A STUDY ON NEW TRENDS IN COMPENSATION

MANAGEMENT IN
ICICI
 ABSTRACT

Identifying all possible factors that increase organizational commitment is of utter importance to
organizations as the realization of organizational goals and objectives is an organization's main
purpose. There is a need therefore to motivate and enhance the commitment of employees to the
organization since they are the building blocks and driving force of any organization. Indeed,
compensation management is an important element of human resource management because it
influences the decision of potential employees to join an organization and also determines the
employer-employee relationship after employees become a part of the organization.
Compensation management should also include both monetary and non-monetary rewards
provided to employees in exchange for the work they do or the services they render. This study
aimed at establishing the impact of compensation management on the organizational
commitment.
 INDEX

Ch. No. PARTICULARS Page No.

1.1 INTRODUCTION
CHAPTER -1 1.2
i
OBJECTIVES OF STUDY
1.3 SCOPE OF STUDY
1.4 NEED FOR THE STUDY
1.5 LIMITATIONS OF STUDY

CHAPTER -2 2.1 REVIEW OF LITERATURE

i I I

2.2 THEORITICAL FRAMEWORK

CHAPTER-3 3.1 COMPANY PROFILEI

3.2 INDUSTRY PROFILE

CHAPTER -4 4.1 DATA ANALYSIS AND

i

INTERPRETATION

CHAPTER-5 5.1 FINDINGS

5.2 SUGGESTIONS
5.3 CONCLUSIONS

CHAPTER-6 BIBILOGRAPHY
List Of Tables
 Table showing your organization established
 Table showing compensation are available
 Table showing handle the compensation management department in your organization
 Table showing basis company provide compensation to their employees
 Table showing kind of compensation you prefer
 Table showing you satisfied with the compensation you receive
 Table showing ICICI is providing better compensation package to the employees
 Table showing compensation for different type of services
 Table showing king in employee compensation
 Table showing Compensation based more on group performance and less on individual
contribution
 Table showing there any procedure of receiving formal feedback by employees on
Company policies, compensation, benefits, employee attitudes
 Table showing In your organization employee receive effective performance appraisal.
 Table showing you getting training for improving the performance
 Table showing you free to give ideas to the higher management
List of the Graphs
 Graph showing your organization established
 Graph showing compensation are available
 Graph showing handle the compensation management department in your
organization
 Graph showing basis company provide compensation to their employees
 Graph showing kind of compensation you prefer
 Graph showing you satisfied with the compensation you receive
 Graph showing ICICI is providing better compensation package to the employees
 Graph showing compensation for different type of services
 Graph showing king in employee compensation
 Graph showing Compensation based more on group performance and less on
individual contribution
 Graph showing there any procedure of receiving formal feedback by employees on
Company policies, compensation, benefits, employee attitudes
 Graph showing In your organization employee receive effective performance
appraisal.
 Graph showing you getting training for improving the performance
 Graph showing you free to give ideas to the higher management
 CHAPTER-I

INTRODUCTION
 1.1 INTRODUCTION
Compensation Management as it is known today has been a very important source of
attracting, retaining and motivating the required human resource for any organization.
Although most employees specially at middle and senior levels claim that money does not play
a very important role in their decision to change or to stay in an organization but in reality, it is
the money which motivate most of the employees.

The employees need to be compensated for the services which they render to an organization.
It is not easy to workout suitable compensation package for the employees and keeps them
satisfied. The experience is that the employees mostly remain dissatisfied with whatever wage
or salary they are paid by the employers.
Therefore, the job of wage and salary administration has been complex and subtle, and littered
with techniques to reduce the complexity and cope with the subtleties. Hence various methods
to compensate the employees have been deployed but without success. Incentive payment
schemes, at times have been considered as the answer to most problems.
The methods of appraisal of employees have been worked out to match the performance of the
employees with proper compensation, but without complete success.
These days, the organizations are also beset with the problem of ‘take home salary’ concept.
The employees are no more interested in knowing how much the company is spending on each
of them but they are keen to known how much would be available to them in their hands.
This had brought into sharp focus the question of income tax planning. The organizations are
findings newer and newer methods to help employees in planning their tax liability or how to
minimise the tax payment by the employees. On the other hand the Government has been
finding out the loopholes in income tax structure to plug the same.
Recently, there have been a number of cases where very large organizations have been caught
for not deducting tax at source properly. As a result, today we find that the number of
components of the compensation have been increased and the nomenclature of some of these
components have been changed to keep the same out of income tax net by the management
under pressure from their employees.
However, these efforts have not proved very helpful to the management as it continues to
remain under stress – whether the methods being used in compensation, are part of tax
planning or tax avoidance and at the same time, is it able to satisfy the employees and maintain
positive image among its employees as well as in the society at large or not.
There is no doubt that the employees work for compensation in terms of money and their
attempt is always to maximise the same. The employees, therefore, are anxious to minimise the
income tax incidence.
The employees work for rewards and the employers seek higher productivity to keep cost per
employee low. A balance is to be struck between these two parties – employer and employee
about compensation.
The compensation should be designed in such a fashion that the organization is able to attract,
motivate, and retain competent employees and at the same time the employees perceive it fair
and equitable.
The perception by the employees is important as the ratio between the input and output – i.e.,
services rendered and the reward for the same in terms of compensation, will determine the
level of their satisfaction, which in turn, determine their contribution, motivation, and
retention.
In India, the Government, specially through labour laws has been playing a very important and
significant role in determining wages and also in making it mandatory for employers to
provide welfare schemes to its work force. The employers and employees have to comply with
the same, willingly or unwillingly.

Compensation Management Concept
An organisation’s goals or objectives can be achieved when its employees put in their best
efforts in the right direction. Hence, they should be nurtured properly and paid well for their
work, performance, services, etc. Besides wages or salaries, organisations provide different
kinds of incentives, benefits and services to their employees.
Money paid to employees for their work in the form of gross pay is included under direct
compensation; while benefits come under indirect compensation and they may consist of life,
accident and health insurance, the contribution of an organisation to retirement i.e. retirement
benefits, expenses incurred for employee welfare as social security etc.
All these things are nothing but the compensation the employees receive in return for their
contribution to their organisation. From the viewpoint of an organisation, compensation
management is a major function. Compensation Management is one of the most important
topics in HRM. This is one area which needs all the attention as it can have a direct impact on
all others.
Compensation Management is concerned with the compensation to employees for their work
and contribution for attaining organisational goals. Obviously, it is concerned with designing
and implementing total compensation package. It is also known as wage and salary
administration or remuneration management.
Every organisation requires suitable human resources to achieve its objectives. To get the
effective results, the employees must be paid and compensated properly even though this is not
the only motivator for the employees to work. Any unjustifiable inequality or an unacceptably
low level of reward causes great dissatisfaction among employees.
Hence, sound wage and salary policies and programmes are very essential to attract, induct,
retain and develop the employees working in the organisation in order to get the best results
from them. Wage and salary administration or compensation management is considered as one
of the vital areas of “Human Resource Management”.
Compensation Management refers to the establishment and implementation of sound policies,
programmes and practices of employee compensation. It is essentially the application of a
systematic and scientific approach for compensating the employees for their work in a fair,
equitable and logical manner. The factors affecting the determination of fair and equitable
compensation are many and are very complex.
Compensation Management includes various areas such as job evaluation, surveys of wages
and salary analysis of relevant organisational problem, development of suitable wage structure,
framing of rules for administering wages and salaries, wage payment, incentive, control of
compensation cost etc. Hence, in the era of globalisation, privatisation, liberalisation,
compensation management has become very complex and depending upon the size of the
organisation, it may be helpful to induct a specialist to handle this specific portfolio under
HRM.
Wages and salaries mean different things to different people and organisations. From the
viewpoint of employees, white collar or blue collar, a salary or a wage is an income and a
return they get for offering their services to their organisation. From the viewpoint of an
organisation or management, wages and salaries constitute a cost of production. A wage or
salary is a price paid to an employee for hiring his services.
Compensation is defined as the consolidated amount, allowances received and various other
kinds of benefits and services which are offered by the organisation to their employees. In
other words, compensation refers to all forms of financial returns, services and benefits
received by the employees from their organisation as a part of their employment relationship.
Such compensation may be received in the form of cash i.e. wages/salaries, bonus, overtime
payments, incentives (i.e. gross payment). This is called as ‘direct compensation’. While
benefits that come under indirect compensation may consist of life, accidents and health
insurance, pay for vacation or illness, retirement benefits and so on.
Thus, in short, compensation is direct and indirect monetary benefits and rewards received by
employees on the basis of the value of the jobs, their personal contributions and overall
performance. Such rewards are given to employees by their organisation according to the
ability of the organisation to pay and the legal provisions.

A well-developed remuneration system should aim at achieving the following objectives:

1. To attract competent and qualified persons towards organization by offering fair wage and
incentive.
2. To retain present employees by paying competitive remuneration.
3. To establish fair and equitable remuneration so as to avoid pay disparities.
4. To improve production, productivity and profitability of the organization.
5. To minimise un-necessary expenditure and to control cost through a device of internal check
and establishment of standard.
6. To improve and maintain good human relation between employer and employee through a
process of payment of bonus, profit sharing and other fringes benefits.
7. To enhance the name and fame of the company through a proper system of wage payment.
8. To ensure prompt and regular payment of wage and salary to all the employees.

Future trends in Compensation Management

In a globalized and liberalized business era, compensation management has concepts, plans
and paradigms different from traditional wage and salary administration. It now involves total
compensation management to have talented human resources and retain them as a knowledge
bank.
The introduction of a performance related payments system and value-added compensation
systems are a much-debated topic among today’s HR Consultants and Human Resource
Managers. However, these trends are facing tooting problems such as designing accurate and
acceptable performance measurement, deciding feasible targets, and rewarding systems to
satisfy the employees.
Fast growing industrial sectors are creating vast, wage and salary disparities and competition
in hiring competent employees. Job-hopping is one of the results of these factors.
Variable pay, which covers performance and target, linked bonuses and sales or marketing
incentives have been increasing in Indian industries after introduction of MNCs. Segregation
of the total package into monthly, quarterly (performance based) and annual segments for extra
benefits is currently being used by private sectors and MNCs.
Incentive schemes are playing another important role in this competitive era, and different
types and forms of productivity and personal growth schemes are operating in our country.
Regarding benefits to the employees, especially to executives and above, stock option
schemes, interest free loans for housing or conveyance, free medical insurance and foreign
tours are likely to gain momentum in future. Perceptions on salary and pay hike issues are
changing to satisfy the worth and motivate employees to perform better.
The employee’s involvement in systems, schemes to encourage skill and level of development,
considering consolidated allowances and flexible pay systems, and spelling out clearly career
advance are being debated as the future needs of compensation management.
 1.2 OBJECTIVE OF THE STUDY

This project attempts to understand the objectives

➢ To understand in detail how to establish pay rates to different level of employee.

➢ To understand the impact of compensation management on performance level.

➢ A comparative study of the compensation management strategies followed in different banks.

➢ To evaluate the relationship between working condition and employee performance

➢ To access the rate at which welfare services affect employees’ performances

➢ To explore relationship between compensation management and improved productivity

NEED OF THE STUDY
Compensation refers to the rewards, an employee gets after offering his/her mental and
physical efforts, wherein he/she compares his/her worth. Any dissatisfaction may result into a
conflict or a dispute. This dissatisfaction not only affects the performance of the employee but
also imbalances the equity between human capital investment and expected returns to the
organization.
As such it is a most sensitive issue in any organization or HRM as employers, employees and
the government have observed that 95% of the industrial disputes in any organization in India
are related to wage/salary or method of payments.
Compensation decisions have become more complex in this competitive age because of an
unbalanced demand and supply ratio. The HRM of every organization is required to make
some systems to scrutinize the wage and salary differentiations or disparities to ensure a
motivated environment in the organization.
The perceptions of employees and employers about compensation are changing and the
emphasis is being laid on how important is pay for the employees and how it affects
investment to hire competitive employees and how it compares with three main factors,
namely, job contents, work environment, and pay attraction to retain an employee.
The expensive growth of some of the sectors like IT, Telecom, BPOs and financial institutions
has triggered off huge demand for talent at all levels. The consultants and HR professionals are
continuously surveying and studying the paradigm shifts of concepts, perceptions and the need
for revising the compensation systems.
The paradigm shift from standard wage and salary to compensation or cost to the company is
clearly visible in today’s hiring practices.
The satisfaction or dissatisfaction is a gap between the expectations of an employee and the
feeling or the experience of worth. This feeling or experience is an outcome of efforts offered
to perform, comfort felt at work place, cushion for inflation in compensation, and appreciation
perceived by the employee. HRM, therefore, needs to design policy and practices to develop
willingness to work and satisfaction toward worth.
Secondly, the compensation policy and the structure must be made attractive and adjustable so
as to attract the talents, motivate the employees to use their hidden potentials, emphasize the
need of self-improvement, and most importantly to retain the employees as they are the
valuable asset to the organization.
 1.3 SCOPE OF THE STUDY

 The study of the project is confirmed in ICICI bank.

 The scope of this project is to study of the compensation management strategies in

ICICI bank & to evaluate the behavior & performance of employee on their work.
 The time span for the project is limited to 45days.

 LIMITATIONS

Everything has some pros and cons and so certain limitations of this study that we could
observe are as follows:

The area of project work is banking sector so, the data or result may be approximate as the
conclusion is based on the survey method i.e. primary & secondary source (filling of
questionnaire from the employees) may be hypothetical (imaginary) data.

 The organizations which have been studied and surveyed are not providing us with full
information which has hampered the result and conclusion.

 Exact data was not provided.

CHAPTER-II
 2.1 RESEARCH METHODOLOGY
A Research Design is the framework or plan for a study which is used as a guide in collecting and
analyzing the data collected. It specifies the methods and procedures for acquiring the information
needed to conduct the research effectively.

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is defined as
data that is collected from original sources for a specific purpose. Secondary data is data collected
from indirect sources.

PRIMARY SOURCES

Questionnaire consists of a set of questions presented to respondents. Because of its flexibility, it is

by far the most common instrument used to collect primary data.

SECONDARY SOURCES

These include books, the internet, the company website etc,

 2.2 REVIEW OF LITERATURE
Armstrong (2005) stated that compensation management is an integral part of human resource
management approach to productivity improvement in the organisation. It deals with the design,
implementation and maintenance of compensation system that are general to the improvement of
organisational ,team and individuals performance Compensation management is concerned with
the formulation and implementation of strategies and policies that aim to compensate people
fairly, equitably and consistently in accordance with their values to the organisation, (Armstrong,
2005). Compensation management as the name suggests, implies having a compensation
structure in which the employees who perform better are paid more than the average performing
employees (Hewitt, 2009). This encourages employees to work harder in order to regain more
salaries. Armstrong and Brown (2005) postulated that compensation management is an integral
part of human resource management (HRM) approach to managing people and as such it
supports the achievement of business objective and it is strategic in the sense that it addresses
longer term issue relating to how people should be valued for what they want to achieve.

Amstrong (2005) was of the opinion that compensation management is all about developing a
positive employment relationship and psychological contract that adopt a total compensation
approach which recognises that there are numbers of ways in which people can be
compensated. In similar view, Bob (2001); Anyebe, (2003) saw compensation management as
being based on a well-articulated philosophy –a set of beliefs and guiding principles that are
consisted with the values of the organisation which recognises the fact that if HRM is about
investing in human capital from which a reasonable return is required, then it is proper to
compensate people differently accordingly to their contributions. Harrison and Liska (2008) in
their study positioned that reward is the centre piece of the employment contract; after all it is the
main reason why people work. This includes both extrinsic and intrinsic received as a result of
the employment by the organisation. In similar pattern, Brown (2003) saw compensation as a
return in exchange
between the employees and themselves as an entitlement for being employee of an organisation,
or as a reward for a job well done, Employees pay does not depend solely on the jobs they hold,
instead organisation vary the amount paid according to differences in performance of the
individual, group or whole organisation as well differences in employees qualities such as
security, education levels and skills (Gehart and Milkovich 1992). Compensation is defined by
Mondy (2010) as the total of all rewards provided to employees in return for their service, the
overall purposes of which are to attract, retain and motivate employees. As compensation is
comprised of both fixed and variables components as well as employees benefits and services, an
optimum combination of these elements is ideal to effectively influence position employees’
performance.

However, direct compensation fully mediates the relationship between indirect compensation and
performance (Namasivagam and Zhao 2007). A statistical significant and positive relationship
was found to govern rewards and motivation, implying that if rewards being offered/ to
employees were to be altered, then there would be a corresponding change in satisfaction and
work motivation while the periodic salary increments, allowance, bonuses, fringe benefits and
other compensations on regular and specific periods keep their morale high and makes them
more motivated (Danish and Usman 2010).

The effect of compensation is explained by many established motivational theories. The operant
theory is based upon the premise that behaviour or job performance of an employee is not a
function of inner thoughts, feelings, perceptions and emotions but is keyed to nature of the
outcome of such behaviour. The consequence of a given behaviour would determine whether the
same behaviour is likely to occur in the future or not .(Chandan 2005) .Based on this direct
relationship of behaviour and consequence rather than the inner working of employees,
management can study and identify this relationship and try to modify and gain control over
behaviour.(Chandan, 2005). It is therefore necessary for managers and employers to understand
the fact that compensating an employee will definitely improve employees performance
,necessary for continuous motivation in order to fast track the improvement of employee
performance.

Chandan (2005) viewed Abraham Maslow theory based upon two assumption, first human
beings have many needs that are different in nature ranging from biological needs at the lower
level to psychological needs at the upper extreme. Secondly, that these needs occur in an order of
hierarchy so that lower level needs must be satisfied before higher level needs arise or become
motivation. Maslow theory made management aware that people are motivated by a wide variety
of needs and management must provide an opportunity to satisfy these needs through creating a
physical and conceptual work environment, so that people will be motivated to achieve
organisational goal. This implies that, for an organisation to achieve its state objective d through
improved employees’ performance there is need to adequately continuous and constantly
compensate employees effectively. However, these needs range from physiological,
A compensation theory of motivation vroom’s expectancy model which is based on the
 assumption that man is rational being and will try to maximise his pay off this approach assume
that motivation to work is strongly determined by an individual perception that a certain type of
behaviour will lead to a certain type of outcome. It is therefore necessary to say that if an
employee perceived that he/she will be adequately compensated such an employee will work
harder to receiver more compensation. This is to ascertain the fact that compensation package has
positive correction with employees performance. This theory postulated three elements which are
expectancy, Instrumentality and valence. Expectancy views a person’s perception of the
inkelihood that a particular outcome will result from a particular behaviour or action for example;
if an employee work works hard he/she will improve productivity, which may definitely lead to
more compensation. However unimproved productivity or performance may not expect an
increase in compensation. Instrumentality relates to a person belief and expectation that his/her
performance will lead to a particular desired reward. For example an employee may work hard in
order to increase his/her performance which will definitely lead to a desired reward inform of
increased compensation. However valence is the value a person assigns to his/her desired reward.
He /she may not be willing to work hard to improve performance if the reward for such
improved performance is not what he/she desires. Employers and managers must make sure that
employees value the compensational packages in order to motivate the employees which project
an increase in employee’s performance.
Oshagbemi (2003) stated that job satisfaction is an affective reaction to a job that results from the
comparison or actual outcomes with those that are desired. Job satisfaction is a pleasurable and
emotional state resulting from the perception of one’s job as fulfilling or allowing the fulfilment of
one’s important job values, provided these values are compatible with one’s needs (Locke, 1976).
Katzell (1964) argues that if there is consensus about job satisfaction, it is the verbal expression of an
incumbent’s evaluation of his or her job. On this basis, it is an affective or hedonic tone, for which
the stimuli are events or conditions experienced in connection with jobs or occupations. Job
satisfaction refers to an employee’s overall affective evaluation of the job situation. There is
increasing interest in the job satisfaction of frontline employees, given their prominent role in
developing relationships (Schneider, Benjamin & Bowen, 1993).

Besides, according to Stephen and Mary (2004) a person with a high level of job satisfaction has a
positive attitude towards the job, while a person who is dissatisfied with the job has a negative
attitude. When people speak of employee attitude, they usually are referring to job satisfaction. Job
satisfaction is a very crucial issue in higher education industry; even less evidence is available related
to job satisfaction in higher education for non-western nations. However, there has been a growing
interest in job satisfaction in higher education over past several years mainly due to the realization
that higher educational institutes are labour intensive and their budgets are predominantly devoted to
personnel and their effectiveness is largely dependent on their employees (Kusku,2003), both
academic and administrative.

Compensation has been defined in a variety of ways. In English, “compensation” is defines as

something that counterbalances, offsets, or makes up for something else’s. However, if we look at the
origin if the word in different languages, we can get a sense of the richness of the meaning, which
combines entitlement, return, and reward (Atul, Matt & George, 2002; Mark, 2002; Mansour, Peter,
Mary, & Robert, 2006). In Japanese, compensation is defines as kyuyo, which is made up of two
separate character (kyu and yo), both meaning “giving something”. Besides, in China, the traditional
characters for the word “compensation” are based on the symbols for logs and water; compensation
provides the necessities in life (Milkovich & Newman, 2008).

According to Deluca (1993) and Rajkumar (1996), compensation is defines as pay, reward,
remuneration, or salary and wage management. These terms are often used interchangeably in
organization. In an organization perspective, compensation is often defines as an important human
resource management function where it emphasizes planning, organizing, and controlling various
types of pay systems. For example, direct and indirect payments, monetary and non-monetary
rewards and cash and non-cash payments, those compensation is used for rewarding employees who
perform in their work or service (Noe, Hollenbeck, Gerhart & Wright, 2004). In this research,
compensation refers to all forms of financial returns and tangible services employees receive as part
of employment relationship. It can be seen as a measure of justice. Normally, it is the major source of
employees’ financial security (Milkovich & Newman, 2008).

Zhou, Qian, Henan and Lei (2009) stated that compensation provides competitive base salary levels
necessary to attract and retain talent and compensates for day-to-day responsibilities performed at
fully acceptable level and above. Chen and Brian (2004) propose that the types of compensation
typically contain the following components base salary, overtime pay (OT), bonuses, commissions,
the dollar value of restricted stock awards and gains from exercising stock options, profit sharing, and
so on. The following is the definition for the two components of compensation.

According to Herman (2005), compensation help to focus on the position and duties performed. And,
it attempts to influence employee’s current and future working performance. Besides, compensation
servers’ different objectives, the main ones being to attract, retain and motivate high-potential
employees. Meanwhile, the fulfilments of those goals are subject to constraints such as the
maintenance of equity, cost control and legal requirements (For example, wage and salary legislation)
(Steven & Loring, 1996). To employee, compensation may be seen as a return in exchange between
the firms they work for and themselves, as an entitlement for being an employee of the company, or
as a reward for job well done. It is given to employees in exchange for work performed (Milkovich &
Newman, 2008).

Steven and Loring (1996) observe that for employees, compensation is an important issue since pay is
perceived to be an indication to their personal and market value to the organization. Based on
about.com (2009), for employers, compensation is one of the crucial communication tools, to send a
message about your organization’s expectations and goal achievement rewards. Besides, Yale and
Donald (2002) stated that compensation rewards performance relative to others and progressive
improvement in year-to-year results and providing regular measures of success or progress. It also
balances rewards with risk and providing capital accumulation opportunity. Therefore, compensation
has very crucial to not only the employees but also the employers.

Carter (2002) proposed that benefits are increasingly expensive for businesses to provide to
employees, so the range and options of benefits are changing rapidly to include, such as flexible
benefits plan. For employers, they use benefits to attract and retain good and talented workers. For
employees, they rely on benefits (for example, medical subsidies, vacations, and retirement) to secure
their financial well-being. By linking benefits (for example, pension and holidays) to seniority,
workers will be reluctant to change jobs (Gerhart & Milkovich, 1992).

Lee, Hsu and Lien (2006) stated that benefits are designed to safeguard employees and their family
against problems due to sickness, sickness, accidents or retirements. Here, let use some examples of
components of benefits to bring out its effect of employees. Work life balance with regard such as
temporal flexibility, leave benefits, and interpersonal relationships has the potential to reduce or
increase stress on workers with life responsibilities. The provision of work life balance strategies can
provide a positive and direct effect on an employee’s decision to remain with an employer (Macran,
Joshi & Dex, 1996).

Based on Milkovich & Newman (2008), income protection helps protect employees from the
financial risks inherent in daily life. It serves as a backup to employees’ salaries in the event that an
employee is sick, disabled, or no longer able to work. Besides, workers allowances are absolutely
needed for employees. It helps to reduce the financial burden of employees and also can treated as
extra sum of salaries indeed (Herman, 2005). Therefore, a benefit has great significance to the whole
organizations.

Bergmann and Scarpello (2002) and Milkivich and Newman (2008) stated that allowances is

often related to additional financial rewards legally provided to employees based on the

employment contract or organization related service, for example, entertainment allowance or

allowance fixed for particular jobs or service schemes. Allowances is also defines as a amount

paid to employees as part of their salary package, or defray their out of pocket expenses incurred

on behalf of the firm (Business Dictionary.com, 2009).

As noted by Lawler (1995), compensation can be an effective motivator only if it is important to

people and it is seen to be tied to their performance in ways that are perceived to be credible and

direct. Without rewards, a company is planting seeds for high turnover, low productivity and long-

term failure.
 THEORITICAL FRAMEWORK

Background of Study
Forty years ago, University of Malaya is the only one university in Malaysia. In today fast moving
world, education is become very crucial for the young generation. Nowadays, there was many new
public or private universities occur in the market. There were twenty public universities and eighteen
private universities in Malaysia. There are become more and more competitors in the higher
education industry and students have more choices when they want to enter to the university. The
current trends for students choosing the universities are not depended on the outlook but they will
choose the universities which have good academics performance and quality. Therefore, to attract
more students and compete with others universities, each university must increase their competitive
advantages.

Thanks to the internet and the accompanying high speed of communications, nowadays technological
and services differentiation is no longer a key to competitive advantage in higher education industry.
So, what the main reasons to make some university more successful than others? What is the key
competitive advantage in today globalize world? The answer is employees. In a university, university
staff is played an important role to run the day to day operation of the organization. University with
talented and motivated staffs will offer outstanding service to their students. This will increase the
university performance and likely to pull the university ahead the competitors, even if the services
offered are similar to those offered by their competitor.

According to Tang, Roberto, Toto & Tang (2004) from United States and Spain, job satisfaction is an
affective reaction to a job that results from the incumbent’s comparison of actual outcomes with those
that are desired or expected. Job satisfaction of the employees is just as important as customer
satisfaction in terms of the organizational performance. Therefore, employers must make sure all their
employees are satisfied with their job. But, how to make sure the staffs are motivated? How to ensure
the staff are satisfied with their job? Here, the compensation and benefits is the key to those
questions.

Nowadays, compensation and benefits are one of the fastest changing fields in Human Resources, as
many company are continue to investigate various ways of rewarding employees for increase their
job satisfaction and their performance. Here, compensation refers to all forms of financial return and
tangible services and benefits employees receive as part of an employment relationship, which
includes topics in regard to wages or salary programs; for example, salary ranges for job descriptions,
merit based programs, bonus based programs, commission based programs, long term or short terms
incentives programs, and etc. Besides, employee’s benefit includes the allowances, income
protection, life insurances, life balance, vacation, and etc. Benefits are forms of value, other than
payment, that are provided to the employee in return for their contribution to the organization, that is,
for doing their job.

Why the compensation and benefits is so important for all the employees? The answer is
compensation is the main sources of employee’s financial security. As we know, everyone is works in
expectation of some rewards; employees may see compensation as a return in an exchange between
employer and themselves, as an entitlement for being an employee of the company and as a reward
for a job well done. Besides, compensation is a motivator for employees. Now, people look for a job
that not only suit their interested and talent, people also look for the salary and the other benefits
which the company will be offer, for example, life insurance, incentive, allowances, SOSCO, EPF
and etc.

Besides, in the economic downturn, based wages is become very important sources to employees for
living. Therefore, if the employers give higher salary to their staff, this will be motivates them to
perform well and they will more satisfy with their job. By doing so, the employees will know that the
company is appreciate their contribution and their efforts are noted by management.

Compensation consists of Main Components

Compensation is the reward or remuneration paid to the employees in return for the service
rendered. Such compensation package includes both monetary and non-monetary components.

In India compensation or pay structure generally consists of the following components:

1. Wage or Salary

2. Dearness and other allowances

3. Incentives

4. Fringe benefits and perquisites.

1. Wage or Salary:
Wage:
The term wage refers to the remuneration paid to the workers appointed on hourly, daily or weekly
basis in return for the service rendered.
It varies according to physical and mental requirement of the job. Wage may be minimum wage,
fair wage and living wage.

i. Minimum Wage:
It is that wage which is sufficient to meet the basic need of a worker and his family. This minimum
wage has to be paid to the worker irrespective of the capacity of the industry to pay. The
Committee on fair wage has defined minimum wage as – “the wage must provide not only for the
bare sustenance of life, but for the preservation of the efficiency of the workers. For this purpose,
minimum wage must provide some measures of education, medical requirements and amenities”.

Fair Wage:
According to committee on fair wage “fair wage is the wage which is above the minimum wage
but, below the living wage”. It is fixed between the minimum wage and capacity to pay by the
industry. The lower limit of the fair wage is the minimum wage; the upper limit is set by the
capacity of the industry to pay.

Fair wage depends on several factors like:

(a) The productivity of labour

(b) The prevailing rates of wage in the same or neighboring localities.

(c) The level of national income and its distribution.

(d) The place of industry in the economy of the country.

Thus, fair wage is determined on the basis of capacity of the industry to pay and region in which
industry is located.

iii. Living Wage:

It is the wage that provides some of the comforts of life. It provides certain amenities considered
necessary for the well-being of the worker. According to Fair Wage Committee “the living wage
should enable the male earner to provide for himself and his family not merely the bare essentials
of food, clothing and shelter but also a measure of frugal (using only as much money or food as is
necessary) comfort including education for children, protection against ill health, requirements of
essential social needs and measure of insurance against the more important mis-fortunes including
old age”.

Salary:
The term salary refers to remuneration paid to the employees appointed on monthly or annual basis
in return for the service rendered. Thus it refers to monthly rate of pay irrespective of number of
hours put in by employees.

Take Home Salary:

It is the net amount of salary received by an employee after making all the deductions towards the
payment of income tax, LIC premium and contribution to P.F. etc.

2. Dearness Allowance (DA):

Under section 3 of the Minimum Wages Act, DA is described as cost of living allowance. It is
given to protect the real wages of workers during inflation. In India it has become integral part of
the wage system.

Along with DA other allowances like City Compensatory Allowance (CCA), House Rent
Allowance (HRA), Medical Allowance (MA), Education Allowance (EA), Conveyance Allowance
etc., also form the part of compensation package.

However, inclusion of all these allowances in the compensation depends on nature and type of job,
contents of job, place of job, terms and condition of appointment, capacity of employer etc.

3. Incentives:
Incentive is a reward paid in addition to wages whether monetary or not that motivates or
compensates an employee for performance above the standard. Payment of incentive depends on
productivity, sales and Profit of the organization.

4. Fringe Benefits and Perquisites:

Fringe Benefits:
It is a general term used to describe any of a variety of non-wage or supplemental benefits that
employees receive in addition to their regular wages. These include such employee benefits as
provident fund, gratuity, medical care, hospitalization, accident relief, paid holidays, health and
group insurance, pension etc.

Perquisites (Perks):
Perquisites also called perks are the special benefits made available only to the top executives of an
organisation. These may include company car, furnished house, stock option scheme, club
membership, paid holidays etc.  
Factors Influencing compensation
The amount of compensation received by an employee should take into account several factors
such as the amount of effort put in, competitive rates prevailing in labour market, demand for and
supply of labour, the firm’s ability to pay, labour policy, etc.

Let us look into these issues more closely:

1. The Organisation’s Ability to Pay:
Wage increases should be given by those organisations which can afford them. Companies that
have good sales and, therefore, high profits tend to pay higher wages than those which running at a
loss or earning low profits because of the high cost of production or low sales. In the short run, the
economic influence on the ability to pay is practically nil. All employers, irrespective of their
profits or losses, must pay no less than their competitors and need pay no more if they wish to
attract and keep workers.
In the long run, the ability to pay is very important. During the time of prosperity, employers pay
high wages to carry on profitable operations and because of their increased ability to pay. But
during a period of depression, wages are cut because funds are not available. Marginal firms and
non-profit organisations (like hospitals and educational institutions) pay relatively low wages
because of low or no profits
.
2. Supply of and Demand for Labour:
The labour market conditions or supply and demand forces operate at the national, regional and
local levels, and determine organisational wage structure and level.
If the demand for certain skills is high and the supply is low, the result is a rise in the price to be
paid for these skills. When prolonged and acute, these labour-market pressures probably force
most organisations to “reclassify hard-to-fill jobs at a higher level” than that suggested by the job
evaluation. The other alternative is to pay higher wages if the labour supply is scarce; and lower
wages when it is excessive.
Similarly, if there is great demand for labour expertise, wages rise; but if the demand for
manpower skill is minimal, the wages will be relatively low. Mescon says- “The supply and
demand compensation criterion is very closely related to the prevailing pay, comparable wage and
ongoing wage concepts since, in essence, all of these remuneration standards are determined by
immediate market forces and factors.”

3. Prevailing Market Rate:

This is also known as the ‘comparable wage’ or ‘going wage rate’, and is the most widely used
criterion. An organisation’s compensation policies generally tend to conform to the wage rates
payable by the industry and the community. This is done for several reasons. First, competition
demands that competitors adhere to the same relative wage level. Second, various government
laws and judicial decisions make the adoption of uniform wage rates an attractive proposition.
Third, trade unions encourage this practice so that their members can have equal pay, equal work
and geographical differences may be eliminated. Fourth, functionally related firms in the same
industry require essentially the same quality of employees, with the same skills and experience.
This results in a considerable uniformity in wage and salary rates.
Finally, if the same or about the same general rates of wages are not paid to the employees as are
paid by the organisation’s competitors, it will not be able to attract and maintain a sufficient
quantity and quality of manpower. Belcher and Atchison observe- “Some companies pay on the
high side of the market in order to obtain goodwill or to ensure an adequate supply of labour, while
other organisations pay lower wages because economically, they have to, or because by lowering
hiring requirements they can keep jobs adequately manned.”

4. The Cost of Living:

The cost of living pay criterion is usually regarded as an automatic minimum equity pay criterion.
This criterion calls for pay adjustments based on increases or decreases in an acceptable cost of
living index. In recognition of the influence of the cost of living, “escalator clauses” are written
into labour contracts.
When the cost-of-living increases, workers and trade unions demand adjusted wages to offset the
erosion of real wages. However, when living costs are stable or decline, the management does not
resort to this argument as a reason for wage reductions.

5. The Living Wage:

The living wage criterion means that wages paid should be adequate to enable an employee to
maintain himself and his family at a reasonable level of existence. However, employers do not
generally favour using the concept of a living wage as a guide to wage determination because they
prefer to base the wages of an employee on his contribution rather than on his need. Also, they feel
that the level of living prescribed in a worker’s budget is open to argument since it is based on
subjective opinion.

6. Productivity:
Productivity is another criterion, and is measured in terms of output per man-hour. It is not due to
labour efforts alone. Technological improvements, better organisation and management, the
development of better methods of production by labour and management, greater ingenuity and
skill by labour are all responsible for the increase in productivity. Actually, productivity measures
the contribution of all the resource factors — men, machines, methods, materials and management.
No productivity index can be devised which will measure only the productivity of a specific factor
of production. Another problem is that productivity can be measured at several levels — job, plant,
industry or national, economic level. Thus, although theoretically it is a sound compensation
criterion, operationally many problems and complications arise because of definitional
measurement and conceptual issues.

7. Trade Union’s Bargaining Power:

Trade unions do affect rate of wages. Generally, the stronger and more powerful the trade union,
the higher the wages. A trade union’s bargaining power is often measured in terms of its
membership, its financial strength and the nature of its leadership. A strike or a threat of a strike is
the most powerful weapon used by it.
Sometimes trade unions force wages up faster than increases in productivity would allow and
become responsible for unemployment or higher prices and inflation. However, for those
remaining on the payroll, a real gain is often achieved as a consequence of a trade union’s stronger
bargaining power.

8. Job Requirements:
Generally, the more difficult a job, the higher are the wages. Measures of job difficulty are
frequently used when the relative value of one job to another in an organisation is to be
ascertained. Jobs are graded according to the relative skill, effort, responsibility, and job conditions
required.

9. Managerial Attitudes:
These have a decisive influence on the wage structure and wage level since judgement is exercised
in many areas of wage and salary administration — including whether the firm should pay below
average, or above average rates, what job factors should be used to reflect job worth, the weight to
be given for performance or length of service, and so forth, both the structure and level of wages
are bound to be affected accordingly. These matters require the approval of the top executives.
Lester observes “Top management’s desire to maintain or enhance the company’s prestige has
been a major factor in the wage policy of a number of firms. Desires to improve or maintain
morale, to attract high-caliber employees, to reduce turnover, and to provide a high living standard
for employees as possible also appear to be factors in management’s wage policy decisions.”

10. Psychological and Social Factors:

These determine in a significant measure how hard a person will work for the compensation
received or what pressures he will exert to get his compensation increased. Psychologically,
persons perceive the level of wages as a measure of success in life; people may feel secure; have
an inferiority complex, seem inadequate or feel the reverse of all these. They may not take pride in
their work, or in the wages they get.
Therefore, these things should not be overlooked by the management in establishing wage rates.
Sociologically and ethically, people feel that “equal work should carry equal wages,” that “wages
should be commensurate with their efforts,” that “they are not exploited, and that no distinction is
made on the basis of caste, colour, sex or religion.”
To satisfy the conditions of equity, fairness and justice, a management should take these factors
into consideration.

11. Skill Levels Available in the Market:

With the rapid growth of industries, business trade, there is shortage of skilled resources. The
technological development, automation has been affecting the skill levels at faster rates. Thus, the
wage levels of skilled employees are constantly changing and an organisation has to keep its level
upto suit the market needs.

Compensation Management – Main forms

Employees give labour and in exchange for labour/service they want money and other benefits.
Such money and other benefits are compensation. The term ‘compensation’ may be defined as the
money paid for the job performed and the benefits/services provided to the employees.
The compensation is given in the following form:
I. Wage:
The dictionary meaning of the term ‘wage’ is the pay of artisans or labourers receiving a fixed sum
by hour, day, week or month, or for a certain amount of work. In a narrow sense ‘wage’ is the
remuneration paid to blue-collar workers for their services, usually on hourly rate or daily rate.
Thus, we find that –
i. Wage is remuneration
ii. It is paid to workers, especially maintenance and production workers
iii. It is payment in exchange for service / labour
iv. It is paid generally on fixed hourly / daily rate.
Wages may be expressed in terms of money called nominal wages, or in terms of purchasing
power with reference to some base year called real wages.
In broad sense, ‘wage’ refers to economic compensation paid by the employer to his workers in
exchange for their labour / service, under some contract. So, wage includes basic wage and also
allowance like overtime pay, holiday pay etc.
II. Salary:
Salary is a periodic, fixed payment for services, especially for official or professional services. It
usually refers payment to weekly or monthly rated employees like clerical, technical, supervisory
and managerial employees.
From the above it is observed –
i. Salary is economic compensation
ii. It is a periodic fixed payment
iii. It is paid to white-collar employees like office staff, technical staff, managerial staff,
professional staff
iv. It is paid by employer in exchange for services rendered by above categories of employees
Thus, ‘Salary’ is defined as economic compensation paid by employer to his monthly / weekly
rated white-collar employees for their services, under any contract / agreement.

FUNCTIONS OF COMPENSATION MANAGEMENT.

Compensation management’s objective is to hire competent persons, to ensure the internal and
external equity concept to improve employee’s satisfaction and to retain these valuable human
resources or assets.
The main functions of Compensation Management are:
(1) The Equity Function
(2) The Welfare Function
(3) The Motivation Function
(4) The Retention Function.
(1) The Equity Function – It is the first and foremost important function of compensation which
ensures that the employees are fairly paid and that their worth is appropriately compared. This
function ensures that more difficult jobs are paid more and that they are fairly compensated in
comparison to similar jobs in the market.
(2) The Welfare Function – This function is to take care of their psychological and social need
satisfaction. The employees worry about the family, and the liability should be reduced and their
self-esteem needs should be met to allow them to work without tension or unwanted stresses.
(3) The Motivation Function – The motivational function is to encourage an employee to take
further challenges, perform better and develop oneself for superior positions. This function,
therefore, takes care of career plans and training and development activities.
(4) The Retention Function – Today, human resources are being considered as a valuable asset to
the organization and because of retaining and developing the knowledge bank, the retention of
employees has become an important function of compensation management.
HRM manager thus endeavour to take care of above functions in managing the compensation to
develop employees satisfaction and to fulfil employer’s objective.

QUALIFICATION OF COMENSATION MANAGER

 Education:
MBA with specialization in HRM/ MA in social work/PG Diploma in HRM/MA in industrial
psychology. A degree or diploma in Labour Law is desirable.

2. Experience:
At least 3 years experience in a similar position in a large manufacturing company.

3. Skill, Knowledge, Abilities:

Knowledge of compensation practices in competing industries, job analysis procedures,
compensation survey techniques, performance appraisal systems. Skill in writing job descriptions,
conducting job analysis interviews, making group presentations, performing statistical
computations ability to conduct meetings, to plan and prioritize work.

4. Work Orientation Factors:

The position may require up to 15 per cent travel.

5. Age:
Preferably below 30 years. Preparing a job specification is always not easy. Regarding the human
resource requirements of a job, there is scope for disagreement. For a clerical job, one bank may
demand high school education; another bank may demand the services of graduates or even
postgraduates.

Differences may also crop up when stating an attribute as a ‘desirable’ or ‘essential’ qualification.
To avoid further confusion as rightly pointed out by Mathis and Jackson, while “writing any job
specification, it is important to list only those SKAs (Skill, knowledge and Abilities) essential for
job performance”.

Main Aims of Compensation Policy

Before designing or developing a compensation policy, the management has to identify its main
aim, and the company’s strategy is to hire staff, maintain, develop and retain the talents.
The main aims can be summarized as below:
1. To attract competent employees within its plans
2. To ensure stable earning and growth of the employees
3. To recognize the values of all jobs and positions
4. To encourage and motivate the employees to grow with the organization
5. To develop trust and confidence in the employees through transparent communication
6. To eliminate possible disputes or grievances
7. To effectively maintain and retain the talents
8. To effectively administer and manage the compensation and satisfaction of the employees
9. To simplify the bargaining process
10. To ensure desired behaviour and industrial harmony.

Government Influences on Compensation Management

The Government’s statutory responsibility is to protect the sweating workers, ensure social justice
and formulate and enact legislations to control exploitation and provide security to the employed
persons.
The Government’s usual interest is to ensure fair compensation, remove pay disparity and
safeguard ‘labour’ as the important element of economy. It, therefore, enforces related legislations
to protect the interests of the nation at the workplace so as to provide a safety net for
unemployment and fair wages to employed nationals.
For this, it influences the compensation in two ways – (1) Direct Influence, enforcing minimum
and fair wages (2) Indirect Influence, to provide social security, health hazard protections and
retiring benefits.

The Government in consultation with the Planning Commissions, Wage Boards and
tribunals views the problems of the workers and evolves and enacts the following:
i. Enacting laws to ensure minimum wages and benefits, to protect certain groups of people to get
employment, to control working hours per week
ii. Setting up tribunals to pass on fair judgement on compensation grievances
iii. Reviewing labour rates for different industries in the specific locations
iv. Dictating ceilings on wages to control the economy
v. Providing social security protection, pension or unemployment compensations.

Types: Flexible compensation or Style of Compensation (with Benefits)

It is a type of compensation which refers to compensation program that allows employees to
choose what type and how much of each reward is desired during the coming year. It is also known
as smorgasbord which allows employees to choose from a selection of employer provided benefits
such as life insurance, health insurance, pension, unemployment compensation, and rest provided
vacations etc. It was basically designed to enable senior executives, top professionals and
managers to choose individually many of these benefits and services.
The demands of services depend on their age, their educational and income levels, their life style
and other forms of preferences. Recent studies suggest that flexible or cafeteria compensation
programs are becoming increasingly popular among employees. It provides an opportunity to
contain the costs of the benefit package and provides benefits on a more tax-effective basis. It also
increases loyalty and motivation of employees, which in turn enhances productivity.

Benefits provided in a cafeteria compensation approach are:

(i) Accidental death, dismemberment insurance
(ii) Bonus eligibility
(iii) Business and professional membership
(iv) Club membership
(v) Cash profit sharing
(vi) Automobile allowance
(vii) Medical assistance y
(viii) Housing allowance
(ix) Deferred Bonus or Deferred Compensation Plan
(x) Dental and eye care insurance
(xi) Education costs
(xii) Free or subsidized lunches
(xiii) Group Life Insurance
(xiv) Health maintenance fees
(xv) Interest-fee Loans
(xvi) Long-term disability benefit
(xvii) Recreational facilities
(xviii) Saving Plans
(xix) Sabbatical leaves
(xx) Sickness and accident insurance
(xxi) Stock bonus plan and stock purchase plan
Features of Cafeteria Style Compensation:
Under this programme, the employee is told that his total compensation mode is of, say Rs.2,000/-
and then he can choose mix of salary life insurance, deferred compensation and other benefits that
suit his particular needs. Each of the options carries a price and the employee can select up to
Rs.2,000/- of salary – those items that he feels best suit his personal needs.
While adopting the programme, the management should remember that the most of younger
employees are more concerned with “take home pay” than with “retirement benefits”. On the other
hand, older employees are more concerned about retirement and pension programmes.

Types of Cafeteria Plans:

The two most popular types of cafeteria plan are:
(i) Pre-tax premium conversion plans
(ii) Flexible spending arrangements (FSA’s)
(i) Premium Conversion:
It is the simplest type of cafeteria plan which permits employees to pay their share of premiums for
health coverage, life insurance and other qualified benefits such as disability insurance on a pre-tax
basis. This plan converts what would otherwise be after-tax employee contributions to pre-tax
contribution by means of an employee’s election prior to the beginning of the year, to reduce pay
and to have the company contribute the amount of the reduction to pay for the coverage selected
by the employee.
(ii) Flexible Spending Arrangements or Flexible Spending Accounts:
It lets employees pay for certain benefit’s expenses such as dental care, medical and dependent
care expenses on a pre-tax basis periodically, employees can elect the amount of salary reduction
dollars they wish to allocate to various elements in their plans.

There are two types of FSA’s:

(a) Health and
(b) Dependent care
In Health FSA employees may set aside money to pay for health plan deductibles and co-payments
as well as other uninsured medical care expenses, such as dental or vision expenses, on a pre-tax
basis.
In Dependent FSA, employees may be reimbursed for dependent care expenses that enable the
employee and spouse to work. They are not subject to the uniform reimbursement requirement.
(i) The information regarding employee satisfaction with flexible compensation plans is limited.
However, the employers hope that it will improve the understanding of the benefits provided.
(ii) These plans are very costly. The cost for development and administration exceeds those for
traditional plans.
Advantages:
(i) Employees can choose benefits that meet their individual needs and adjust those choices
annually as needs change.
(ii) It help employers control costs by ensuring that money is not spent on benefits, that employees
neither want nor need.
(iii) By offering more flexible cafeteria type benefits, employers gain an edge in attracting and
retaining valuable employees.
(iv) It helps in improving employer-employee relationships, as giving employees control over their
benefits promotes goodwill and creates a partnership in the benefit programs between both the
parties.
(v) Cafeteria plans address the wide variation in benefit needs of diverse employees.
(vi) It helps in developing better understanding of the benefit package, as employees are actively
involved in the selection process

Employee Compensation Package

While discussing compensation, it is easy to imagine in terms of ‘rupees per hour’. However,
successful compensation packages are the ones which are more like a total rewards system that
contains nonmonetary, direct, and indirect elements.
A significant change has come into the compensation management system over the last few years.
As a result, the very definition of compensation has been reconceptualized. The modern definition
considers both intrinsic (intangible) and extrinsic (tangible) components of compensation. While
extrinsic compensation covers both the monetary and non-monetary rewards, intrinsic compensa-
tion reflects employee s emotional satisfaction through job accomplishment. Presently, more
organizations are seen to be using this pattern.
Non-monetary compensation includes career and social rewards such as job security, flexible
working hours, working from home, and opportunity for growth, praise and recognition, task
enjoyment, and avenues of warmth and friendships.
Direct compensation is an employee’s base wage. It can be a monthly or annual salary, hourly
wage or any performance-based pay that an employee receives, such as profit-sharing bonuses.
Indirect compensation varies widely from one organization to another organization. Indirect
compensation includes everything from legally required public protection programmes such as
social security to health insurance, post-retirement benefits, paid leave, child care and maternity
benefits, housing facilities, etc.
In some organizations, employees can choose compensations suitable to them from a wide variety
of compensation elements designed by the employer. Progressive HR mangers can create
compensation packages by combining many of these compensation alternatives to make them
employee-friendly.
Recent studies reveal that pay should be tied to performance for organizational effectiveness. Of
course, business performance cannot always be ensured by compensation. Successful managers
must search and innovate to influence employees and their performances. Your organization may
benefit from the tenure bonuses for long-time employees, equipment repair incentives to encourage
good equipment maintenance, or bonuses for arriving at work on time.
Levels of employee motivation, need satisfaction, and employee retention are directly linked with
designing and practising compensation packages. In order to design the policy, an organization
must formulate both primary and secondary objectives.

Problem Statement
As mention earlier, there are many new public or private universities occur in market. To compete
with other competitor, each university must increase their competitive advantage. The key
competitive advantage is employees. Therefore, the issues of the employee job satisfaction become
very important for the employer. There are many factors which can influence job satisfaction among
university staff, for example, job security, compensation and benefits, opportunities to use skills and
feeling safe in the work environment. But, this research just will investigate the influence of
compensation and benefits towards job satisfaction among university staff.

For a university, there are many staffs to cover and the employer does not really understand what
their staffs need. It is impossible for taking all employees’ compensation and benefits throughout the
firm into consideration to set up the reward system. This is because different department staffs have
different needs. For example, for lecturer the flexible working hours and higher bonus will be more
favoured by them. But, for the marketing department the flexible working hours and more incentives
and allowances will be favoured by them.

Compensation and benefits is a primary motivator for employees. Nowadays, people look for a job
not only suit their creativity and talents, but compensate them- both in term of salary and other
benefits-accordingly. (Enotes.com, 2008) Therefore, when the problems occur to the compensation
and benefits of the staffs are going to have impact on employee’s job satisfaction. When the staffs
receives the salary less than he or she expected, he or she will feel that he or she is not appreciated by
the university and what he or she did is meaningless. So, the staff will feel job dissatisfaction and less
motivated by the university. According to the Society for Human Resources Management report, job
dissatisfaction can contribute to multiple organizational problems and has been associated with
increased levels of turnover and absenteeism, which ultimately cost the organization in terms of low
performance and decreased productivity. (SHRM, 2009) Thus, employer must ensure that the
compensation and benefits system is fair and equitable to all the staffs and understanding the system.
By doing so, employer can create a real job satisfaction and motivate their employees.

Besides, research has shown that both getting less than you want and getting more than you want
leads to large discrepancies between desires and outcome and eventually leads to low job satisfaction
thus to low quality if working performance. (Rice, Bennett, & McFarlin, 1989) Hence, desires play an
important role in assessing if increasing income impacts an individual’s job satisfaction and work
performance. Moreover, if the desires of the individual are already met, then an increase in income
will not increase satisfaction as well as working performance. (Solberg, Diener, Wirtz, Lucas, &
Oishi, 2002) In other words, increasing compensation and benefits may not always lead to
employee’s job satisfaction.

Besides, employers must design an appropriate compensation and benefits system to their staff. This
is because inappropriate compensation and benefits will have negative effect to employee job
satisfaction. For example, assume that university staffs have received one thousand and fifty ringgit
(RM) each month, no allowances and overtime claim and his or her still need to work 8 hours per
day. Will you believe this staff will satisfy with his or her jobs? The answer is absolutely no.
Therefore, an appropriate compensation and benefits system is very significant to an organization.
 CHAPTER -III

INDUSTRY & COMPANY

 3.1 INDUSTRY PROFILE
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and well-
regulated. The financial and economic conditions in the country are far superior to any other country
in the world. Credit, market and liquidity risk studies suggest that Indian banks are generally resilient
and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments
Innovation Index (FPII). *

Market Size
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign
banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks in
addition to cooperative credit institutions As of November 2020, the total number of ATMs in India
increased to 209,282.
Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.
During FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit extended surged
to US$ 1,698.97 billion. During FY16-FY20, deposits grew at a CAGR of 13.93% and reached US$
1.93 trillion by FY20.
According to the RBI, bank credit and deposits stood at Rs. 108 trillion (US$ 1.5 trillion) and Rs.
149.6 trillion (US$ 2.1 trillion), respectively, as of March 12, 2021.
Credit to non-food industries stood at Rs. 107.3 trillion (US$ 1.5 trillion), as of March 12, 2021. Non-
food industries grew at 5.7% in January 2021 as against an increase of 8.5% in January 2020

Investments/Developments
Key investments and developments in India’s banking industry include:

 In December 2020, in response to the RBI’s cautionary message, the Digital Lenders’
Association issued a revised code of conduct for digital lending.
 As of February 27, 2021, the number of bank accounts opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached 41.93
 crore and deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh crore (US$
23.07 billion).
 On November 6, 2020, WhatsApp started UPI payments service in India on receiving the
National Payments Corporation of India (NPCI) approval to ‘Go Live’ on UPI in a graded
manner.
 In October 2020, HDFC Bank and Apollo Hospitals partnered to launch the ‘HealthyLife
Programme’, a holistic healthcare solution that makes healthy living accessible and affordable
on Apollo’s digital platform.
 In 2019, banking and financial services witnessed 32 M&A (merger and acquisition) activities
worth US$ 1.72 billion.
 In March 2020, State Bank of India (SBI), India’s largest lender, raised US$ 100 million in
green bonds through private placement.
 In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by providing
minimum regulatory capital to RRBs for another year beyond 2019-20 - till 2020-21 to those
RRBs which are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR)
of 9% as per the regulatory norms prescribed by RBI.
 The NPAs (Non-Performing Assets) of commercial banks recorded a recovery of Rs. 400,000
crore (US$ 57.23 billion) in the last four years including record recovery of Rs. 156,746 crore
(US$ 22.42 billion) in FY19.

 
Government Initiatives

 As per Union Budget 2021-22, the government will disinvest IDBI Bank and privatise two
public sector banks.
 As per Union Budget 2019-20, the Government proposed fully automated GST refund module
and an electronic invoice system that will eliminate the need for a separate e-way bill.
 Government smoothly carried out consolidation, reducing the number of Public Sector Banks
by eight.
 As of September 2018, the Government of India made Pradhan Mantri Jan Dhan Yojana
(PMJDY) scheme an open-ended scheme and added more incentives.
 The Government of India planned to inject Rs. 42,000 crore (US$ 5.99 billion) in public
sector banks by March.
Achievements
Following are the achievements of the Government:

 In March 2021, Unified Payments Interface (UPI) recorded 2.73 billion transactions worth Rs.
5 lakh crore (US$ 68.88 billion).
 According to the RBI, India’s foreign exchange reserve reached US$ 574.82 billion as of
November 27, 2020.
 To improve infrastructure in villages, 204,000 point of sale (PoS) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture & Rural
Development (NABARD).
 The number of transactions through immediate payment service (IMPS) increased to 346.55
million in volume and amounted to Rs. 2.88 trillion (US$ 39.57 billion) in value in January
2021.

Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation of reforms
are expected to provide further impetus to growth in the banking sector. All these factors suggest that
India’s banking sector is poised for a robust growth as rapidly growing businesses will turn to banks
for their credit needs.
Also, the advancement in technology has brought mobile and internet banking services to the fore.
The banking sector is laying greater emphasis on providing improved services to their clients and
upgrading their technology infrastructure to enhance customer’s overall experience as well as give
banks a competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion by
FY23 driven by the five-fold increase in the digital disbursements.

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44 foreign
banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural cooperative banks in
addition to cooperative credit institutions. As of November 2020, the total number of ATMs in India
increased to 209,282.
According to the RBI, India’s foreign exchange reserves reached US$ 580.3 billion, as of March 5,
2021. According to the RBI, bank credit and deposits stood at Rs. 107.75 trillion (US$ 1.46 trillion)
and Rs. 149.34 trillion (US$ 2.02 trillion), respectively, as of February 29, 2021.
Credit to non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15, 2021.
Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.
Total assets across the banking sector (including public, private sector and foreign banks) increased to
US$ 2.52 trillion in FY20.
Indian banks are increasingly focusing on adopting integrated approach to risk management. The
NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs. 400,000 crore
(US$ 57.23 billion) in FY19, which is highest in the last four years.
RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit information,
accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017
Bill has been passed and is expected to strengthen the banking sector. Total equity funding of
microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in 2018-19.
As of February 27, 2021, the number of bank accounts opened under the government’s flagship
financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached 41.93 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh crore (US$ 23.07 billion).
Rising income is expected to enhance the need for banking services in rural areas, and therefore,
drive the growth of the sector.
The digital payments revolution will trigger massive changes in the way credit is disbursed in India.
Debit cards have radically replaced credit cards as the preferred payment mode in India after
demonetisation. In February 2021, Unified Payments Interface (UPI) recorded 2.29 billion
transactions worth Rs. 4.25 lakh crore (US$ 57.68 billion).

ICICI Bank Limited is a banking sector company. The bank is engaged in providing a range of
banking and financial services, including commercial banking, retail banking, project, and
corporate finance, working capital finance, insurance, venture capital and private equity,
investment banking, broking and treasury products and services. The bank's business segments
are retail banking, wholesale banking, treasury, other banking, life insurance, general insurance,
and others. Its international banking is focused on providing solutions for international banking
requirements of its Indian corporate clients and leveraging economic corridors between India and
the rest of the world. The bank caters to the financial need of women entrepreneurs through its
Self-Help Group (SHG) programme as part of its microfinance initiatives.
 ICICI Bank - Promoting Inclusive Growth 

2021 ICICI Bank launched ‘Namma Chennai Smart Card’, a Common Payment
Card System (CPCS) in partnership with Greater Chennai Corporation and
Chennai Smart City Limited

2020 ICICI Bank launched ‘Infinite India’, a comprehensive online platform for
foreign companies setting up operations in the country
ICICI Bank launched ‘iMobile Pay’—India’s first app that offers payments
and banking services for its customers
Introduced mobile ATM vans in the state of Orissa to enable senior citizens
to access key banking facilities at their doorstep
Chinese Central Bank acquired stake in ICICI Bank for Rs. 15,000 crore
(US$ 2127.9 million)
ICICI Bank launched India’s largest API Banking portal with nearly 250
APIs

2019 ICICI Bank has inaugurated its 50th branch in Ahmedabad.

2018 ICICI Bank is India's largest private sector bank with total consolidated
assets of Rs 1124,281 crore (US$ 160.86 billion) at March 31, 2018.

2017 ICICI Bank won the ‘Best Retail Bank in India’ award for the fifth
consecutive year at the Asian Banker Excellence in Retail Financial Services
International Awards 2018.

COMPANY PROFILE
ICICI Bank is a leading private sector bank in India. The Bank’s consolidated total assets stood
at Rs. 14.76 trillion at September 30, 2020.  ICICI Bank currently has a network of 5,288
branches and 15,158 ATMs across India.

History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian industry. The principal objective
was to create a development financial institution for providing medium-term and long-term
project financing to Indian businesses. Until the late 1980s, ICICI primarily focused its activities
on project finance, providing long-term funds to a variety of industrial projects. With the
liberalization of the financial sector in India in the 1990s, ICICI transformed its business from a
development financial institution offering only project finance to a diversified financial services
provider that, along with its subsidiaries and other group companies, offered a wide variety of
products and services. As India’s economy became more market-oriented and integrated with the
world economy, ICICI capitalized on the new opportunities to provide a wider range of financial
products and services to a broader spectrum of clients. ICICI Bank was incorporated in 1994 as a
part of the ICICI group. In 1999, ICICI became the first Indian company and the first bank or
financial institution from non-Japan Asia to be listed on the New York Stock Exchange.
 
The issue of universal banking, which in the Indian context meant conversion of long-term
lending institutions such as ICICI into commercial banks, had been discussed at length in the late
1990s. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and
offer a wider range of products and services, and greater opportunities for earning non-fund-
based income in the form of banking fees and commissions. After consideration of various
corporate structuring alternatives in the context of the emerging competitive scenario in the
Indian banking industry, and the move towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities and would create the optimal legal structure for ICICI
group's universal banking strategy. The merger would enhance value for ICICI shareholders
through the merged entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong corporate relationships
built up over five decades, entry into new business segments, higher market share in various
business segments, particularly fee-based services, and access to the vast talent pool of ICICI and
its subsidiaries.
 
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI
and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by
shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at
Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve
Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, were integrated in a single entity.

ICICI Group Companies

ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its group companies.

Investor Relations
All the latest, in-depth information about ICICI Bank's financial performance and business
initiatives.
ICICI Bank disseminates information on its operations and initiatives on a regular basis. The
ICICI Bank website serves as a key investor awareness facility, allowing stakeholders to access
information on ICICI Bank at their convenience. ICICI Bank's dedicated investor relations
personnel play a proactive role in disseminating information to both analysts and investors and
respond to specific queries.

Board of Directors
ICICI Bank's Board members include eminent individuals with a wealth of experience in
international business, management consulting, banking and financial services.

Board Members

Mr. Girish Chandra Chaturvedi

Non-Executive (part-time)
Chairman

Mr. Hari L. Mundra

Independent Director

Mr. Lalit Kumar Chandel

Government Nominee Director

Mr. Sandeep Bakhshi,

Mr. S. Madhavan
Managing Director &
Independent Director
CEO

Ms. Neelam Dhawan Mr. Anup Bagchi,

Independent Director Executive Director

Mr. Radhakrishnan Nair Mr. Sandeep Batra,

Independent Director Executive Director

Ms. Rama Bijapurkar Ms. Vishakha Mulye,

Independent Director Executive Director

Mr. B. Sriram
Independent Director

Mr. Uday Chitale

Independent Director

 
  OUR PRODUCTS

Savings Account

Our Savings Account is designed to fulfil your different needs in every stage of life. Trusted by
millions, you can enjoy an unmatched online banking experience 24x7 and access extensive
branch and ATM network.

Ever imagined an online Savings Account that can do more than just saving? We have one which
will serve your different purposes. Be it saving money to tick items off your bucket list, splurging
on your favourite brands, investing to save tax or retirement planning, the all-new InstaSave
Account can do it all, instantly!

Advantage Woman Savings Account

We believe that our responsibility extends to make opportunities available for women to invest in
themselves. Hence, our Advantage Woman Savings Account includes offers on skill-building
courses like IT certifications, music lessons and personality development. We also have offers
that help women look after themselves and their family better, like discounts on healthcare, kids’
education and more.
Benefits

Get complimentary personal accident insurance protection and purchase protection cover on your
Savings Account. 
Debit Card benefits:

 Enjoy cashback up to Rs 750 per month on dining, entertainment and jewellery and offers on
usage of Debit Card – now, earn as you spend!
 Free unlimited access to all banks' ATMs – with more than 2 lakh ATMs across the country,
you are never far away from your money
 Daily cash and withdrawal limit as per your account variant.

Current Account

ICICI Bank Business Banking offers comprehensive banking solutions to suit the banking needs
of every MSME.From a wide range of Current Account products to convenient banking solutions
like corporate internet banking, Mobile Banking and Tax Payments we make your banking easy
and hassle free.
 Credit Cards

ICICI Bank Credit Cards, to take care of all your expenses

From your everyday commute to international trips, from daily spends to luxury purchases, from
grocery shopping to fine-dining restaurants, there is always an ICICI Bank Credit Card to take
care of all your expenses. Experience an array of benefits, attractive offers and user-friendly
features when you use a credit card from ICICI Bank.

To experience all this and more, click on the button below and discover the offers that you are
eligible for.

ICICI Bank Credit Cards offer a host of benefits and offers to cater to your needs. So get the
credit card of your choice by browsing through the credit card section

Fixed Deposits

5 reasons why FD is the ideal investment option:

1. Safety of your funds with the trust of ICICI Bank 

2. Assured returns on your investment
3. Designed for convenience – Invest anytime, anywhere using our iMobile, Internet
Banking, branches, ATMs or Customer Care
4. Instant liquidity – Need funds for emergencies? Opt for partial withdrawal or get an Over
Draft against your FD. Make premature withdrawals in multiples of Rs. 1,000 subject to applicable
charges, get a Loan or Overdraft up to 90% of your FD amount and choose from monthly
or quarterly payouts.
5. Minimum Balance - You can avail of ICICI Bank Fixed Deposits for a minimum deposit of
Rs 10,000 for General Customers and Rs 2,000 for Fixed Deposits for Minors.
6. Loan against FD - Avail of a loan facility up to 90% of principal and accrued interest, safe
custody of your FD receipts and automatic renewal of Deposit Account on completion of tenure.
Loan against the fixed deposit maybe given to the depositors at the discretion of the bank
7. Competitive interest rates.
Recurring Deposit
Open a recurring deposit (RD) account online with ICICI Bank and save up consistently and
conveniently from today, so you can reap benefits tomorrow. With our RD facility, you can keep
a track of your recurring transactions, avail a loan against your account and do so much more.

Life Insurance

Term life insurance plan is a financial safety net for your loved ones in your absence. If you are
the person insured, you pay a specific premium amount at fixed intervals for a policy term of
your choice. In case of your unfortunate demise during this term, your cover amount is paid to
your selected nominee(s) like your spouse, children or parents.

With our affordable and flexible term plan, ensure your family is financially secured at different
stages of life.

General Insurance

Life is full of surprises. There are times when you are caught unprepared and do not know what
to do. Sometimes life takes a turn for the worst when you least expected it to. Your hard-earned
money, which you saved for something special, is then spent in settling hospital bills or someone
else’s dues.

Events such as hospitalization, burglary, natural disasters, car theft, riots etc. can negatively affect
your finances. It is in times like these that you wish for a blanket of protection that insulates you
from the harshness of such events. General insurance is that blanket.

ICICI Bank Limited solicits general insurance products as a Corporate Agent of ICICI Lombard
General Insurance Company Limited, which offers a wide range of general insurance solutions
that are designed to fit every need, every pocket and every situation.
 AWARDS
Time and again our innovative banking services has been recognized and rewarded world over.

Awards - 2020

 ICICI Bank has been recognised as 'India's Most Sustainable Company' by BW Business
World magazine in the Banking, Financial Services and Insurance (BFSI) sector. The Bank ranked
12th in the overall list of 194 companies. ICICI Bank is the only bank to have received an A+ rating
for its sustainable practices and robust environment, social and governance framework.
 ICICI Bank was declared as 'House of the Year, India' at Asia Risk Awards 2020. Risk, a
London-based magazine, organises these prestigious awards annually for firms and individuals
involved in Asia's derivatives market and risk management.
 ICICI Bank emerged as the winner in the 'Best HR Technology Implementation' category at
the Asian Banker Financial Technology Innovation Awards 2020.
 ICICI Bank was recognised as the winner in the ‘Best Innovation Programme’ category at
the Retail Banker International Asia Trailblazer Awards 2020. These awards are organised by Retail
Banker International, an online publication that provides news on banking and finance from across
the globe.

Awards - 2019

 ICICI Bank won the Bronze Medal in the ‘CSR & Not-for-Profit (beyond metro)’ category
for the skilling initiatives undertaken through ICICI Foundation for Inclusive Growth that help the
less-privileged youth in rural and urban areas enabling them to earn sustainable livelihoods.
 ICICI Bank was awarded by the Government of India in the ‘Best Performing Bank –
Overall’ and ‘Best Performing Bank, Statewise – Bihar’ categories for its significant contribution
towards the Pradhan Mantri Awas Yojna Gramin. ICICI Bank was the only bank to be awarded in
both the categories.
 ICICI Bank’s tower in Gachibowli Hyderabad, was awarded a 4-star rating in the recently
concluded CII-SR EHS Excellence Award – 2019. The award programme was organised by the
Confederation of Indian Industry. The Bank was awarded for the various initiatives undertaken to
ensure environmental protection at its tower in Hyderabad and safety of its employees.
 ICICI Bank was recognised as the ‘Best Consumer Digital Bank – 2019’ for India region by
Global Finance; a publication headquartered in New York.
 ICICI Bank won two awards in the ‘Private Sector Banks’ segment at Digital Payments
Awards 2018-19 organised by the Ministry of Electronics and Information Technology (MeitY),
Government of India. The Bank was awarded for its outstanding performance in two categories
-'BHIM Aadhaar POS Deployment' and 'POS Deployment in rural India'.

Awards - 2018

 ICICI Bank won multiple awards at the 17th edition of the Energy Efficiency Summit hosted
by Confederation of Indian Industry (CII). The Bank won the ‘Excellence in Energy Management’
award for the fourth consecutive year. ICICI Bank’s corporate office in BKC, Mumbai was declared
as the ‘National Energy Leader’ at the summit. Additionally, the Bank received the ‘Excellent
Energy Efficient Unit’ awards for Empire Tower, Chandivali Tower and Mafatlal Tower offices in
Mumbai, NBCC Tower office in Delhi and the Ambattur Tower office Chennai. The Bank also
received the ‘Excellent Energy Efficient Unit’ award for its data centre in Hyderabad and call centre
in Thane.
 ICICI Bank was recognised as the ‘FX House of the Year’ in India at the inaugural edition of
the FX Week Asia Awards 2018. The Bank won the award for the array of Forex services that it
provides in the Indian market. The awards are organised by FX Week, a portal that covers news
from the finance sector across the globe.
 ICICI Bank was recognised as the winner in the ‘Smart Data Centre’ category at the maiden
edition of the DCD 'Best in India' Awards 2018. The Bank was recognised as the winner for its
implementation of Internet of Things (IOT) and smart analytics to improve the efficiency of its Data
Centre operations. The awards were organised by Data Centre Dynamics (DCD), a global B2B
events and media company, delivering insights to help the professionals driving the data centre scale
IT infrastructure sector to make strategic and operational decisions.

Newsroom
Catch up with ICICI Bank's latest business and social initiatives, as well as innovative product
launches.
 
Corporate Social Responsibility
ICICI Bank is deeply engaged in human and economic development at the national level. The
Bank works closely with ICICI Foundation across diverse sectors and programs.
 
CHAPTER-IV
 DATA ANALYSIS
QUESTIONNAIRE FILLED BY EMPLOYEES

1. When was your organization established?

2. What types of compensation are available?

Analysis:
There are two type of compensation are available are direct or indirect compensation.
Direct includes Base Pay, Commissions, Overtime Pay, Bonuses, Travel/Meal/Housing
Allowance and indirect compensation includes vacation, leaves, retirement, taxes.

3. Who handle the compensation management department in your organization?

_______MANAGER__________________________________________

Analysis:
The manager handle the compenstation management department in their organization.

4. On what basis company provide compensation to their employees.

 a. Base Pay b) Commissions

c) Travelling/meal/housing allowance d) Any other

Base Pay Commissions

20% Travelling/meal/housing allowance
Anyother

80%

Analysis:

This graph shows that company provide compensation to their employees on the basis of base
pay & Travelling/meal/housing allowance.80% of employee prefer Travelling/meal/housing
allowance & only 20% of employee prefer base pay.

5. What kind of compensation you prefer?

a) Monetary b) Rewarding

c) Motivation d) Holiday packages

Analysis:

From the chart above we find that, 67% of employee prefers monetary benefits & only 33% of
employee are happy & satisfied with non monetary benefits like rewards. In this company neither
the employee are motivated nor are they satisfied with holiday package as compensation.
 6. Are you satisfied with the compensation you receive?

a. Yes b) No

Analysis:

From the chart given above we can clearly see that 80% of employees are satisfied with the
compensation they receives & only 20% of employees are dissatisfied with the compensation they
receives.
 7. What do you think that ICICI is providing better compensation package to the
employees?

a. Yes b) No
If “NO” than which organization, do you think?

Analysis:

Yes, HDFC is providing better compensation package to the employees out of 10 employee % of
employees are satisfied with the compensation they get and % of employee are dissatisfied with the
compensation provided by the company.
8. Is there different type of compensation for different type of services.

a. Yes b) No

100% 0%

YES

NO

Analysis:

Yes, there are different types of compensation for different type of services like direct and
indirect compensation provided to the employee of the organization for increasing their
motivation and retention of employees.
 9. Is cash still king in employee compensation.

a. Yes b) No

Analysis:

From the chart given above we can clearly see that the cash is still king there because everyone is
satisfied with the monetary motivation and not by non monetary motivation. Here we can see that
90% of employees are satisfied with monetary value rather than
10. Is Compensation based more on group performance and less on individual
contribution.

a. Yes b) No

Analysis:

In this organization compensation is based more on individual contribution because every

employee is single entity there and they are judge on the basis of self performance.
 11.Is there any procedure of receiving formal feedback by employees on
Company policies, compensation, benefits, and employee attitudes.

a. Yes b) No

Analysis:

Yes, there are procedure of receiving formal feedback by employees on Company policies,
compensation, benefits, and employee attitudes. It helps in bringing out new ideas. It also helps in
improving employee and management relationship number of ideas helps in choosing the better
option from them which will be more effective and beneficial for the organization.
 12.In your organization employees receive effective performance appraisal.

a. Yes b) No

YESNO

Analysis:

Yes, in our organization employee receive effective performance appraisal because it give
pleasure to the employee by rewards and they also get motivated which leads to the effective
performance.It enhances effectiveness of employees and boosts the confidence level of
employees.
13. Are you getting training for improving the performance.

a. Yes b) No c) can’t say

Analysis:

Yes, tanning help in improving the performance of employee. It helps in developing skills &
motivation level of employees. It also provides practical knowledge. It is necessary for the
organization to provide training to their employees for better performance and update employee
time to time. It helps in increase in the performance & motivation level of employee and also
enhance effectiveness of employees.
 14.Are you free to give ideas to the higher management?

a. Yes b) No

Analysis:

Yes, the employees are free to give ideas and suggestions to the higher management. By this
new and different ideas are bring out of the box and this help in taking better decision which
may be beneficial for the organization. It also boosts the confidence level of employees, and
their ideas are entertained so they get motivated also.
CHAPTER – V
FINDINGS
SUGGESTIONS
&
CONCLUSION
 5.1 FINDINGS

The compensation management policy is good in ICICI bank. The employee of

the organization is satisfactory to the employees.

The employees are motivated because of the environment of the organization. The products of

ICICI bank have good credibility in the region.

 5.2 SUGGESTIONS
 In line with this study, the following recommendations were made.

 Organizations must make sure that there is friendly and positive relationship between
employers and employees in the organization.

 Management creates good and friendly working conditions that will aid employee’s
performance.

 Organizations should ensure the provision of good welfare packages that will encourage
and promote employee’s performance.

 It is the desire of every organization to constantly increase productivity, thereby

necessitating the need to motivate employees through comprehensive compensation policies
and friendly working conditions.

 The need to retain effective and qualified work force is a necessity for a functional
organization, thereby necessitating the need to provide good working conditions and
effective working packages that will aid in retaining effective work force.
 5.3 CONCLUSION
It has businesses spread out across the globe. The company faces a large amount of competition. The
Compensation Committee reviews the overall compensation structure and policies of the Bank with a
view to attract, retain and motivate employees, consider grant of stock options to employees,
reviewing compensation levels of the bank's employees.

The project was very satisfying experience for me, practically and academically. It also helped me in
enriched my knowledge also.

The Bank's compensation policy is to provide a fair and consistent basis for motivating and rewarding
employees appropriately according to their job / role size, performance, contribution, skill and
competence.
BIBLIOGRAPHY
References
[1] Hu, Y.Q. and Zhou, H. (2012)
Executive Compensation, Company’s
Growth and
Relative Performance Evaluation—
Empirical Evidence from the Sample of
Listed
Companies in China.
Accounting Research
, 5, 22-28.
[2] Albuquerque, A.M. (2013) Do
Growth-Option Firms Use Less Relative
Perfor-
mance Evaluation?
The Accounting Review
, 89, 27-60.
https://doi.org/10.2308/accr-50574
[3] Drymiotes, G. and Sivaramakrishnan,
K. (2012) Board Monitoring, Consulting,
and
Reward Structures.
Contemporary Accounting Research
, 29, 453-486.
https://doi.org/10.1111/j.1911-
3846.2011.01109.x
[4] Zhu, T. (2015) Director’s
Compensation, CEO’s Compensation and
Firm’s Future
Performance: Supervision or Collusion?
Accounting Research
, 8, 007.
[5] Díaz-Fernández, M., López-Cabrales,
A. and Valle-Cabrera, R. (2013) In Search
of
Demanded Competencies: Designing
Superior Compensation Systems.
The Inter-
national Journal of Human Resource
Management
, 24, 643-666.
https://doi.org/10.1080/09585192.2012.67746
1
[6] Bushardt, S.C., Glascoff, D.W. and
Doty, D.H. (2011) Organizational Culture,
For-
mal Reward Structure, and Effective Strategy
Implementation: A Conceptual Model.
Journal of Organizational Culture
,
Communication and Conflict
, 15, 57.
[7] Madhani, P.M. (2014) Aligning
Compensation Systems with Organization
Culture.
Compensation & Benefits Review
, 46, 103-115.
https://doi.org/10.1177/0886368714541913
[8] Xia, N. and Dong, Y. (2014) Executive
Compensation, Employee Compensation
and
Corporate Growth—Based on Listed SMEs
in China Empirical Data.
Accounting
Research
, 9, 012.
[9] Banker, R.D., Darrough, M.N., Huang,
R.,
et al.
(2012) The Relation between CEO
Compensation and Past Performance.
The Accounting Review
, 88, 1-30.
https://doi.org/10.2308/accr-50274
[10] Chen, C.X., Williamson, M.G. and
Zhou, F.H. (2012) Reward System Design
and
Group Creativity: An Experimental
Investigation.
The Accounting Review
, 87,
1885-1911. https://doi.org/10.2308/accr-
50232
[11] Chen, D.H., Fan, C.L. and Shen, Y.J.
(2015) Executives and Employees:
Comparison
and Interaction of Incentive Effectiveness.
Management World
, 5, 160-171.
[12] Li, W.J. and Hu, Y.M. (2012) Who Is
Encouraged by Pay Dispersion in State-
Owned
Enterprises?
Economic Research Journal
, 12, 125-136.
[13] Tafkov, I.D. (2012) Private and
Public Relative Performance Information
under
Different Compensation Contracts.
The Accounting Review
, 88, 327-350.
https://doi.org/10.2308/accr-50292
[14] Lu, R., Liu, J.H. and Xu, N. (2011)
Internal Control, Property Right and
Executive
Pay Performance Sensitivity.
Accounting Research
, 10, 42-48.
[15] Pan, H.B. and Yu, M.G. (2014) Intra-
Group Transactions, Executive
Compensation,
and Capital Allocation Efficiency.
Accounting Research
, 10, 003.
[16] Chen, J. and Xu, Y.D. (2012) Are the
Incentives of CEO Compensation Care for
the
Interest of Creditor?—Empirical Evidence
from the view of Debt Maturity Con-
straint in China.
Accounting Research
, 9, 73-81.

References
[1] Hu, Y.Q. and Zhou, H. (2012)
Executive Compensation, Company’s
Growth and
Relative Performance Evaluation—
Empirical Evidence from the Sample of
Listed
Companies in China.
Accounting Research
, 5, 22-28.
[2] Albuquerque, A.M. (2013) Do
Growth-Option Firms Use Less Relative
Perfor-
mance Evaluation?
The Accounting Review
, 89, 27-60.
https://doi.org/10.2308/accr-50574
[3] Drymiotes, G. and Sivaramakrishnan,
K. (2012) Board Monitoring, Consulting,
and
Reward Structures.
Contemporary Accounting Research
, 29, 453-486.
https://doi.org/10.1111/j.1911-
3846.2011.01109.x
[4] Zhu, T. (2015) Director’s
Compensation, CEO’s Compensation and
Firm’s Future
Performance: Supervision or Collusion?
Accounting Research
, 8, 007.
[5] Díaz-Fernández, M., López-Cabrales,
A. and Valle-Cabrera, R. (2013) In Search
of
Demanded Competencies: Designing
Superior Compensation Systems.
The Inter-
national Journal of Human Resource
Management
, 24, 643-666.
https://doi.org/10.1080/09585192.2012.67746
1
[6] Bushardt, S.C., Glascoff, D.W. and
Doty, D.H. (2011) Organizational Culture,
For-
mal Reward Structure, and Effective Strategy
Implementation: A Conceptual Model.
Journal of Organizational Culture
,
Communication and Conflict
, 15, 57.
[7] Madhani, P.M. (2014) Aligning
Compensation Systems with Organization
Culture.
Compensation & Benefits Review
, 46, 103-115.
https://doi.org/10.1177/0886368714541913
[8] Xia, N. and Dong, Y. (2014) Executive
Compensation, Employee Compensation
and
Corporate Growth—Based on Listed SMEs
in China Empirical Data.
Accounting
Research
, 9, 012.
[9] Banker, R.D., Darrough, M.N., Huang,
R.,
et al.
(2012) The Relation between CEO
Compensation and Past Performance.
The Accounting Review
, 88, 1-30.
https://doi.org/10.2308/accr-50274
[10] Chen, C.X., Williamson, M.G. and
Zhou, F.H. (2012) Reward System Design
and
Group Creativity: An Experimental
Investigation.
The Accounting Review
, 87,
1885-1911. https://doi.org/10.2308/accr-
50232
[11] Chen, D.H., Fan, C.L. and Shen, Y.J.
(2015) Executives and Employees:
Comparison
and Interaction of Incentive Effectiveness.
Management World
, 5, 160-171.
[12] Li, W.J. and Hu, Y.M. (2012) Who Is
Encouraged by Pay Dispersion in State-
Owned
Enterprises?
Economic Research Journal
, 12, 125-136.
[13] Tafkov, I.D. (2012) Private and
Public Relative Performance Information
under
Different Compensation Contracts.
The Accounting Review
, 88, 327-350.
https://doi.org/10.2308/accr-50292
[14] Lu, R., Liu, J.H. and Xu, N. (2011)
Internal Control, Property Right and
Executive
Pay Performance Sensitivity.
Accounting Research
, 10, 42-48.
[15] Pan, H.B. and Yu, M.G. (2014) Intra-
Group Transactions, Executive
Compensation,
and Capital Allocation Efficiency.
Accounting Research
, 10, 003.
[16] Chen, J. and Xu, Y.D. (2012) Are the
Incentives of CEO Compensation Care for
the
Interest of Creditor?—Empirical Evidence
from the view of Debt Maturity Con-
straint in China.
Accounting Research
, 9, 73-81.
BIBLIOGRAPHY
REFERENCES
Armstrong, M (2005). A Hand book on Human Resources Management Practices; UK; Kogan
page, 986p
Armstrong, M. & Brown, D (1998). Relating Competences to pay; The UK experience,
Compensation and Benefit Review 18(2); 295-310
Asika N. (1991) “Research Methodology in Behavioural Science”, Longman Nigeria Plc, Lagos
State
Anyebe, A (2003). The Nigerian Civil Service, Issues in structures and operation, Journal of
Professional Administration. 5;11-17
Banjoko S. (2002) “Human Resource Management” An expository Approach. Pumark Nigeria
Limited, Lagos State Pages 100-103
Begbie, C.,Bussin, M., & Schurink, W (2011). A Food manufacturing manager’s experience and
perception of the implementation of an incentive scheme. SA Journal of Human Resources
Management, 9, 1-13
Bernadin J. H ( 2005) “Human Resource Management , An Experimental Approach, 4th Edition
McGraw Hill/Irin (Boston), USA pg 252 – 253
Bob, N (2001). Making employees suggestion count. Journal of Personnel Management,17; 20- 41
Brown, D (2003). Reward Strategies. Journal of Personnel Management,1; 17-29
Chandan, J.S(2005). Management Theory and Practice. Third edition. Vikas Publishing House.
New Delhi.
Chiang,F.F & Birtch, T.A (2008). Achieving Task and Extra Task- Related Behaviours; A Case
of Gender and Position Differences in the perceived role of rewards in the Hotel industry.
International Journal of Hospitality Management, 27, 491-503
Danish, R.Q & Usman, A.(2010). Impact of Reward and Recognition on Job Satisfaction and
Motivation. An empirical study from Pakistan. International Journal of Business and
Management, 5, 159-167
Gerhart, B., & Milkovich, G.T(1990). Organisational Differences in Managerial Compensation and
Financial Performance. The Academy of Management Journal. 33, 663-691

Harrison, D.A & Liska,Z (2008). Promoting Regular Exercise Occupational Fitness Programme.
Journal of Personnel Psychology,5(5); 27-45
Hewitt, A (2009). Managing Performance with incentive pay. Journal of Personnel Management,7(1); 20-
31
Hunter L.C. & Robertson D.J. (1969), “Economics of wages and labour” Macmillan Press Limited, London
Pages 57 – 60
Luthans, F., & Stajkovic, A.D (1999). Reinforce for performance; The Academy of Management Executive,
13, 49-57
Namasivayam, K., Miao, L., & Zhao, X (2007). An Investigation of the Relationship between
Compensation Practices and Firms Performance in the US Hotel Industry. International Journal of
Hospitality Management, 26, 574-587
Ojo A. (1998) “Personnel Management, Theories and Issues, Panaf Publishing Inc. Lagos State Pearce, L
(2010).Managerial Compensation Based on Organisational Performance. Journal of
Industrial Relation, 52; 3-28

QUESTIONNAIRE
 QUESTIONNAIRE

1. When was your organization established?

2. What types of compensation are available?

3. Who handle the compensation management department in your organization?

4. On what basis company provide compensation to their employees?

a) Base Pay b) Commissions c) Travel/Meal/Housing Allowance d)Any other

5. What kind of compensation you prefer?

a) Monetary b) Rewarding

c) Motivation d) Holiday packages

6. Are you satisfied with the compensation you receive?

Yes b) No
7. What do you think that ICICI is providing better compensation package to the employees?

a) Yes b) No

If “NO” than which organization, do you think.

8. Is there different type of compensation for different type of services?

a) Yes b) No

9. Is cash still king in employee compensation?

a) Yes b) No

10. Is Compensation based more on group performance and less on individual contribution?

a) Yes b) No

11. Is there any procedure of receiving formal feedback by employees on Company policies,
compensation, benefits, employee attitudes?

a) Yes b) No

12. In your organization employee receive effective performance appraisal.

a) Yes b) No

13. Are you getting training for improving the performance?

a) Yes b) No c) cannot say

14. Are you free to give ideas to the higher management?

a) Yes b) No