels fall below the expectations of employees or
are not competitive, employees may quit in frustration.
c) Ensure equity: Pay should equal the worth of a job. Similar jobs should get
similar pay. Likewise, more qualified people should get better wages.
d) New and desired behaviour: Pay should reward loyalty, commitment,
experience, risk taking, initiative and other desired behaviours. Where the
company fails to reward such behaviours, employees may go in search of greener
pastures outside.
e) Control costs: The cost of hiring people should not be too high. Effective
compensation management ensures that workers are neither overpaid nor
underpaid.
f) Comply with legal rules: Compensation programmes must invariably satisfy
governmental rules regarding minimum wages, bonus, allowances, benefits, etc.
g) Ease of operation: The compensation management system should be easy to
understand and /” operate. Then only will it promote understanding regarding
pay-related matters between employees, unions and managers.

EQUITY AND PAY RATES

The need for equity is the most important factor in determining pay rates. This is achieved
through the following steps:3
 Find the worth of each job through job evaluation.
 Conduct a salary survey to find what other employers are paying for
comparable jobs.
 Group similar jobs into pay grades.
 Price each pay grade by using wage curves.
 Fine tune pay rates.

JOB EVALUATION

Job analysis offers valuable information for developing a compensation system in terms of
what duties and responsibilities need to be undertaken. The worth of a job to the organization
is as ascertained through job evaluation. Since the whole process is largely subjective, a
committee is appointed to collect information and come up with a hierarchy of jobs according

21
to their value. The evaluation is done through the use of market pricing or through the use of
ranking, point or factor comparison methods.

WAGE AND SALARY SURVEYS

While job evaluation ensures internal equity wage and salary surveys ensure external equity.
A wage and salary survey provided information as to what other organizations that compete
for employees are paying. The survey could cover all the jobs within an organization
(obviously costly and hence avoided) or limited to benchmark jobs, jobs that are used to
anchor the company’s pay scale and around which other jobs are slotted based on their
relative worth to the firm. The benchmark jobs have the following basic
characteristics.

 Many workers in other companies have these jobs.

 They will not be changing in the immediate future in terms of tasks,
responsibilities, etc.
 They represent the full range in terms of salary such that some are among the
lowest paid in the group of jobs, others are in the middle range and some are at
the high end of the pay scale.

Formal and informal surveys (through telephone, for example) could be undertaken to collect
data on benefits like insurance, medical leave, vacation pay, etc., and so offer a basis on
which to take decisions regarding employee benefits. Published source also provide valuable
information regarding industry wise trends in salary structures in and around the country. The
published sources in India include:

 Reports published by the Ministry of Labour

 Pay commission reports.
 Reports of Wage Bonds appointed by Government.
 Reports of employees and employers’ organizations.
 Trade journals of specific industry groups, etc

One of the major problems with these sources is the comparability of jobs in the survey to
jobs in the organization. To overcome the limitations of published surveys, conduct your
own surveys of important jobs. The following survey methods are generally used to
collect relevant wage-related information:

22
COMPONENTS OF PAY STRUCTURE IN INDIA

The pay structure of a company depends on several factors such as labour market conditions,
company’s paying capacity and legal provisions:

WAGES

In India, different Acts include different items under wages, though all the Acts include basic
wage and dearness allowance under the term wages. Under the Workmen’s Compensation
Act, 1923, “wages for leave period, holiday pay, overtime pay, bonus, attendance bonus, and
good conduct bonus” from part of wages. Under the payment of Wages Act, 1936, Section 2
(vi), “any award of settlement and production bonus, if paid, constitutes wages.” Under the
Payment of Wages Act, 1948, “retrenchment compensation, payment in lieu of notice and
gratuity payable on discharge constitute wages.”

However, the following types of remuneration, if paid, do not amount to wages under any of
the Acts:

i. Bonus or other payments under a profit-sharing scheme which do not form a part
of contract of employment.
ii. Value of any house accommodation, supply of light, water, medical attendance,
traveling allowance, or payment in lieu thereof or any other concession.
iii. Any sum paid to defray special expenses entailed by the nature of the employment
of a workman.
iv. Any contribution to pension, provident fund, or a scheme of social security and
social insurance benefits.
v. Any other amenity or service excluded from the computation of wages by general
or special order of an appropriate governmental authority.

The term ‘Allowances’ includes amounts paid in : addition to wages over a period of time
including holiday pay, overtime pay, bonus, social security benefit, etc. The wage structure in
India may be examined broadly under the following heads:

BASIC WAGE

The basic wage in India corresponds with what has been recommended by the Fair Wages
Committee (1948) and the 15th Indian Labour Conference (1957). The various awards by

23
wage tribunals, wage boards, pay commission reports and job evaluations also serve as
guiding principles in determining ‘basic wage’. While deciding the basic wage, the following
criteria may be considered: (i) Skill needs of the job; (ii) Experience needed; (iii) Difficulty
of work: mental as well as physical; (iv) Training needed; (v) Responsibilities involved; (vi)
Hazardous nature of job.

DEARNESS ALLOWANCE (DA)

It is the allowance paid to employees in order to enable them to face the increasing dearness
of essential commodities. It serves as a cushion, a sort of insurance against increase in price
levels of commodities. Instead of increasing wages every time there is a rise in price levels,
DA is paid to neutralize the effects of inflation; when prices go down, DA can always be
reduced. This has, however, remained a hypothetical situation as prices never come down to
necessitate a cut in dearness allowance payable to employees.

DA is linked in India to three factors: the index factor, the time factor and the point factor.
All India consumer price index (AICPI): The Labour Bureau, Shimla, computes
the AICPI (Base 1960 = 100 points) from time to time.

Time Factor: in this case DA is linked to the rise in the All India Consumer Price index
(AICP!) in a related period, instead of linking it to fortnightly or monthly fluctuations in
index.

Point Factor: Here DA rises in line with a rise in the number of index points above a specific
level.

Other allowances:

The list of allowances granted by employers in India has been expanding, thanks to the
increasing competition in the job market and the growing awareness on the part of
employees.
BONUS

Employee compensation and benefits are divided into four basic categories
:
1. Guaranteed pay – a fixed monetary (cash) reward paid by an employer to an employee.
The most common form of guaranteed pay is base salary.

24
2. Variable pay – a non-fixed monetary (cash) reward paid by an employer to an employee
that is contingent on discretion, performance, or results achieved. The most common forms of
variable pay are bonuses and incentives

3. Benefits – programs an employer uses to supplement employees’ compensation, such as

paid time off, medical insurance, company car, and more

4. Equity-based compensation – stock or pseudo stock programs an employer uses to

provide actual or perceived ownership in the company which ties an employee's
compensation to the long-term success of the company. The most common examples are
stock options.

Nominal and Real Wages:

Wages can be expressed in two ways. When they are expressed in terms of
money paid to the worker they are called nominal wages. But when they are
expressed in terms of their purchasing power with reference to some base year they are called
real wages. These wages are arrived at by making adjustment in the nominal wages for the
rise or fall in the cost of living. Thus, if the nominal wage of a worker in 1984 was
Rs.400p.m. and in 1994 it is Rs.900 p.m. but if the living in 1994 has become thrice as costly
as in 1984 the real wage of the worker in 1994 is Rs.300 only. How do we measure changes
in the cost of living, or changes in the prices that consumers pay? The measuring rod is the
consumer price index number. This index number is intended to show over a period of time
the average percentage change in the prices paid by the consumers belonging to the
population group proposed to be covered by the index for a fixed list of goods and services
consumed by them. The average percentage change, measured by the index, is calculated
month after month with reference to a fixed period.

INCENTIVE
An incentive is something that motivates an individual to perform an action. The study of
incentive structures is central to the study of all economic activities (both in terms of
individual decision-making and in terms of co-operation and competition within a larger
institutional structure). Economic analysis, then, of the differences between societies (and
between different organizations within a society) largely amounts to characterizing the

25
differences in incentive structures faced by individuals involved in these collective efforts.
Ultimately, incentives aim to provide value for money and contribute to organizational
success

FACTORS INFLUENCING COMPENSATION LEVELS:-

The amount of compensation received by an employee should reflect the effort put in by the
employee, the degree of difficulty experienced while expending his energies, the competitive
rates offered by others in the industry and the demand-supply position within the country, etc.
These are discussed below.

a) Job Needs: Jobs vary greatly in their difficulty, complexity and challenge. Some need
high levels of skills and knowledge while others can be handled by almost anyone.
Simple, routine tasks that can be done by many people with minimal skills receive
relatively low pay. On the other hand, complex, challenging tasks that can be done by
few people with high skill levels generally receive high pay.

b) Ability to pay: Project determines the paying capacity of a firm. High profit levels
enable companies to pay higher wages. This partly explains why computer software
industry pays better salaries than commodity based industries (steel, cement,
aluminum, etc), Likewise, multinational companies also pay relatively high salaries
due to their earning power.

c) Cost of living: Inflation reduces the purchasing power of employees. To overcome

this, unions and workers prefer to link wages to the cost of living index rises due to rising
prices, wage follow suit.

d) Prevailing wage rates: Prevailing wage rates in competing firms within an industry
are taken into account while fixing wages. A company that does not pay comparable
wages may find it difficult to attract and retain talent.

e) Unions: Highly unionized sectors generally have higher wages because well organized
unions can exert presence on management and obtain all sorts of benefits and concessions
to workers.

26
 f) Productivity: This is the current trend in most private sector companies when workers’
wages are linked to their productivity levels. If your job performance is good, you get
good wages. A sick bank, for example, can’t hope to pay competitive wages, in tune with
profit making blanks.

g) State Regulation: The legal stipulations in respect of minimum wages, bonus,

dearness allowance, allowances, etc., determine the wage structure in an industry.

h) Demand and supply of labour: The demand for and the supply of certain skills
determine prevailing wage rates. High demand for software professionals, R&D
professionals in drug Industry, telecom and electronics engineers, financial analysis,
management consultants ensures higher wages. Oversupply kills demand for a certain
category of employees leading to a steep fall in their wages as well.

Most employers, nowadays, are Interested in paying a fair wage to all workers which is
neither very high (affecting the company’s profitability) nor very low (where attracting
and retaining people becomes difficult).

FRINGE BENEFITS

The term ‘fringe benefits’ refers to the extra benefits provide to employees in addition to the
normal compensation paid in the form of wage or salary. Many years ago, benefits and
services were labeled ‘fringe’ benefits because they were relatively insignificant or fringe
components of compensation. However, he situation now is different, as these have, more or
less, become important components of a comprehensive compensation package offered by
employers to employees.

TB main feature of fringe benefits, as they stand today may be stated thus:9

 They are supplementary forms of compensation.

 They are paid to all employees (unlike incentives which are paid to specific
employees whose work is above standard) based on their membership in the
organization.
 They are indirect compensation because they are usually extended as a condition
of employment and are not directly to performance.
 They help raise the living condition of employees.

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  They m be statutory or voluntary. Provident find is a statutory benefit whereas
transport is a voluntary benefit.

TYPES OF FRINGE BENEFITS

The fringe benefits offered by various organizations in India may be broadly classified into
five categories. These few discussed below:

Payment for time not worked: This category include: (a) hours of work, (b) paid holidays,
(c) shift premium, (d) holiday pay and (e) paid vacation.

i. Hours of Work: Section 51 of the Factories Act, 1948, specifies that no adult
worker shall be required to work in a factory for more than 48 hours in any
week. Section 54 of the Act restricts the working hours to 9 on any day. In
some organization, the numbers of working hours are less than the legal
requirements.
ii. Paid Holiday: According to the Factories Act, 1948, an adult worker shall
have weekly paid holidays, preferably Sunday. When a worker is deprived of
weekly holidays, he is eligible for compensatory holidays of the same number
in the same month. Some organizations allow the workers to have two days’
holidays in a week.
iii. Shift Premium: Companies operating second and third shifts, pay a premium
to the workers who are required to work during the odd hour’s shift.
iv. Holiday Pay: Generally organizations offer double the normal rate of the
salary to those workers, who work during holidays.
v. Paid Vacation: Workers in manufacturing, mining and plantations who
worked for 240 days during a calendar year are eligible for paid vacation at the
rate of one day for every 20 days worked in case of adult workers and at the
rate of one day for every 20 days worked in case of adult workers and at the
rate of one day for every 15 days worked in case of child workers.

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 INDUSTRY & COMPANY PROFILE

INTRODUCTION

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries
due to the entry of several new players. It accounts for over 10 per cent of the country‘s
Gross Domestic Product (GDP) and around 8 per cent of the employment. India is the
world‘s fifth-largest global destination in the retail space.

MARKET SIZE

The Boston Consulting Group and Retailers Association of India published a report titled,
‗Retail 2020: Retrospect, Reinvent, Rewrite‘, highlighting that India‘s retail market is
expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by
income growth, urbanisation and attitudinal shifts.

The report adds that while the overall retail market is expected to grow at 12 per cent per
annum, modern trade would expand twice as fast at 20 per cent per annum and traditional
trade at 10 per cent.

Retail spending in the top seven Indian cities amounted to Rs 3.58 trillion (US$ 53.7 billion),
with organised retail penetration at 19 per cent as of 2014. Online retail is expected to be at
par with the physical stores in the next five years.

India is expected to become the world‘s fastest growing e-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies
have high expectations about growth of Indian e-commerce markets. Indian e-commerce
sales are expected to reach US$ 55 billion! by FY2018 from US$ 14 billion in FY2015.
Further, India's e-commerce market is expected to reach US$ 220 billion in terms of gross
merchandise value (GMV) and 530 million shoppers by 2025, led by faster speeds on reliable
telecom networks, faster adoption of online services and better variety as well as
convenience@.

India‘s direct selling industry increased 6.5 per cent in FY2014-15 to Rs 7,958 crore (US$
1.19 billion) and is expected to reach a size of Rs 23,654 crore (US$ 3.55 billion) by
FY2019-20, as per a joint report by India Direct Selling Association (IDSA) and PHD.

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INVESTMENT SCENARIO

The Indian retail industry in the single-brand segment has received Foreign Direct
Investment (FDI) equity inflows totalling US$ 344.9 million during April 2000–September
2015, according to the Department of Industrial Policies and Promotion (DIPP).

With the rising need for consumer goods in different sectors including consumer electronics
and home appliances, many companies have invested in the Indian retail space in the past
few months.

 Amazon India expanded its logistics footprint three times to more than 2,100 cities
and towns in 2015, as Amazon.com invested more than US$ 700 million in its India
operations since July 2014.
 Adidas AG, reknowned for its Adidas and Reebok sports brands, has become the first
foreign sports company to get government approval to open 100 per cent foreign-
owned stores in India.
 Walmart India plans to add 50 more cash-and-carry stores in India over the next four
to five years.
 >Aeropostale, an American teen fashion retailer, has chosen to enter India over
China, and expects India to be among its top three markets over the next four years
with revenue target of Rs 500 crore (US$ 75 million).
 Opinio, a hyperlocal delivery start-up, has raised US$ 7 million in a Series-A funding
from Gurgaon-based e-commerce fulfilment service firm Delhi very along with
investment from Sands Capital and Accel Partners.
 Textile major Arvind Limited has announced a partnership with Sephora, owned by
LVMH Moet Hennessy Louis Vuitton, a French luxury conglomerate, in order to
enter into the beauty and cosmetics segment.
 Mobile wallet company MobiKwik has partnered with Jabong.com to provide mobile
payment services to Jabong‘s customers.
 DataWind partnered with HomeShop18 to expand its retail footprint in the country.
Under the partnership, HomeShop18 and DataWind would jointly launch special sales
programmes across broadcast, mobile and internet media to provide greater access to
the latter‘s tablet range.
 FashionAndYou has opened three distribution hubs in Surat, Mumbai and Bengaluru
to accelerate deliveries.

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  Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 375 million) in a
fruit and vegetable processing unit, an integrated meat processing unit, and a modern
shopping mall in Hyderabad, Telangana.
 Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-
largest supermarket retailer in the country, acquired Total hypermarkets owned by
Jubilant Retail.
 With an aim to strengthen its advertising segment, Flipkart acquired mobile ad
network AdiQuity, which has a history of mobile innovations and valuable experience
in the ad space.
 US-based Pizza chain Sbarro plans an almost threefold increase in its store count from
the current 17 to 50 over the next two years through multiple business models.

GOVERNMENT INITIATIVES

The Government of India has taken various initiatives to improve the retail industry in India.

 The Ministry of Urban Development has come out with a Smart National Common
Mobility Card (NCMC) model to enable seamless travel by metros and other transport
systems across the country, as well as retail purchases.
 IKEA, the world‘s largest furniture retailer, bought its first piece of land in India in
Hyderabad, the joint capital of Telangana and Andhra Pradesh, for building a retail
store. IKEA‘s retail outlets have a standard design and each location entails an
investment of around Rs 500–600 crore (US$ 75–90 million).
 The Government of India has accepted the changes proposed by Rajya Sabha select
committee to the bill introducing Goods and Services Tax (GST). Implementation of
GST is expected to enable easier movement of goods across the country, thereby
improving retail operations for pan-India retailers.
 The Government has approved a proposal to scrap the distinctions among different
types of overseas investments by shifting to a single composite limit, which means
portfolio investment up to 49 per cent will not require government approval nor will it
have to comply with sectoral conditions as long as it does not result in a transfer of
ownership and/or control of Indian entities to foreigners. As a result, foreign
investments are expected to be increase, especially in the attractive retail sector.

THE UPCOMING TREND

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E-commerce is expanding steadily in the country. Customers have the ever increasing choice
of products at the lowest rates. E-commerce is probably creating the biggest revolution in the
retail industry, and this trend would continue in the years to come. Retailers should leverage
the digital retail channels (e-commerce), which would enable them to spend less money on
real estate while reaching out to more customers in tier-2 and tier-3 cities.

Both organised and unorganised retail companies have to work together to ensure better
prospects for the overall retail industry, while generating new benefits for their customers.
Nevertheless, the long-term outlook for the industry is positive, supported by rising
incomes, favourable demographics, entry of foreign players, and increasing urbanisation.

GROWTH OF INDIAN RETAIL INDUSTRY

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney,
India retail industry is the most promising emerging market for
investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross
Domestic Product) of the country. In 2009, it rose to 12%. It is also expected to reach 22% by
2010.
According to a report by North bride Capita, the India retail industry is expected to
grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the
total market share. It can be mentioned here that, the share of organized sector in 2007 was
7.5% of the total retail market.
India is rapidly evolving into a competitive marketplace with potential target consumers
in the niche and middle class segments. The market trends indicate tremendous growth
opportunities. Global majors too are showing a keen interest in the Indian retail market. Over
the years, international brands like marks and spencer, Samsonite, Lacoste, McDonald‘s,
Swarovski, Domino‘s among a host of others have come into India through the franchise
route following the relexation of FDI (Foreign Direct Investment) restrictions. Large Indian
companies- among them the Tata, Goenka and the Piramal groups are investing heavily in
this industry.

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MAJOR RETAILERS IN INDIA
PANTALOON:
Pantaloon is one of the biggest retailers in India with more than 450 stores across the country.
Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the
country. It's growing at an enviable pace and is expected to reach 30 million sq. ft by the year
2010. In 2001, Pantaloon launched country's first hypermarket ‗Big Bazaar‘. It has the
following retail segments:

 Food & Grocery: Big Bazaar, Food Bazaar

 Home Solutions: Hometown, Furniture Bazaar, Collection-I
 Consumer Electronics: e-zone
 Shoes: Shoe Factory
 Books, Music & Gifts: Depot
 Health & Beauty Care: Star, Sitara
 E-tailing: Futurebazaar.com
 Entertainment: Bowling Co.

TATA GROUP
Tata group is another major player in Indian retail industry with its subsidiary Trent, which
operates Westside and Star India Bazaar. Established in 1998, it also acquired the largest
book and music retailer in India ‗Landmark‘ in 2005. Trent owns over 4 lake sq. ft retail
space across the country.

RPG GROUP
RPG Group is one of the earlier entrants in the Indian retail market, when it came into food &
grocery retailing in 1996 with its retail Food world stores. Later it also opened the pharmacy
and beauty care outlets ‗Health & Glow‘.

RELIANCE
Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance
Fresh stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its
sales to reach Rs. 90,000 crores by 2010.

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AV BIRLA GROUP
AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis
Philippe, Allen Solly, Van Heusen, Peter England are quite popular. It's also investing in
other segments of retail. It will invest Rs. 8000-9000 crores by 2010.
Another big player in the segment will be the Bharti group. Overhauling this part of the
supply chain will be the key to the success of any retail venture in food and groceries
segment.

Wal-Mart, the world‘s largest retailer, and Bharti Enterprises have signed a
Memorandum of Understanding (MoU) to explore business opportunities in the Indian retail
industry. This joint venture will mark the entry of Wal-Mart into the Indian retailing industry
a retail chain like Future Group‘s Big Bazaar may be clocking heady sales (growing at 100%
year- on- year), but the dozen odd shops operating in its proximity wear a deserted look,
giving a somewhat hollow ring to the much- talked- about retail boom in the country. The key
players currently operating in the Indian retail industry includes Future Group, Trent Ltd,
RPG Enterprise, Vishal Retail Ltd, Shoppers Stop Ltd, Bata India Ltd, Provogue India Ltd,
Vdeocon Appliances Ltd, ITC Ltd, Godrej Agrovert Ltd, and DCM-Hariyah Kissan Bazaar.

Retailers ranging from Pantaloon to RPG to Piramal‘s or the Tata‘s are working
towards exploiting this model, perceived by consumers as more value enhancing. But in the
long run, what is most likely to succeed is a more balanced multi-format strategy. Finally,
while in the first flush of the retail boom, the elimination of traditional intermediaries may
bring windfall gains (as well as bring welcome and much-needed relief to the producers), this
source will increasingly dry out as competition intencifies and margins come under pressure a
few years down the line. What would set the survivors apart from those who are forced to sell
out or go belly-up will be differentiators like location, value-added services (convenience),
private labels and customer loyalty programs other than price. The last, a result of retailer-
manufacturer tie-ups, state-of-the-art supply chain infrastructure, global sourcing and scale
will be a key factor. And, if experience in other markets is anything to go by, an uncanny
ability to read shifting trends.

RETAIL FORMATS IN INDIA

Hyper marts /supermarkets: large self-servicing outlets offering products from a variety of
categories.

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  Mom-and-pop stores: they are family owned business catering to small sections; they
are individually handled retail outlets and have a personal touch.
 Departmental stores: are general retail merchandisers offering quality products and
services.
 Convenience stores: are located in residential areas with slightly higher prices goods
due to the convenience offered.
 Shopping malls: the biggest form of retail in India, malls offers customers a mix of all
types of products and services including entertainment and food under a single roof.
 E-trailers: are retailers providing online buying and selling of products and services.
 Discount stores: these are factory outlets that give discount on the MRP.
 Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and
other small items can be bought via vending machine.
 Category killers: small specialty stores that offer a variety of categories. They are
known as category killers as they focus on specific categories, such as electronics and
sporting goods. This is also known as Multi Brand Outlets or MBO's.
 Specialty stores: are retail chains dealing in specific categories and provide deep
assortment. Mumbai's Crossword Book Store and RPG's Music World is a couple of
examples.

CHALLENGES FACING INDIAN RETAIL INDUSTRY

 The tax structure in India favors small business

 Lack of adequate infrastructure facilities
 High cost of real estate
 Dissimilarity in consumer groups
 Restrictions in Foreign Direct Investment
 Shortage of retail study options
 Shortage of trained manpower
 Low retail management skill

The retail industry in India is currently growing at a great pace and is expected to go
up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the
year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer
spending has also gone up and is also expected to go up further in the future. In the last four
year, the consumer spending in India climbed up to 75%. As a result, the India retail industry

35
is expected to grow further in the future days. By the year 2013, the organized sector is also
expected to grow at a CAGR of 40%.

OVERVIEW

The Indian Retail sector has come off age and has gone through major transformation over
the last decade with a noticeable shift towards organised retailing. A T Kearney, a US Based
global management consulting firm has ranked India as the fourth most attractive nation for
retail investment among 30 flourishing markets.

The retail market is expected to reach a whooping Rs. 47 lakh crore by 2016-17, as it
expands at a compounded annual growth rate of 15 per cent, accordingy to the ‗Yes Bank -
Assocham‘ study.

The retail market, (including organised and unorganised retail), was at Rs. 23 lakh crore in
2011-12. According to the study, organised retail, that comprised just seven per cent of the
overall retail market in 2011-12, is expected to grow at a CAGR of 24 per cent and attain
10.2 per cent share of the total retail sector by 2016-17.

In terms of sheer space, the organised retail supply in 2013 was about 4.7 million square feet
(sq ft). This showed a 78 per cent increase over the total mall supply of just 2.5 million sq ft
in 2012.

―Favourable demographics, increasing urbanisation, nuclearisation of families, rising

affluence amid consumers, growing preference for branded products and higher aspirations
are other factors which will drive retail consumption in India,‖ said DS Rawat, Assocham
Secretary General.

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 RETAIL CLASSIFICATION

Retail industry can be broadly classified into two categories namely- organised and
unorganised retail.

 Organized retail - Organised traders/retailers, who are licensed for trading activities and
registered to pay taxes to the government.
 Unorganized retail – It consists of unauthorized small shops - conventional Kirana shops,
general stores, corner shops among various other small retail outlets - but remain as the
radiating force of Indian retail industry.

MARKET DYNAMICS

In the past few years, Indian Retail sector has seen tremendous growth in the organised
segment. Major domestic players have stepped into the retail arena with long term, ambitious
plans to expand their business across verticals, cities and formats.

Companies like Tata, Reliance, Adani Enterprise and Bharti have been investing considerably
in the booming Indian Retail market. Along with these giant retailers, a number of
transnational brands have also entered into the market to set up retail chains in close
association with bigger Indian companies.

High consumer spending over the years by the young population (more than 31% of the
country is below 14 years) and sharp rise in disposable income are driving the Indian
organised retail sector‘s growth. Even Tier I & Tier II cities and towns are witnessing a major
shift in consumer preferences and lifestyles, the result of which, they have emerged as
attractive markets for retailers to expand their presence.

The Indian retail sector is highly fragmented and the unorganised sector has around 13
million retail outlets that account for around 95-96% of the total Indian retail industry.
However, going forward, the organised sector‘s growth potential is expected to increase due
to globalisation, high economic growth, and improved lifestyle.

Although the growth potential in the sector is immense, there are obstacles too, that could
slow the pace of growth for new entrants. Rigid regulations, high personnel costs, real estate

37
 costs, lack of basic infrastructure, and highly competitive domestic retailer groups are some
such challenges.

KEY DRIVERS OF THE INDIAN RETAIL INDUSTRY

 Emergence of nuclear families

 An increase in the double-income households trend
 Large working population
 Reasonable Real estate prices
 Increase in disposable income and customer aspiration
 Demand as well as increase in expenditure for luxury items
 Growing preference for branded products and higher aspirations
 Growing liberalization of the FDI policy in the past decade
 Increasing urbanisation,
 Rising affluence amid consumers

BOTTLENECKS

 A long way to meet international standards

 Lack of efficient supply-chain management
 Lack of required retail space
 No fixed consumption pattern
 Shortage of trained manpower
 Lack of proper infrastructure and distribution channel

EMERGING SECTORS/TRENDS IN INDIAN RETAILING

Within retail, the emerging sectors would be food and grocery, apparel, electronics, e-
commerce, fashion and lifestyle.

Incorporation of technology in the organised retail segment has been something to reckon
with in the past few years. Use of computers for merchandise planning and management,
control of inventory costs and supplies and replenishment of goods done electronically,
internal store billing, etc has changed the face of product retailing.

39

38
Online retail business is the next gen format which has high potential for growth in the near
future. After conquering physical stores, retailers are now foraying into the domain of e-
retailing. The retail industry is all set to test waters over the online medium, by selling
products through websites. Food and grocery stores comprises the largest chunk of the Indian
retail market.

An emerging trend in this segment is the virtual formats where customer orders are taken
online through web portals which are delivered at the door step the very same day or the
following day. This trend has been catching up with most of the large sized retail chains that
have their websites.

THE ROAD AHEAD…

According to panel members at the seventh Food and Grocery Forum India, the opportunities
in food and grocery retail in India are immense, given that it constitutes about 69 per cent of
India‘s total retail market. The Indian retail market, currently estimated at $490 billion, is
project to grow at a compounded annual growth rate of 6 per cent to reach $865 billion by
2023. Modern retail with a penetration of only 5% is expected to grow about six times from
the current 27 billion USD to 220 billion USD, across all categories and segments.

Organised Retail is emerging as the new phenomenon in India and despite the slump, the
market is growing exponentially. As economic growth brings more of India‘s people into the
consuming classes and organized retail lures more and more existing shoppers, by 2015,
more than 300 million shoppers are likely to patronize organized retail chains.

Consumer markets in emerging market economies like India are growing rapidly owing to
robust economic growth. India's modern consumption level is set to double within five years
to US$ 1.5 trillion from the present level of US$ 750 billion.

The growing middle class is an important factor contributing to the growth of retail in India.
By 2030, it is estimated that 91 million households will be ‗middle class‘, up from 21 million
today. Also by 2030, 570 million people are expected to live in cities, nearly twice the
population of the United States today.

Thus, with tremendous potential and huge population, India is set for high growth in
consumer expenditure. With India's large ‗young‘ population and high domestic
consumption, the macro trends for the sector look favorable.

39
ORGANIZATIONAL HIERARCHY

Chairman and Managing Director

Sr. Vice Presidents

Vice President

Sr. General Manager and Manager

Dy. General Manager

Asst. General Manager

Manager

Dy. Manager

Asst. Manager

Executive

Staff

Workmen

40
 HR DEPARTMENT CHART

Vice President (HR & Legal)

Dy. Manager (Legal) Sr. General Manager

Confidential Executive Dy. Manager (HR)

Security Executive Assistance Manager (HR) Executive (HR) Supervisor

Security Guard

41
 ABOUT THE FUTURE GROUP – COMPANY PROFILE

Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India's
leading business houses with multiple businesses spanning across the consumption space.
While retail forms the core business activity of Future Group, group subsidiaries are present
in consumer finance, capital, insurance, leisure and entertainment, brand development, retail
real estate development, retail media and logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square
feet of retail space in over 71 cities and towns and 65 rural locations across India. The group
owns several leading formats including Pantaloons, Big Bazaar, Food Bazaar, Home Town,
eZone and Central. Pantaloon Retail was awarded the International Retailer of the Year -
2008, by the US-based National Retail Federation, the largest retail trade association and the
Emerging Market Retailer of the Year 2008 at the World Retail Congress in Barcelona.

Future Group believes in developing strong insights on Indian consumers and building
businesses based on Indian ideas, as espoused in the group's core value of 'Indianness'.
The group's corporate credo is, 'Rewrite rules, Retain values'.

ABOUT FUTUREBAZAAR.COM
FutureBazaar.com is the e-commerce arm of the Future Group. FutureBazaar provides an
integrated shopping site where consumers are able to buy products from our flagship stores
including eZone, Pantaloons and Big Bazaar online and get home delivery of products.

FutureBazaar delivers across more than 1500 cities and towns in India covering 16,000 pin
codes. FutureBazaar carries genuine products and offers manufacturer's warranty (as
opposed to Seller's warranty) which most other sites offer. FutureBazaar offers products
where the complete supply chain is managed by Future Group entities unlike other sites that
are marketplaces.
By the virtue of being a part of Future Group, FutureBazaar is able to offer a wide range of
genuine products at very competitive prices, confidence of buying from a trusted source
and the convenience of returning in our physical stores.

42
ABOUT BIG BAZAAR
Big Bazaar is not just another hypermarket. It caters to every need of your family. Where
Big Bazaar scores over other stores is its value for money proposition for the Indian
customers.

At Big Bazaar, you will definitely get the best products at the best prices - that's what we
guarantee. With the ever increasing array of private labels, it has opened the doors into the
world of fashion and general merchandise including home furnishings, utensils, crockery,
cutlery, sports goods and much more at prices that will surprise you. And this is just the
beginning. Big Bazaar plans to add much more to complete your shopping experience.

ABOUT PANTALOONS
Pantaloons are among India's largest chains of fashion stores. Pantaloons Fresh Fashion, with its
focus on 'fresh look, feel and attitude' offers, trendy and hip collections that are in sync with the
hopes and aspirations of discerning young and 'young-at-heart' consumers.

Pantaloons Fresh Fashion stands out as a fashion trendsetter, on the lines of how fashion is
followed internationally. This 'fresh fashion' destination allows customers to shop for the
latest in fashion apparel and accessories throughout the year in an attractive and visually
stimulating ambience.

Pantaloons Fresh Fashion stores have presence with stores not just in Metros but also in
smaller towns. All stores have a wide variety of categories like casual wear, ethnic wear,
formalwear, party wear and sportswear for Men, Women and Kids.

ABOUT EZONE
eZone, with the catch phrase 'experience electronics' is an experience led lifestyle format
that brings together the best in national and international consumer electronic and durables
brands in a family-centric environment.

Typically in excess of 12,000 square feet in size, an eZone store truly enables you to
experience electronics, through three dedicated zones - Liberation Zone, Experience Zone

43
and Home Zone. The Liberation Zone offers personal products like computers, laptops,
handy cams, MP3 players and mobile phones. While entertainment products such as Plasma /
LCD, Flat TV's, Home Theatre systems, DVD players, and Stereo systems are displayed in

the Experience Zone. And in the Home Zone segment, one gets to pick electronic goods of
his or her choice including Refrigerators, Air Conditioners, washing machines and
Microwave ovens among other kitchen related appliances. e Zone is not only about
showcasing electronics products and gadgets, but providing you with a complete shopping
experience through touch & feel, allowing you to pick and choose from an array of best of
brands under one roof. eZones are primarily stand alone concepts, but are also present within
the Central malls.

The Big Bazaar is a useful place to find cheap household items, clothes, and food all under
one roof. However, the chaos and crowds often make shopping there a challenge. Pros

Low prices.
Great sales and promotions.
Wide range of products under the one roof.
Many stores.
Cons
Overcrowded.
Checkout can be extremely slow.
Complaints of poor customer service and overcharging.
Quality is variable.

Description
Outlets in around 60 locations across India.
Sells furniture, electronics, clothes, cookware, cosmetics, household items, food,
gifts, jewelry, and books.
Also has special Food Bazaar outlets.
Most stores open from 10 a.m. until 9.30-10 p.m. daily.

GUIDE REVIEW - REVIEW OF BIG BAZAAR INDIA

There was a time not so long ago that large department stores were a completely foreign
concept in India -- but not anymore. The Big Bazaar is one such department store to have set
up shop across the country. Since its first outlet opened in Kolkata in late 2001, the Big
Bazaar has spread to towns and cities at an alarming rate.

44
 DATA ANALYSIS AND INTERPETATION

1. Opinion on awareness of pay policy in Big Baazar?

Table 1.1

Opinion No of Respondents % of Respondents

Yes 43 86%
No 7 14%
Total 50 100%

Graph 2.1

Opinion on awareness of pay policy in Big Baazar

14%

Yes
No

86%

INTERPRETATION: According to the above table 86% of the employees of the

organization are aware of the pay policies and rest of the 14% of the employees are not aware
of that they may be part time employees or contract based employees.

45
 2. Knowing about Compensation Packages in Retail Industries?

Table 1.2

Opinion No of Respondents % of Respondents

Yes 33 66
No 17 34
Total 50 100

Graph 2.2

Knowing about Compensation Packages in Retail Industries

34%
Yes
No

66%

INTERPRETATION: From the above table it is evident that 66% of the employees in the
Retail industry are aware of their compensation packages in their industry and rest of the 34%
are not aware about the compensation packages which are in practice in the industry.

3. Basis for Remuneration factor in Big Baazar?

46
Table 1.3

S. No Basis No. of Respondents % of Respondents

1 Previous work history 8 16
2 Experience 34 68
3 Length of service 5 10
4 Other 3 6
Total 50 100%

Graph 2.3

Basis for remuneration factor in Big Baazar

6%
16%
10%

Previous work history

Experience
Length of service
Other

68%

Interpretation: In the above table it is evident that 16% of the employees remuneration is
provided on the basis of previous work history, 68% of the employees remuneration is
provided on the basis of experience, 10% of the employees remuneration is provided on the
basis of their length of service and 6% of the employees remuneration is provided on other
grounds.

47
 4. Base of compensation provided in the organization

Table 1.4

S. No Base No. of Respondents % of Respondents

1 Hourly pay 0 0
2 Annual pay 47 94
3 Part time 2 4
4 Contract 1 2
Total 50 100

Graph 2. 4

Base of compensation provided in the organization

2%
4%

Hourly pay
Annual pay
Part time
Contract

94%

INTERPRETATION: In the above table it is evident there are no employees who work an
hourly pay basis as mentioned 0% in the table, 94% of the employees work on annual pay
base, 4% of the employees work on part time base and 2% of the employees work on contract
basis.

5. Pay package according to Market level or any other factors?

48
Table 1.5

S. No According to No. of Respondents % of Respondents

1 Market level 26 52
2 Below market level 4 8
3 Above market level 19 38
4 Organization’s capability 1 2

Total 50 100

Graph2. 5

Pay package according to Market level or any other factors

2%

Market level
38% Below market level
Above market level
52% Organization’s capability

8%

INTERPRETATION: In the above table it is evident that 52% of the employee’s

compensation package is defined on the market level, 4% of the employees pay package is
defined below the market level, 19% of the employee’s compensation package is defined
above market level and 1% of the employee’s compensation package is defined on
organizations capability.

6. What Factors Determines the Incentives of Employee’s?

Table 1.6

49
 S. No Determined by No. of Respondents % of Respondents
1 Manager 1 2
2 Profit 18 36
3 Seniority 5 10
4 Performance 26 52
5 Cost of living 0 0
Total 50 100

Graph2.6

Factors Determines the Incentives of Employee’s

2%

Manager
36% Profit
Seniority
52% Performance
Cost of living

10%

INTERPRETATION: In the above table shows that the incentive pay factor is determined
2% by the managers, 36% by the profit of the organization, 10% by the seniority, 52% by the
performance of the employees and cost of living is not taken into the consideration to pay
incentives.

7. Kinds/Plan of incentives in the organization?

Table 1.7

50
 S. No Kinds / Plans No. of respondents % of respondents
1 Organization portfolio 0 0
2 Group incentive plans 0 0
3 Individual plans 0 0

4 All 3 above 49 98

5 None 1 2

Total 50 100

Graph 2.7

Kinds/Plan of incentives in the organization

2%

Organization portfolio
Group incentive plans
Individual plans
All 3 above
None

98%

INTERPRETATION: In the above table it indicates that 98% of the employees are
provided all 3 kinds of incentives plans which are organization profit, group incentive plan
&individual plan and only 1% of the employees are not getting any kind of incentives
because, they are contract employees

8. Satisfaction Level about fringe benefits?

Table1.8

51
 S. No Level of satisfaction No. of respondents % of respondents
1 Highly satisfied 6 12
2 Satisfied 42 84
3 Dissatisfied 2 4
4 Highly dissatisfied 0 0
Total 50 100

Graph2.8

Satisfaction Level about fringe benefits

4%
12%

Highly satisfied
Satisfied
Dissatisfied
Highly dissatisfied

84%

INTERPRETATION: After studying the above table it is concluded that 84% of the
employees are satisfied with their fringe benefits, 6% of the employees are highly satisfied
with their fringe benefits, 2% of the employees are dissatisfied with their fringe benefits and
none of the employees is highly dissatisfied regarding their fringe benefits.

9. Types of benefits factors?

Table 1.9

S. No Types of benefits No. of Respondents % of Respondents

1 Protection programme 0 0
2 Paid time-off 0 0

52
 3 Above two 48 96
4 None 2 4
Total 50 100

Graph2.9

Types of benefits factors

4%

Protection programme
Paid time-off
Above two
None

96%

INTERPRETATION: In the above table, 96% of the respondents are provided both the
protection and paid time-off benefits and only 4% of the respondents are not provided with
either one of the benefits.

10. Level of fringe benefits providing to the employees

Table 1.10

Grades Scored points No. of Respondents % of Respondents

Grade – I 76 to 100 points 4 8
Grade – II 51 to 75 points 43 86
Grade – III 26 to 50 points 2 4
Grade – III 1 to 25 points 1 2

53
 Total 50 100

Graph2.10

Level of fringe benefits providing to the employees

2%
4% 8%

Grade – I
Grade – II
Grade – III
Grade – III

86%

INTERPRETATION: Note: In the questionnaire, question No. 11 deals with the checklist
about fringe benefits which contains 20 benefits and each marking allocates 5 points.
According to this, interpretation has made.
In the above table 8% of the respondents got 76 to 100 points, it indicates that these
respondents are getting total fringe benefits from the organization and these employees called
as Grade-I employees who are top level executives, 86% of the respondents have scored
between 51 to 75 points, it indicates that they are getting Grade-II employees benefits, 4% of
the respondents have scored between 26-50, it indicates that they are getting Group-III
employees benefits and 2% of the respondents are getting Group-IV employees benefits.

11. What is the average working duration/ hour of an employee?

Table 1.11

S. No Basis No. of Respondents % of Respondents

1 8 hours 8 16
2 9 – 10 hours 34 74
3 More than 10 hours 5 10

54
 Total 50 100

Graph2.11

Average working duration/ hour of an employee

10%
16%

8 hours
9 – 10 hours
More than 10 hours

74%

INTERPRETATION: In the above table, 74% of the respondents are provided for 9-10
working hour duration, were as 16% says the duration is 8 hours and 10% says it is more than
10 hours.

12. Do you agree that the Shift System is Convenient than Adopting a fixed Timing to
work?

Table 1.12

S. No Level of Satisfaction No. of Respondents % of Respondents

1 Strongly Agree 6 12
2 Agree 42 84
3 Neutral 2 4
4 Disagree 0 0

55
 Total 50 100

Graph 2.12

Shift System is Convenient than Adopting a fixed Timing to work

4%
12%

Strongly Agree
Agree
Neutral
Disagree

84%

INTERPRETATION: After studying the above table it is concluded that 12% of the
employees strongly Agree and Agree which is shows the highest 84 percentage and the
neutral which is 4% and disagree there is null.

13. Do you have a formal job evaluation plan in place?

Table 1.13

Opinion No of Respondents % of Respondents

Yes 43 86%
No 7 14%
Total 50 100%

56
Graph 2.13

formal job evaluation plan in place

14%

Yes
No

86%

INTERPRETATION: In the above table, the formal job evaluation plan which is shows the
86%. Yes and 14 % for No.

57
 14. Do you have an employee policy manual?

Table 1.14

Opinion No of Respondents % of Respondents

Yes 43 86%
No 7 14%

Total 50 100%

Graph 2.14

14%

Yes
No

86%

INTERPRETATION: In the above table, employee policy manual which is shows

the 86%. Yes and 14 % for No.

58
 15. Which type of Compensation payment system do you prefer?

Table 1.15

S. No Basis No. of Respondents % of Respondents

1 Fixed pay system 10 20
2 Variable pay system 34 68
3 Balanced-Debt Method 6 12
Total 50 100%

Graph 2.15

Compensation payment system

12%
20%

Fixed pay system

Variable pay system
Balanced-Debt Method

68%

INTERPRETATION: In the above table Compensation payment system which is shows the
fixed pay system is 20 % and Variable pay system 68% and balances Debt method 12 %.

59
 FINDINGS OF THE STUDY

 86% of the employees of the organization are aware of the pay policies and rest of the
14% of the employees are not aware of that they may be part time employees or
contract based employees.
 it is evident that 66% of the employees in the Retail industry are aware of their
compensation packages in their industry and rest of the 34% are not aware about the
compensation packages which are in practice in the industry.
 16% of the employee’s remuneration is provided on the basis of previous work
history, 68% of the employee’s remuneration is provided on the basis of experience,
10% of the employees remuneration is provided on the basis of their length of service
and 6% of the employees remuneration is provided on other grounds.
 There are no employees who work an hourly pay basis as mentioned 0% in the table,
94% of the employees work on annual pay base, 4% of the employees work on part
time base and 2% of the employees work on contract basis.
 52% of the employee’s compensation package is defined on the market level, 4% of
the employees pay package is defined below the market level, 19% of the employee’s
compensation package is defined above market level and 1% of the employee’s
compensation package is defined on organizations capability.
 the incentive pay factor is determined 2% by the managers, 36% by the profit of the
organization, 10% by the seniority, 52% by the performance of the employees and
cost of living is not taken into the consideration to pay incentives.
 98% of the employees are provided all 3 kinds of incentives plans which are
organization profit, group incentive plan &individual plan and only 1% of the
employees are not getting any kind of incentives because, they are contract employees
 It is concluded that 84% of the employees are satisfied with their fringe benefits, 6%
of the employees are highly satisfied with their fringe benefits, 2% of the employees
are dissatisfied with their fringe benefits and none of the employees is highly
dissatisfied regarding their fringe benefits.
 96% of the respondents are provided both the protection and paid time-off benefits
and only 4% of the respondents are not provided with either one of the benefits.

60
 8% of the respondents got 76 to 100 points, it indicates that these respondents are
getting total fringe benefits from the organization and these employees called as
Grade-I employees who are top level executives, 86% of the respondents have scored
between 51 to 75 points, it indicates that they are getting Grade-II employees benefits,
4% of the respondents have scored between 26-50, it indicates that they are getting
Group-III employees benefits and 2% of the respondents are getting Group-IV
employees benefits.
 74% of the respondents are provided for 9-10 working hour duration, were as 16%
says the duration is 8 hours and 10% says it is more than 10 hours.
 It is concluded that 12% of the employees strongly Agree and Agree which is shows
the highest 84 percentage and the neutral which is 4% and disagree there is null.
 The formal job evaluation plan which is shows the 86%. Yes and 14 % for No.
 Employee policy manual which is shows the 86%. Yes and 14 % for No.
 Compensation payment system which is shows the fixed pay system is 20 % and
Variable pay system 68% and balances Debt method 12 %.

61
 SUGGESTIONS

After doing this project work in the company, we found few of the main things in the
organization. They are as follows

 Continuously updating the compensation packages information in the

organization.

 Company should find out the various tax relaxation benefits to the employees.

 Providing a handsome compensation package can boost up the employee

motivation.

 Communicate about the benefits the employees in an effective manner.

 Adjust labour cost to financial results – the basic idea is to create a bonus plan

where the company is paying more bonuses in ‘good times’ and less (or no)

bonuses in ‘bad times’.

 Drive employee performance – the basic idea is that if an employee knows that

his/her bonus depends on the occurrence of a specific job.

 Employee retention – retention is not a primary objective of bonus plans, yet

bonuses are thought to bring value with employee retention as well,

 Employees paid more are more satisfied with their job (all other things being

equal) thus less inclined to leave their employer.

 Variable pay is a non-fixed monetary (cash) reward that is contingent on

discretion, performance, or results achieved.

 There are different types of variable pay plans, such as bonus schemes, sales

incentives (commission), overtime pay, and more.

62
 CONCLUSION

Compensation employees represent a critical human resource management practice:

without sound compensation systems, companies cannot attract and retain the best-qualified
employees. Practicing various human resources policies and programs like employment,
development and compensation and interaction among employees create a sense of
relationship between the individual worker and management, among workers and trade
unions and management.
It is the process of interaction among human beings. Human relations is an area of
management in integrating people into work situation in a way that motivates them to work
together productively, co-operatively and with economic, psychological and social
satisfaction. It includes:
The main objectives of compensation administration are to design a cost-effective pay
structure that will attract, motivate and retain competent employees and that will also be
viewed as fair by these employees apart from meeting legal requirements organization have
to take care of ever-rising employee expectation and competitive pressures while designing
an effective compensation plan. The purpose of this protect to bring out the importance of
designing an effective compensation plan that takes care of legal stipulations, industry
practices, employee expectation, competitive pressures, etc., so as to attract and retain talent.

63
 BIBLIOGRAPHY

Books referred:

1. Human resource and personnel management

By Aswarthappa.
2. Human resource management
Himalaya publishing house
3. Human resource management and human relations.
By V.P.
Michel
4. Gunkel, M. (2006). International Management Studies. Country Compatible Incentive
Design: a Comparison of Employee's Performance Reward Preferences in Germany and
the USA. Wiesbaden: DUV.
5. Javitich, A. (2004). Motivating Employees. Retrieved on November 24, 2010 from
http://www.javitch.com/Q/004.pdf
6. Mathis, R.L., & Jackson, J.H. (2008). Human Resource Management. 12th Ed. Ohio:
Thomson Inc.
7. McNamara, C. Basics about Employee Motivation (Including Steps you can take).
Retrieved on November 24, 2010 from
http://managementhelp.org/guiding/motivate/basics.htm
8. Podmoroff, D. (2005). 365 Ways to Motivate and Reward your Employees Ever Day-
With Little or No Money. Florida : Atlantic Publishing Group, Inc.
9. Randhawa, G. (2007). Human Resource Management. New Delhi: Atlantic Publishers &
Distributors
10. Werner, J. M., & DeSimone, R. L. (2009). Human Resource Development. 5th Ed. Ohio:
South Western Cengage Learning.
WEBSITES:
www.bigbazaar.com
www.biologicale.com
www.ask.com
www.google.com
www.citehr.com

64
 QUESTIONNARIES
EMPLOYEES SATISFACTION LEVEL REGARDING
COMPENSATION MANAGEMENT

PERSONAL INFORMATION:-
NAME :
AGE :
QUALIFICATION :
EXPERIENCE: :

QUESTIONNARIES

1. Are you aware of the procedure of pay policies in your organization?

A) Yes B) No [ ]
2. Do you know about compensation packages in IT industry?
A) Yes B) No [ ]
3. On what basis remuneration is provided in Karvy ?
A) Previous work history [ ]
B) Experience
C) Length of Service
D) If any other
4. On what base you are provided the compensation in the Karvy ?
A) Hourly pay B) Annual salary C) Contract base D) Part time
5. What do you feel about your pay package according to……………?
A) To market level [ ]
B) To below of market level
C) To above of market level
D) To company capability
6. In an incentive payment, worker pay is determined by [ ]
A) Manager B) Profit C) Seniority D) Cost of living
E) Performance

65
7. What kind of incentives are providing in your organization?

A) Organization profit plan

B) Group incentive plan are
C) Individual incentive plan
D) Above
8. Which type of fringe benefits you are provided in the stock Broking
A) Protection programs
B) Paid time – off
C) Services
D) All are above

9. What kind of insurance policies is providing to you in your organization?

A) Group insurance [ ]
B) Individual insurance
C) Group and individual insurance
D) None

10. How do you satisfy with the fringe benefits provided by the organization?
A) Highly satisfied [ ]
B) Satisfied
C) Dissatisfied
D) Highly dissatisfied
11. What is the average working duration/ hour of an employee? [ ]
A. 8 hours B. 9 – 10 hours
C. More than 10 hours

12. Do you agree that the shift system is convenient than adopting a fixed timing to work?
A. Strongly Agree [ ]
B. Agree
C. Neutral
D. Disagree

13. Do you have a formal job evaluation plan in place? [ ]

A. Yes B. No

14. Do you have an employee policy manual? [ ]

A. Yes B. No

15. Which type of Compensation payment system do you prefer? [ ]

A. Fixed pay system

B. Variable pay system
C. Balanced-Debt Method
D. All

66