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INTRODUCTION

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INTRODUCTION Employees exchange work for rewards. Probably the most important reward and certainly the most obvious is money. The goals of compensation administration are to design the lowest-cost pay structures that will attract, motivate and retain competent employees, and that also will be perceived as fair by these employees.

Compensation Management: Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.Compensation management, also known as wage and salary administration, remuneration management, or reward management, is concerned with designing and implementing total compensation package. The traditional concept of wage and salary administration emphasized on only determination of wage and salary structures in organizational settings. However, over the passage of time, many more forms of compensation as discussed earlier, entered the business field which necessitated to take wage and salary administration in comprehensive way with a suitable change in itsnomenclature. Beach has defined wage and salary administration as follows: "Wage and salary administration refers to the establishment and implementation of sound policies and practices of employee compensation. It includes such areas as job evaluation, surveys of wages and salaries, analysis of relevant organizational problems, development and maintenance of wage structure, establishing rules for administering wages. Wage payments, incentives, profit sharing, wage changes and adjustments, supplementary payments, control of compensation costs and other related items"

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Components of Compensation system: The literal meaning of compensation is to counter-balance. In the case of human resource management, compensation is referred to as money and other benefits received by an employee for providing services to his employer. Money and benefits received may be in different forms-base compensation in money fonn and various benefits, which may be associated with employee's service to the employer like provident fund, gratuity, and insurance scheme, and any other payment which the employee receives or benefits he enjoys in lieu of such payment. Cascio has defined compensation as follows: "Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivateemployees to strive for higher levels of productivity” Based on above description of compensation, we may identify its various components as follows: Wage and Salary: Wage and salary are the most important component of compensation and these are essential irrespective of the type of organization. Wage is referred to as remuneration to workers particularly, hourly-rated payment. Salary refers to as remuneration paid to white-collar employees including managerial personnel. Wages and salary are paid on the basis of fixed period of time and normally not associated with productivity of an employee at a particular time. Incentives: Incentives are the additional payment to employees besides the payment of wages and salaries. Often these are linked with productivity, either in terms of higher production

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or occurrence of certain events like medical benefits. Perquisites: These are normally provided to managerial personnel either to facilitate their job performance or to retain them in the organization. This has led to the development of several theories of wages such as subsistence theory by Ricardo. free residential accommodation. residual claimant theory by Frascis Walker. marginal productivity theory by Philip Wickstted and John Clark. health and life insurance. club membership. Fringe Benefits: Fringe benefits include such benefits which are provided to the employees either having long-term impact like provident fund. etc. gratuity. Each theory tries to explain how wages are determined. These incentives may be given on individual basis or group basis. Canteens. bargaining theory by John Davidson and behavioral theory by James March and Herbert Simon. wages are paid to workers which include basic wages and other allowances which are linked with the wages like dearness allowances. wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them.Traditionally. in the absence of any bargaining power possessed by laborers. paid holiday trips. accident relief.Such perquisites include company car. etc. or facilitation in performance of job like uniforms. recreation.or cost saving or both. In its actual sense which is prevalent in the practice. wage fund theory by Adam Smith. they did not have any say in the determination of wages paid to them. stock options. Wages: According to economic theory. surplus value theory by Karl Marx. pension. In the 4 . etc.

These concepts are: minimum wage. the concept of need based minimum wage was added. the earnings of women. soon after the independence. According to the above committee. Let us have a brief look at these concepts. the Conference suggested the following guidelines: • The standard working class family should be taken to consist of three consumption units for the earner. " Subsequent to the committee's report. This Act does not define the concept of minimum wages but empowers the Central Government as well as State Governments to fix minimum wages from time to time. "Minimum wage is the wage which must provide not only for the bare sustenance of life. living wage. Indian Labor Conference elaborated the concept of fixation of minimum wars which were termed as need-based minimum wages. Government of India set up a Committee on Fair Wages in 1948 which has defined various concepts of wages which govern the wage structure in the country specially in those sectors which can be termed as underpaid and where workers do not have bargaining power through unions. In 1957.Indian context. For the calculation of wages. 1948. 5 . minimum wage must provide some measure of education. Later. medical requirements and amenities. For this purpose. and fair wage. Minimum Wage: A minimum wage is one which has to be paid by an employer to his workers irrespective of his ability to pay. the payment of minimum wages is mandatory. Wherever this Act applies. children and adolescents should be disregarded. but for the preservation of the efficiency of the workers. Government enacted legal provisions regarding minimum wages under the Minimum Wages Act.

In the second phase fair wages were to be established in the Community and industry. the norms should be the minimum rent charged by the Government in any area for houses provided under subsidized housing scheme for low-income groups. The Committee also observed that since the national income did not support the payment of living wage. clothing and shelter but a measure of frugal comfort including education for his children. protection against ill-health. In the initial stage the wages to be paid to the entire working class were to be established and stabilized. Living Wage: Along with the minimum wage the Committee on Fair Wages has given the concept of living wage which has been defined as follows: "A living wage is one which should enable the earner to provide for himself and his family not only the bare essentials of food. " Living wage is more than the concept of minimum wage. 6 .700 calories per adult. it should be implemented in three phases. Fuel. • • In respect of housing. • The clothing requirements should be estimated at a per capita consumption of 18 yards per annum per person. Such a wage is determined keeping in view the national income and paying capacity of industrial sector. In the final phase the working class was to be paid the living wage.• The minimum food requirements should be calculated on the basis of the net intake of 2. requirements of essential social needs and a measure of insurance against the more important misfortunes including old age. Lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage.

the level of national income and its distribution and the capacity of industry to pay. Time Wage Method: In time wage method. 7 . The Committee has defined fair wage as follows: "Fair wage is the wage which is above the minimum wage but below the living wage. Perhaps. the concept of fair wages is followed by the most business organizations. a combination of these two methods is followed to ensure the payment of minimum wages. This results into two types of wages time wage and piece wage. Sometimes. weekly. These two basic systems have their own relative merits and demerits. monthly or any other time base. Such factors are labor productivity prevailing wage rates. in order to avoid hardship to employees. Methods of Wage Payment: In devising system of wage determination. This method is known as balance method. the wage is determined on the basis of time worked which may be hourly.Fair Wage: The concept of fair wage is linked with the capacity of the industry to pay. fair wage depends on different variables affecting wage determination. this is the oldest and most prevalent system of wage payment. The lower limit of the fair wage is obviously the minimum wage: the upper limit is to be set by the capacity of the industry to pay. daily. the critical question that emerges is whether the wage will be linked to time spent on the workplace or output achieved during a specified period. " Thus. At present. A worker is paid wage for the time worked irrespective of his output during that time. Let us see how these methods work.

Merits of Time Wage: This method is applied more commonly because it has certain inherent merits which are as under: There are certain jobs in which output within a specified period is not easily measurable.g.Both employers and workers know well in advance the amount of wages payable and they can adjust their budgets accordingly. 8 . It ensures the payment of regular and specific wages which is beneficial from social point of view. Thus. Employees tend to take easy approach. It demotivates efficient workers for more output as they are put at par with inefficient ones.In such a case wage payment is linked to time.This system does not differentiate between efficient and inefficient workers: gradually.Labor cost of production becomes difficult to determine in advance because wages are not linked to output. Demerits of Time Wage: Though adopted more commonly. The job of a peon. even an illiterate worker can understand it. time wage system suffers from a number of drawbacks and if the workers are not adequately motivated for higher performance This system can generate inefficiency in the following ways: Since there is no direct linkage between performance and wages. Product/service quality tends to be high as workers are not in hurry to produce more without regard to quality. It is quite easy to understand and calculate the amount of wages to be paid. inefficiency percolates to efficient workers too. e.

requires less 9 . Where supervision is good and the supervisors can estimate a fair day's work. This may be calculated on the basis of number of units produced or the completion of a job where output is not measurable in terms of individual units. Where quality of work is more pronounced and requires creative imagination like artistic work. This is fair and equitable so far as utilization of human resources is concerned. Where machinery and raw materials are quite sophisticated which require handling with utmost care like processing of precious metals. Where individual employees do not have direct control on their outputs like assembly work. It differentiates efficient and inefficient workers and provides incentives to inefficient workers to become efficient. There is a possibility that wrong employees are placed on the job. It. Where work is of highly varied nature and standards of outputs cannot be ascertained like research work. This system is more suitable in the following situations: Where units of output are not measurable precisely like office work.Since productivity is not a criterion for fixing wages. Piece Wage Method: In piece wage method workers are paid wages according to the quantity of output during a specified period. Where workers' unions oppose the introduction of piece rate system. Merits of Piece Wage: Piece wage method has the following merits: There is a direct relationship between output and wages which works as a motivating factor to workers to produce more.Various merits and demerits of time wage system suggest that this system can be followed in some jobs but not in all. Piece wage method too has its own merits and demerits.

Various merits and demerits of piece wage system indicate that this system is not suitable for all conditions but only to specific conditions which are as follows: Where the output of each individual worker can be measured precisely. There may be jealousy and interpersonal conflict among workers because of their uneven earnings at the same workplace. • The method does not ensure minimum wages as output may be adversely affected by factors beyond control. Where workmanship is not required.supervision if there is in-built system for product quality control. • The product quality and machinery conditions are likely to suffer because workers concentrate more on quantity rather than quality. Where production methods are standardized and job is of repetitive nature. When the flow of work is regular and work interruptions do not occur. • There is a tendency on the part of the employers to cut piece rate if workers' earnings are quite high. 10 .The organization can estimate its cost of production well in advance because wage cost is directly proportional to output. Trade unions generally oppose this system because of the fear of discrimination among workers based on their working. Demerits of Piece Wage: Piece wage system has the following demerits: • There is a problem in fixing piece rate in the absence of any standardized procedure. Where the quantity of output is a direct result of skills and efforts of individual workers.

if a worker produces more quantity in a period. Labor unions: If the laborers are well organized into strong trade unions. the management may fix low wages. On the other hand. This method has its relevance in a workplace where the work flow is irregular like docks.Balance Method: Balance method also known as debt method. and earns more than his time wage. the wages tend to be low. If there is a short supply of labor. Under this method. usually on weekly or monthly basis. he is given credit for additional output which is compensated in another period in which production quantity falls below the time wage. a worker is guaranteed a fixed wage based on time rate with a provision of piece wage method. their bargaining power would be high and they can demand higher rates of wages. This method provides a sense of security to a worker so far as his wage earning is concerned. At the same time. he is also motivated to produce more because of inclusion of piece wage system. if the laborers are not organized. Thus. we may summarize the factors affecting wage rates as under: Demand for and supply of labor: Demand and supply conditions of labor have considerable influence on the determination of wage rates. Factors Affecting Wages: On the basis of above discussion. 11 . the wages may be high whereas if there is no dearth of labor. is essentially a combination of time wage and piece wage methods.

As the State assumes responsibility for safeguarding the interest of citizens. The ability to pay in turn is determined by the profitearning capacity of the enterprise. it has to step in to regulate the wage rates of laborers through legislative measures. is determined by the ability of the enterprise to pay its workers. Ability to pay: The wage level. to a large extent.Cost of living: The cost of living of workers also has a strong influence on the rate of wages. Job requirements: Job requirements are also an important factor affecting wages. and this will enable them to retain and attract qualified workers to the organizations. Prevailing wage rates: Prevailing wages in a particular industry are also taken into account by the employers while deciding wage levels for their employees. By considering the prevailing wage level. the laborers may not be in a position to make both ends meet and this will affect their efficiency. employers will come reasonable close to the wage level of competitors. State regulation: State regulation is another important factor influencing wage rtes. 12 . Jobs requiring specialized knowledge or involving much mental or manual effort are priced higher than those which are light or which do not need any specialized knowledge. Hence progressive employers consider this factor also. If this factor is not considered.

a small group. In some other organizations annual increases based on merit. “It refers to all the plans that provide extra pay for extra performance in addition to regular wages for a job” – Hummel and Nickerson. They are designed to stimulate human effort by rewarding the person. Incentives: ‘Incentive’ may be defined as any reward of benefit given to the employee over and above his wage or salary with a view to motivating him to excel in his work. The following are some of the definitions of the term ‘Incentive’: Wage incentives are extra financial motivation. Thus. a plant work force or all the employees of a firm are partially or wholly related to some measure of productivity output”– Scott. One cannot expect effective performance from a worker 13 .Increment system: In some organizations wages automatically increase annually at a prescribed rate without any relation to workers’ performance. A scheme of incentive is a plan to motivate individual or group performance. “It is any formal and announced programme under which the income of an individual. But this compensation alone cannot bring job satisfaction to the workers. Incentives include both monetary as well as non-monetary rewards. for improvements in the present or targeted results” – The National Commission on Labor. over and above the time rated remuneration. the prevailing system of granting increments also affects wages. Need for incentive: It is true that monetary compensation does constitute very important reason for the working of an employee.

Incentives for work: Incentives can take any form. Conditions at work (Environment) 14 . Clark Dickinson the important incentives for work can be listed as follows: Desire for livelihood and fear of want. The moral command and fear of conscience. A chance to get somewhere (Opportunity). Doing my share (Participation) I count for something (Recognition). Confidence in the management. even if he is well paid. A safe future (Security). Desire for praise and fear of being dismissed. Know what’s going on (Communication). pride in the job and in firm and concern for the overall good cannot be brought by a bonus. Impulse to activity or joy in work and dislike of inactivity. Trust in leadership. • • • • • • • • • Doing something worthwhile (Good). According to Z. A decent living (Fair Wages). Robert E. Hence the modern authorities on management science have recognized the need for the provision of incentives to build up good morale. Sociologists and industrial psychologists also view that the financial aspect is not the only dominant motivating force. Desire for approval of master and fear of punishment.who is dissatisfied with its job. Salton has mentioned the following nine factors as the Motives for work.

Thus. Experiences of foreign 15 .Further additional cash wage may also tempt the workers to misuse the money in vices like gambling. the workers by virtue of the non-financial incentives are enabled to enjoy a richer and fuller life. bonus and other incentives directly given to the workers in the form of cash. Financial Incentives. The financial incentives may be either direct or indirect.Mere monetary incentive cannot help the management in solving all the problems of industrial unrest. the nonfinancial incentives have a significant role to play. and Non-financial Incentives. clothing. It is given in the form of money. in short. Indirect financial incentives include subsistence allowance expenses.Classification of Incentives: All forms of incentives can be broadly classified into two kinds namely. The financial incentives still form the most important influencing and motivating factor up to a certain limit. Financial Incentives Financial incentives or pecuniary incentives are the most original of all the incentives. Under such circumstances. Non-financial incentives: Non-financial or non-pecuniary incentives include all other influences planned or unplanned. which stimulate exertion. drinking etc. Direct incentives include wages. medical expenses etc. They make the working class more stabilized and economically sound. shelter etc. Such incentives create a healthy atmosphere and change the mental outlook of the workers.Because it is only by virtue of the monetary compensation that the workers can satisfy their fundamental needs such as food.

Some of the popular ones are given below: Job Security: The management must try its best to create a sense of job security. There should be no risk of retrenchment. Non-Financial Incentives can take a variety of forms. Recognition: Recognition of work is the essence of securing good work. 16 .countries particularly countries like Britain. Participation: Workers feel more satisfied when they are given an opportunity to raise their voice in handling the affairs of the enterprise. But it is high in those concerns where they have a feeling of job security. Since they actually take part in the decisionmaking their co-operation is assured. demotion and termination. But the technique of praise must be practiced as far as possible. Efficient people would naturally like to get recognition for their skill and excellence in their work. Such recognition can do many things that what a cash reward can do. America and Japan have shown that there is a high degree of positive correlation between non-financial benefit schemes and labor productivity. Experiences have also shown that the productivity is less in those concerns where workers have no feeling of safe and secure. Of course it is not practicable for the superiors to praise everybody for every thing done by them.

Other Incentives: Other incentives like quick promotion. provisions of facilities for development and training. Pride in job: The workers must be made to feel pride in their job. Delegation of Responsibility: Delegation of rights and responsibilities to execute a given task often proves to be a strong motivating factor. can effectively stimulate the workers’ pride in their job and in the firm. Various techniques can be employed to develop pride to work.Sincere Interest in Subordinates as Individual Persons: The workers must be made to feel pride in their job. Merits of Incentives: The following are the advantages derived by providing incentives to employees: Higher output: By providing incentives to his employees. dynamic leadership. By delegation the superior trusts his workers and stimulates them to show better results. provision of labor welfare amenities etc. This leads to higher output. fair treatment. can effectively stimulate the workers pride in their job and in the firm. the employer is able to induce them to work better. Various techniques can be employed to develop pride to work. ethical conduct etc. ethical conduct etc. 17 . fair treatment. dynamic leadership. also have a significant role to play in motivating the employees. Food products. Food products.

Such workers are sure to have greater work commitment and therefore may not leave the organization. Efficient workers are able to earn more: Such of those workers who are highly efficient are able to earn more by way of performance bonus. as a result. higher output results in greater profits for the business. Rate of labor turnover is bound to be low: If adequate incentives are available to the workers. Possible to identify inefficient and dull workers: If. When suitable incentives are available. the tendency will be to while away the time. First. higher commission and so on. the enterprise is able to keep the selling price low and this result in greater sales. The need for close supervision. is bound to be low. Supervision does not pose any problem: When suitable incentives are available. it should mean that they are basically dull. some workers are able to earn only their normal wage. They begin to see every minute in terms of money. therefore. No problem of idle time: In an organization where no proper incentives are available for the workers. the workers become duty conscious. The rate of labor turnover. in spite of the incentive schemes. the workers become time conscious. the cost per unit becomes less and second. thus. they may not have a feeling of dissatisfaction. This happens in two ways. does not arise.Greater profits: Needless to say. The employer. has to decide whether to retain them or subject them to rigorous training. 18 .

they may handle the machines carelessly. This increases the wear and tear of machines. may give undue importance to the quantity of output produced neglecting the quality of output. Increase in paper work: Proper administration of any incentive scheme involves lot of paper work. 19 . This may promote ill feelings among the employees of an organization. Health of the workers may get affected: Some workers tend to overwork in order to earn more and this may affect their health. Wear and tear of machines may be more: As the employees are keen on increasing the output all the time. Such a problem can be overcome only if the organization has a perfect system of quality control. Problems arising out of incentives: The following problems are bound to arise while implementing an incentive plan: Quality of work may suffer: The workers. It necessitates the maintenance of proper records and books. Inter-personnel relationships may suffer: Only those employees who are really efficient will be benefited out of incentives. This leads to reduction in complaints and grievances.Reduction in complaints and grievances: As the organization makes available suitable incentives to the workers. they may not have anything to complain about. Increase in accidents: There is always a preference to step up output disregarding even safety regulations and this may increase the rate of accidents in the workplace. those in the production department in particular.

Every worker should be assured of a minimum wave notwithstanding performance. From the management's point of view. It should be so simple that the worker will be in a position to work out his total earnings himself. Consensus required: The management should not take a unilateral decision while evolving an incentive scheme. It should not expect too much out of the employee nor should it give scope for bias or favoritism. at a rate higher than the normal rate of 20 . In the absence of such an atmosphere. it should be cost effective. From the workers' point of view. No scope for bias or favoritism: The standards set under the incentive plan should be based on objective analysis. Only then the workers would have a sense of security. Assured minimum wage: Payment to any worker should not be totally related to his performance.Requirements of a sound incentive plan: A good incentive plan shall fulfill the following requirements: Trust and confidence: The success of any incentive plan depends on the existence of an atmosphere of trust and confidence between the workers and the management. it should offer return. Beneficial to both the workers and the management: The incentive plan should be beneficial to both the workers and the management. Consensus between the workers and the management is necessary for the success of the plan. Simple to operate: The incentive plan should not involve tedious calculations. the workers may resist any such proposal by the management.

vacation pay. Extra Pay for time Worked: This category covers the benefits such as: premium pay. travel time etc. recreation. grievance time. profit sharing. paid lunch periods. incentive bonus.wages. Christmas bonus. housing subsidy. The results of evaluation should be made known to the employees at the earliest. in the plan. Deewali or Pooja bonus. paid rest and relief time. Redressing grievances: Grievances and complaints are bound to arise whenever any incentive plan is in vogue in the organization. Fringe Benefits: The fringe benefits are categorized as follows: Payment for Time Not worked: Benefits under this category include: sick leave with pay. shift premium. food cost subsidy. The fringe benefits are classified under four heads as given here under: 21 . Review: The progress of the incentive scheme should be periodically reviewed. for the extra efforts made by them. if any. Proper machinery should be installed for the quick handling of all such complaints. bargaining time. Only then it would be possible to notice and remove defects. unemployment compensation. Sound system of evaluation: A perfect system of evaluating the employee’s performance should be created in the organization. Organizations provide a variety of fringe benefits. old age insurance.

recreational programs. sick benefits. provident fund. holidays. leave for grievances. level for negotiation. stress counseling. Old Age and Retirement: Benefits under this category include: deferred income plans. counseling. insurance. old age assistance. jobs to the sons/daughters of the employees and the like. cost of living bonus. canteen. health insurance. overtime pay. attendance bonus. housing. beauty parlor services. pension. quality bonus. Participation and Stimulation: This category covers the following benefits: anniversary awards. traveling concession to retired employees. safety measures etc.Employment Security: Benefits under this head include unemployment. disability insurance. old age counseling. etc. gratuity. call-back pay. leave for maternity. technological adjustment pay. jobs to sons/daughters of the deceased employee and the like. 22 . cooperative credit societies. sick leave. and medical benefits for retired employees. educational facilities. leave travel pay. retiring rooms. lay-off. life insurance. income tax aid. Health Protection: Benefits under this head include accident insurance. medical care. Personnel Identification. hospitalization.

Employee Security: Physical and job security to the employee should also be provided with a view to promoting security to the employee and his family members. The benefit of confirmation of the employee on the job creates a sense of job security. Further a minimum and continuous wage or salary gives a sense of security to the life. Retrenchment Compensation: The Industrial Disputes Act, 1947 provides for the payment of compensation in case of lay-off and retrenchment. The nonseasonal industrial establishments employing 50 or more workers have to give one month’s notice or one month’s wages to all the workers who are retrenched after one year’s continuous service. The compensation is paid at the rate of 15 days wage for every completed year of service with a maximum of 45 days wage in a year. Workers are eligible for compensation as stated above even in case of closing down of undertakings.

Lay-off Compensation: In case of lay-off, employees are entitled to lay-off compensation at the rate to 50% of the total of the basic wage and dearness allowance for the period of their lay-off except for weekly holidays. Lay-off compensation can normally be paid up to 45 days in a year. Safety and Health: Employee’s safety and health should be taken care of in order to protect the employee against accidents, unhealthy working conditions and to protect worker’s capacity. In India, the Factories Act, 1948, stipulated certain requirements regarding working conditions with a view to provide safe working environment. These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and

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fume, artificial humidification, over-crowding, lighting, drinking water, latrine urinals, and spittoons. Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, striking gear and devices for cutting off power, self-acting machines, easing of new machinery, probation of employment of women and children near cotton openers, hoists and lifts, lifting machines, chains ropes and lifting tackles, revolving machinery, pressure plant, floors, excessive weights, protection of eyes, precautions against dangerous fumes, explosive or inflammable dust, gas etc. Precautions in case of fire, power to require specifications of defective parts of test of stability, safety of buildings and machinery etc.

Objectives of Fringe Benefits: The view point of employers is that fringe benefits form an important part of employee incentives to obtain their loyalty and retaining them. The important objectives of fringe benefits are: • • • To create and improve sound industrial relations To boost up employee morale. To motivate the employees by identifying and satisfying their unsatisfied needs. • • To provide qualitative work environment and work life. To provide security to the employees against social risks like old age benefits and maternity benefits. • To protect the health of the employees and to provide safety to the employees against accidents.

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To promote employee’s welfare by providing welfare measures like recreation facilities.

To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are called golden hand-cuffs.

To meet requirements of various legislations relating to fringe benefits.

Need for Extending Benefits to Employees: • Rising prices and cost of living has brought about incessant demand for provision of extra benefit to the employees. • Employers too have found that fringe benefits present attractive areas of negotiation when large wage and salary increases are not feasible. • As organizations have developed ore elaborate fringe benefits programs for their employees, greater pressure has been placed upon competing organizations to match these benefits in order to attract and keep employees. • Recognition that fringe benefits are non-taxable rewards has been major stimulus to their expansion. • Rapid industrialization, increasingly heavy urbanization and the growth of a capitalistic economy have made it difficult for most employees to protect themselves against the adverse impact of these developments. Since it was workers who are responsible for production, it was held that employers should accept responsibility for meeting some of the needs of their employees. As a result, some benefits-and-services programs were adopted by employers • The growing volume of labor legislation, particularly social security legislation, made it imperative for employers to share equally with their employees the cost of old age, survivor and disability benefits. 25

It replaces the traditional “one-benefitplan-fits-all” programs that dominated organizations for more than 50 years. • Labor scarcity and competition for qualified personnel has led to the initiation. at least partly. evolution and implementation of a number of compensation plans. so that they may be protected against the insecurity arising from unemployment.• The growth and strength of trade unions has substantially influenced the growth of company benefits and services. Less than 10% of employees now fit this stereotype. Traditional benefit programs were designed for the typical employees of the 1950s—. Flexible Benefits: What are Flexible Benefits? Flexible benefits allows allow employees to pick benefits that most their needs. Company benefits-and-services programs are among some of the mechanisms which managers use to supply this security.a male with wife and two children at home. The idea is to allow each employee to choose a benefit package that is individually tailored to his or her own needs and situation. The average organization provides fringe benefits worth approximately 40% of an employee’s salary. to the employees who are responsible for it. injury and old age. a third are part of two-income families with no children. While 25% of today’s employees are single. sickness. As such these traditional programs don’t tend to meet the needs of today’s more diverse 26 . • The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go.

for example. disability insurance. Typically. Flexible spending plans allow employees to set aside up to the dollar amount offered in the plan to pay for particular services. Of course we know that assumption is false. Flexible spending accounts can increase employee take-home pay because employees don’t have to pay taxes on the dollars they spend out of these accounts. however.” which allow the “purchase” of additional benefits that uniquely meet his or her needs. 27 . So a module designed for single employees with no dependents might include only essential benefits. Consistent with expectancy theory’s thesis that organizational rewards should be linked to each individual employees goals. marital status. and expanded health coverage. spouses’ benefit status. each employee is given “benefit credits. flexible benefits turn the benefit expenditure into a motivator. designed for single parents. Core-plus plans consist of a core of essential benefits and a menu-like selection of other benefits options from which employees can select and add to the core. for employees to pay for health-care and dental premiums. Thus. It’s a convenient way. might have additional life insurance. and the like. with each module put together to meet the needs of a specific group of employees. and flexible spending accounts. core-plus options. They can be uniquely tailored to reflect differences in employee needs based on age. number and age of dependents. do meet these diverse needs.workforce. flexible benefits individualized rewards by allowing each employ to choose the compensation package that best satisfies his or her current needs. Flexible benefits. The three most popular type of benefit plans are modular plans. Linking Flexible Benefits and Expectancy Theory: Giving all employees the same benefits assumed that all employees have the same needs. Another. Modular plans are pre-designed packages of benefits.

.. It may take a few more years to offer flexible benefits to employees in India and other Asian counties by the managements. And a similar survey of 307 firms in the United Kingdom found that while only 16% have flexible benefits programs in place. it should proceed as a process. In India some flexible benefits are offered in a limited way to the top management personnel like Executive Directors. In India and most countries of Asia with the exception of Japan Flexible benefits are not offered by employers for various reasons which may create personnel and trade union problems.Flexible Benefits in Practice: Today almost all major Corporations in the United States offer Flexible benefits. Compensation Management Process: In order to achieve the objectives of compensation management. President. another 60% are either in the process of implementing them or are seriously considering them. And they are becoming a norm in other countries too. For instances a recent survey of 136 Canadian Organizations found that 93% have adopted flexible benefits or will in the near term. General Manager etc. This process has various sequential steps as shown: • • • • • • Organization’s strategy Compensation policy Job analysis and evaluation Analysis of contingent factors Design and implementation of compensation plan Evaluation and review 28 . Vice President.

the organization does not grow through additional investment but stabilizes and the growth comes through making the present investment more effective. compensation strategy involves cost control with below average cash and incentive payments. The benefits which have been standardized have to be maintained. In mature market. the organization has to harvest profit through cash generation and cost cutting and if this cannot be sustained over the long run. information technology is a fast growing business presently and we find maximum merger and higher managerial compensation in this industry. In such a growing market. the inputs. the organization has to pay high cash to attract talents. the possible retrenchment of business to invest somewhere else. in order to make the growth strategy successful. In such a case.Organization’s Strategy: Organization’s overall strategy though not a step of compensation management is the starting point in the total human resource management process including compensation management. In such a situation. particularly human resources. the companies do the following: 29 . known as learning curve growth. an organization can expand its business through internal expansion or takeover and merger of other organizations in the same line of business or a combination of both. In a growing market. Thus. do not grow in the same proportion as the business expands. Companies operating in different types of market/product having varying level of maturity. adopt different strategies and matching compensation strategy and blend of different compensation methods. Therefore. average cash and moderate incentives may work. it can be seen that organizations follow different strategies in different market situations and align their compensation strategy and contents with these strategies. Cascio has observed that in viewing the compensation from strategic point of view. For example. In the declining market.

• They view the company's performance as the ultimate criterion of the success of the strategic pay decisions and operational remuneration programmes. many external factors which impinge on the policy must also be taken care of Job Analysis and Evaluation. the organization should clearly specify its compensation policy. They integrate pay considerations into strategic decision-making processes. Job analysis also provides base for job evaluation which determines the relative worth of various jobs in the organization. In order to make compensation management to work effectively. 30 . The relative worth of various jobs determines the compensation package attached with each job. Compensation Policy: Compensation policy is derived from organizational strategy and its policy on overall human resource management. The policy should be linked with the organizational philosophy on human resources and strategy.• They recognize remuneration as a pivotal control and incentive mechanism that can be used flexibly by the management to attain business objectives. • • They make the pay system an integral part of strategy formulation. incentives and benefits and various types of perquisites to various levels of employees. Besides. such as those that involve planning and control. Job analysis provides basis for defining job description and job specification with the former dealing with various characteristics and responsibilities involved in a job and the latter dealing with qualities and skills required in job performer. which must include the basis for determining base compensation.

pay commissions for Government employees as well as for public sector enterprises. which affect the operation of human resource management system. Various internal factors are organization’s ability to pay and employees' related factors such as work performance. various incentive plans. compensation management should have a provision for evaluating and reviewing the compensation plan. Therefore. these are determined by external party. etc. it will generate results either in terms of intervening variables like employee satisfaction and morale or in terms of end-result variable like 31 . the organization may be able to design its compensation plan incorporating base compensation with provision of wage/salary increase over the period of time. cost of living. it is implemented. level of economic development. After implementation of the plan. seniority. both external and internal. benefits and perquisites. Implementation of compensation plan requires its communication to employees and putting this into practice. Evaluation and Review: A compensation plan is not a rigid and fixed one but is dynamic since it is affected by a variety of factors which are dynamic. pressure of trade unions and various labor laws dealing with compensation management. social factors. Sometimes. for example. skills. The impact of these factors will be discussed later.Analysis of Contingent Factors: Compensation plan is always formulated in the light of various factors. These factors may be analyzed through wage/salary survey. Design and Implementation of Compensation Plan: After going through the above steps. After designing the compensation plan. Various external factors are conditions of human resource market.

or below market. above. • Decide what. Determine the cost of going outside versus looking inside. Determine the cost of a consultant's review. However. incentive-based versus non-contingent pay). Designing and Developing the Compensation Plan: Develop a program outline: • • • Set an objective for the program. If it does not work as intended. Determine a budget. • Determine whether the company should set salaries at. sales employees. 32 . • Decide the extent to which employee benefits should replace or supplement cash compensation. Designate an individual to oversee designing the compensation program: • • • • Determine whether this position will be permanent or temporary. this latter variable is more important..g. professional employees. hourly versus salaried rates. Establish target dates for implementation and completion. differences should exist in pay structures for executives.increase of productivity. Develop a compensation philosophy: • Form a compensation committee (presumably consisting of officers or at least including one officer of the company). The evaluation of compensation plan must be done in this light. there should be review of the plan necessitating a fresh look. Determine who will oversee the program once it is established. and so on (e. if any.

administration. Meet with department managers. 33 . On the basis of required tasks and forecasted business plans. sales. Evaluate jobs: • Rank the jobs within each senior vice president's and manager's department.Conduct a job analysis of all positions: • Conduct a general task analysis by major departments. adjust job descriptions if necessary. • Develop model job descriptions for exempt and nonexempt positions and distribute the models to incumbents for review and comment. develop a matrix of jobs crossing lines and departments. to determine their specific job functions. and adjust if necessary. What tasks must be accomplished by whom? • Get input from senior vice presidents of marketing. • Interview department managers and key employees. and then rank jobs between and among departments. to review job descriptions. • • • Develop a final draft of job descriptions. finance. Finalize and document all job descriptions. as necessary. as necessary. • Decide which job classifications should be exempt and which should be nonexempt. • Prepare a matrix organizational review. and other appropriate departments to determine the organizational structure and primary functions of each. production. • Verify ranking by comparing it to industry market data concerning the ranking.

senior. Establish a trend line in accordance with company philosophy (i. • Prepare flow charts of all ranks for each department for ease of interpretation and assessment. • Present data and charts to the compensation committee for review and adjustment. junior.e.• Compare the matrix with data from both the company structure and the industry wide market. Determine an appropriate salary structure: • • • • • Determine the difference between each salary step. Determine grades: • Establish the number of levels . and beginner for each job family and assign a grade to each level. 34 . or other reasons for maintaining a position. Review job descriptions. or monetary range of a position at a particular level. necessity. Determine a minimum and a maximum percent spread. Review the market price of benchmark jobs within the industry. • Determine the number of pay grades.. Establish grade pricing and salary range: • • • Establish benchmark (key) jobs. where the company wants to be in relation to salary ranges in the industry). Slot the remaining jobs. intermediate. within each department. Verify the purpose.

a merit raise schedule).g. Develop and document specific policies for selected groups. • Meet with the compensation committee for review. such as cost-of-living adjustments. • Present data to the executive operating committee (senior managers and officers) for review and approval. Develop a salary administration policy: • • • Develop and document the general company policy.• Meet with the compensation committee for review. and approval. and approval.. Develop and document a strategy for merit raises and other pay increases. adjustments. Communicate the final program to employees and managers: • Present the plan to the compensation committee for feedback. adjustments. annual reviews. and promotions. • Present data to the compensation committee for review. adjustment. performance appraisal forms. bonuses. 35 . • Develop and document procedures to justify the policy (e. and approval. and approval. adjustments. Obtain top executives' approval of the basic salary program: • Develop and present cost impact studies that project the expense of bringing the present staff up to the proposed levels. review.

handouts. using slide shows or movies. Make changes where necessary. Design and develop detailed systems. to develop appropriate data input forms. and to create effective monitoring reports for senior managers. • • • Make presentations to managers and employees. • Develop a plan for communicating the new program to employees. literature. Work with HR information systems staff to establish effective implementation procedures. Execute the program. Implement the program. and forms. Monitor the program: • • • Monitor feedback from managers. Develop and determine format specifications for all reports. and incorporate necessary changes. • • • • Have the necessary forms printed. Execute test runs on the human resources information system. etc.• Make a presentation to executive staff managers for approval or change. 36 . procedures. Find flaws or problems in the program and adjust or modify where necessary.

1. This study helps to understand about the increment plan in the compensation.1. This study helps to know various rewards & benefits to the employees.3 SCOPE OF THE STUDY The study focuses to gain knowledge on the compensation package offered at Reliance Communications. This project can be used as reference for future in-depth research. 37 .2 NEED FOR STUDY To know on what basis the employees are rewarded. To know about the increment plans of the company in the salary. To know about the company’s retirement benefits. To analyze the various compensation benefits provided by the employer to motivate their employees. This study helps to know about the retirement plan. To know about the differential incentive system. This study helps to understand the differential incentive system.

• To know about whether the salary is given to them according to their performance level. 38 . • To know if there is any rewards for those who are performing well. • To know about the different incentive system.1. • To know about whether the compensation is increased in a year. • To know about the various benefits given to employees in the company.4 OBJECTIVES: Primary objective: • To identify the performance on compensation benefits in RELIANCE COMMUNICATION’S Secondary objectives: • To know about the employees knowledge on compensation structure. • To know about the retirement plan of the company.

Statement of the Problem: To identify the effectiveness on compensation benefits in Reliance communication Research design: A research design is an arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purchase with economy in procedure. the research design is the conceptual structure within which research is conducted. the design decisions happen to be in respect of: What is the study about? Why is the study being made? 39 . For conducting for the first time and thus are original in character. which already have through to statistical process. it constitutes the blue print for the collection. In fact.5 RESEARCH METHOLDOLOGY Research methodology is a systematic approach to solve the research problem. Research methodology has many dimensions and research methods are a part of it. measurement and analysis of data. More explicitly.1. It can be considered as a new research is done scientifically. Secondary data is collected by some. As such the design includes an outline of what the researcher will do from writing the hypothesis and its operational implications to the final analysis of data.

Here the department heads were asked to give their opinion of the compensation benefits followed in that company. Researcher must be very careful in using secondary data. He must make a minute scrutiny because it is just possible that the secondary data may be unsuitable or may be inadequate in the context of the problem which the researcher wants to study. Primary data: It is the direct response from the respondents. 40 . The type of research design that will be used for the study is descriptive research design. they refer to the data which have already been collected and analyzed by someone else. This is descriptive sampling followed in this method. This study is explorative in nature which found in departments the compensation benefits in Reliance communication . Secondary data: Secondary data means the data that are already available i.Where will the study be carried out? What type of data is required? Where can the required data are found? What periods of time will the study include? What will be the sample design? What techniques of data collection will be used? How will the data be analyzed? In what style the result is prepared? Fundamental to the success of any research project is the sound research design. Sources of Data collection: The data for this study has been collected from this source.e. A questionnaire was given to elicit the answers for them.

Primary data was collected using the questionnaire. Sampling technique: The type of sampling technique that will be used for the study is convenience sampling. Population Size: 150 employees Sample size: The sample size that will be taken for the study is 115 employees. 41 . which is a non probability sampling technique.Data collection: Secondary data was collected from the books and records of the company.

42 . The ratings were taken only from middle and lower level employees.1.6 LIMITATIONS OF THE STUDY • The study is conducted only among the workers of RELIANCE COMMUNICATIONS • • • Company gave access to analyze the data for only 115 employees. Duration of The Study is another limitation.

REVIEW OF LITERATURE 43 .

REVIEW OF LITERATURE "If you pick the right people and give them the opportunity to spread their wings . Benefits are increasingly expensive for businesses to provide to employees. supplementary payments. control of compensation costs and other related items" -Beach Based on the research conducted approximately over a period of 20 years on mentoring in the workplace. Turban & Dougherty. life insurance. employee stock ownership plans.. Dreher & Ash. plus the many kinds of benefits and services that organizations provide their employees. so the range and options of benefits are changing rapidly to include. for example. establishing rules for administering wages. analysis of relevant organizational problems. etc. profit sharing. Researchers in the early 1990s began to publish work that investigated (along with other issues) whether mentoring received by protégés was related to their objective career progress as measured by variables such as promotion rates and compensation (e. Wage payments. 1991). incentives. 1992. Scandura. 1990. flexible benefit plans." -Jack Welch Employee benefits typically refers to retirement plans. health life insurance. Whitely.you almost don't have to manage them. Dougherty.g. disability insurance. & Dreher. wage changes and adjustments. -Muhammed Irshad "Wage and Salary administration refers to the establishment and implementation of sound policies and practices of employee compensation.Carter McNamara Compensation may be defined as money received in the performance of work. vacation. It includes such areas as job evolutional. one of the key research questions pertains to the value of mentors and mentoring for the career success of protégés. . surveys of wages and salaries. 1994.and put compensation and rewards as a carrier behind it . development and maintenance of wage structure. 44 .

work alienation. Greenberger. and focused on protégé (versus mentor) outcomes. and Wang (2002) and Wanberg. and role modeling functions. & Goodman. source of data. However. Eby. job involvement. Welsh. promotions. with a special review and discussion of formal mentoring.Scholars soon acknowledged that the construct of career success includes more than objective outcomes. compensation. and perceived career success. methodology. These characteristics included focus. and they began to include subjective outcomes of mentoring. Sample sizes ranged from 22 to 3.321. 45 . (Fagan & Walter. noted that it was difficult to code studies on the formal/informal dimension. and Hezlett (2003) and a metaanalysis focused specifically on research examining mentoring's career benefits for protégés by Allen. Fagenson. Noe et al. discussed a variety of issues and suggested new directions in the study of mentoring. Wanberg et al. career related. They did not indicate any explicit criteria for inclusion of studies generating their summary statistics on these studies examining outcomes. Noe et al. Poteet. Wanberg and colleagues (2003) provided a lengthy and comprehensive review of the workplace mentoring literature. Boss. with most sample sizes over 100. 1982. and sample size— reporting that most studies used cross-sectional surveys. Their review included a table summarizing key characteristics of studies of both protégé and mentor outcomes. their monograph did not systematically or in a detailed fashion review the literature focusing on mentoring and protégé career outcomes. in that many authors did not explicitly make this distinction. type of mentoring examined. 1998). These include two recent monographs on mentoring by Noe. including perceived career success. (2002) delineated both the proximal (more immediate) and distal (longer term) outcomes of mentoring for protégés. They reported that their reading of the literature led them to conclude that mentored individuals (versus no mentored) report more career and job satisfaction. Lentz. higher incomes. such as promotions. including psychosocial. They categorized proximal outcomes as including the various mentoring functions received by protégés. 1988. They suggested a number of distal outcomes for protégés. Koberg. and Lima (2004). relied upon self-reports. and lower turnover intentions and work alienation.

COMPANY PROFILE 46 .

COMPANY PROFILE Reliance – Anil Dhirubhai Ambani Group. ranks among India’s top three private sector business houses in terms of net worth. 47 . The group has business interests that range from telecommunications (Reliance Communications Limited) to financial services (Reliance Capital Ltd) and the generation and distribution of power (Reliance Infrastructure Limited). Reliance Communications. Other major group companies — Reliance Capital and Reliance Infrastructure — are widely acknowledged as the market leaders in their respective areas of operation. to offer services spanning the entire infocomm value chain. data and video) digital network. high-capacity. an offshoot of the Reliance Group founded by Shri Dhirubhai H Ambani (1932-2002). convergent (voice. Reliance – ADA Group’s flagship company. It has established a pan-India. with over 100 million subscribers. integrated (wireless and wireline). is India's largest private sector information and communications company.

48 .

there is more than one unique way of describing the true genius of Dhirubhai: the corporate visionary. As with all great pioneers.000 crore colossus—an achievement which earned Reliance a place on the global Fortune 500 list. Dhirubhai is widely regarded as the father of India’s capital markets. the unmatched strategist.000). Fewer still have left behind a legacy that is more enduring and timeless. the proud patriot. When Dhirubhai embarked on his first business venture. the first ever Indian private company to do so. he had a seed capital of barely US$ 300 (around Rs 14. In 1977. In one lifetime. when Reliance Textile Industries Limited first went public. Dhirubhai H Ambani. Over the next three and a half decades. Shri . starting from the proverbial scratch. he converted this fledgling enterprise into a Rs 60. the leader of men. India’s largest private sector enterprise. the champion of shareholder interest. the Indian stock market was a place patronised by a small club of elite investors which dabbled in a handful of stocks. 49 . he built. the architect of India’s capital markets. But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth creator.Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance.

promising them. They will overcome the handicaps of illiteracy and lack of mobility.” It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm) started laying 60. in the process making millionaires out of many of the initial investors in the Reliance stock. and creating one of the world’s largest shareholder families.000 route kilometres of a pan-India fibre 50 . had stated as early as 1999: “Make the tools of information and communication available to people at an affordable cost. Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets. who single-handedly built India’s largest private sector company virtually from scratch. Reliance scripted one of the greatest growth stories in corporate history anywhere in the world. Through out this amazing journey. and went on to become India’s largest private sector enterprise. Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hardearned money in the Reliance Textile IPO. in exchange for their trust. Under Dhirubhai’s extraordinary vision and leadership.Undaunted. The late Dhirubhai Ambani dreamt of a digital India — an India where the common man would have access to affordable means of information and communication. Dhirubhai. substantial return on their investments.

This backbone was commissioned on 28 December 2002.truly that of a 21st century person. Think fast. and at the same time. He was deeply rooted in traditional Indian values. Think ahead. It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm) started laying 60. the auspicious occasion of Dhirubhai’s 70th birthday. Think different. as well as his fascination for cutting-edge technology and desire to always achieve the highest possible productivity. He built the Reliance empire from scratch and. though sadly after his unexpected demise on 6 July 2002.optic backbone. At Reliance. the auspicious occasion of Dhirubhai’s 70th birthday. His corporate philosophy was short. Dhirubhai possessed a very modern outlook . simple and incredibly effective: “Think big.000 route kilometres of a pan-India fibre optic backbone. This backbone was commissioned on 28 December 2002.” This was clearly reflected in his passion for mega-sized projects. it catapulted to become one of the top Fortune 500 corporations of the world — an achievement unparalleled in history. though sadly after his unexpected demise on 6 July 2002. Dhirubhai preached — and personally practised — one mantra throughout his life: Dream with conviction. Aim for the best. in a short span of 25 years. Dhirubhai was a pillar of inspiration 51 .

He was convinced that infocom could energise enterprises. 52 . drive governance. and tear apart every barrier that divides Indian society. By practicing what he preached. by making time and distance irrelevant. Reliance Communications is committed to transform Dhirubhai’s dream into a reality. and how it can be utilised and turned to the advantage of one and all. Dhirubhai fully realised that true empowerment of the people is possible only through education. Being an effective communicator. guide. he inspired and encouraged everyone to surpass the best in the world. remove every obstacle to opportunity and growth. and render learning an interesting experience. He was a firm believer in the power of information and communication. apart from making life exciting. empower every Indian. He would always say that if a telephone call could be made cheaper than a postcard. it would transform every home.for one and all. he continued to inspire. Keeping his conviction as our credo. educate and motivate everyone through his communications.

3. he also held the post of Vice Chairman and Managing Director of Reliance Industries Limited (RIL). He also steered the 100-year Yankee bond issue for the company in January 1997. India’s largest private sector enterprise. Starting in 1991. Till recently. Reliance Communications. Gujarat. He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology. Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer. is the chairman of all listed companies of the Reliance ADA Group. Reliance Energy and Reliance Natural Resources limited. convertibles and bonds. Ambani Regarded as one of the foremost corporate leaders of contemporary India. He is credited with having pioneered a number of path-breaking financial innovations in the Indian capital markets. namely. and has been centrally involved in every aspect of the company's management. he directed Reliance Industries in its efforts to raise over US$ 2 billion. 50. Reliance Capital.1 Chairman Profile: Anil D. He is a member of: 53 . He spearheaded the country’s first forays into the overseas capital markets with international public offerings of global depositary receipts. Gandhi Nagar. Shri Anil D Ambani.

3. October 2002 Awarded the First Wharton Indian Alumni Award by the Wharton India Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas. Upper House of India’s Parliament a position he chose to resign voluntarily on March 25. Ahmedabad Board of Governors Indian Institute of Technology. Indian Institute of Management. 2004 Conferred ‘The Entrepreneur of the Decade Award’ by the Bombay Management Association. December 2001 Selected by Asiaweek magazine for its list of ‘Leaders of the Millennium in Business and Finance’ and was introduced as the only ‘new hero’ in Business and Finance from India. Central Electricity Regulatory Commission Board of Governors. The Wharton School. he was elected for a six-year term as an independent member of the Rajya Sabha. USA Central Advisory Committee. June 1999. 54 . Kanpur In June 2004.2 Awards and Achievements: Conferred the ‘CEO of the Year 2004’ in the Platts Global Energy Awards Rated as one of ‘India’s Most Admired CEOs’ for the sixth consecutive year in the Business Barons – TNS Mode opinion poll. 2006.Wharton Board of Overseers.

providing Information. Mission We will create world-class benchmarks by: • Meeting and exceeding Customer expectations with a segmented approach • Establishing.Vision By 2015. efficient and effective • Incessant offering of Products and Services that are value for money and excite customers • Providing a Network experience that is best in the industry • Building Reliance into an iconic Brand which is benchmarked by others and leads industry in Intention to Purchase and Loyalty. Communication & Entertainment services. and being the industry benchmark in Customer Experience. 55 . nurtures talent and propagates RCOM Values by personal example. • Developing a professional Leadership team that inspires. re-engineering and automating Processes to make them customer centric. Employee Centricity and Innovation. be amongst the top 3 most valued Indian companies.

coinciding with the joyous occasion of the late Dhirubhai Ambani’s 70th birthday. It marked the auspicious beginning of Dhirubhai’s dream of ushering in a digital revolution in India. was among the initial initiatives of Reliance Communications.Business India ’s leading integrated telecom company Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group (ADAG) of companies. launched on 28 December 2002. by bestowing it in the hands of the common man at affordable rates. Listed on the National Stock Exchange and the Bombay Stock Exchange. It includes broadband. 56 . Our business encompasses a complete range of telecom services covering mobile and fixed line telephony. Today. Reliance Mobile (formerly Reliance India Mobile). it is India’s leading integrated telecommunication company with over 100 million customers. national and international long distance services and data services along with an exhaustive range of value-added services and applications. Our constant endeavour is to provide an enhanced customer experience and achieve customer satisfaction by upscaling the productivity of the enterprises and individuals we serve. we can proudly claim that we were instrumental in harnessing the true power of information and communication.

. and still counting. 6 lakh villages. Reliance Mobile services now cover over 24. We have achieved many milestones in this short journey. it created a world record by adding one million subscribers in a matter of just 10 days through its ‘Monsoon Hungama’ offer.We endeavour to further extend our efforts beyond the traditional value chain by developing and deploying complete telecom solutions for the entire spectrum of society. In July 2003.000 towns. In 2003. What sets Reliance Mobile apart is the fact that nearly 90 per cent of our handsets are data-enabled. Reliance Mobile has ushered in a mobile revolution by offering advanced multimedia handsets to the common man at very affordable rates. Reliance Mobile is India’s largest mobile service brand. Wireless Reliance Mobile With over 100 million subscribers across India. AC Nielsen voted Reliance Mobile (formerly Reliance India Mobile) as India’s Most Trusted Telecom Brand. This innovative low pricing has increased the number of mobile phone users and its result is clearly reflected in the meteoric rise in India’s tele-density over the past four 57 years. and can access hundreds of Java applications on Reliance Mobile World.

With over 150 data applications offering varied services . high quality headline video clips. CDMA2000 1x is more cost-effective as it utilises the scarce radio spectrum more efficiently than other technologies do.5 billion page views per month from Reliance Mobile users.unique to any wireless service in India . Enhanced voice clarity. 58 . R World receives over 1. Its uniqueness lies in the fact that it enables complex Internet application to be introduced in mobile phones effectively and quickly. R World offers a wide array of applications that include hourly news updates. R World The R World suite of Reliance Mobile is a unique Java-based application. mobile banking. city and TV specials.Our pan-India wireless network runs on CDMA2000 1x technology. entertainment and commerce. superior data speed of up to 144 kbps and seamless migration to newer generations of mobile technologies are some of its key differentiators. astrology. downloadable multi-lingual ring tones. information. bill payment. which has superior voice and data capabilities compared to other cellular mobile technologies. exam results. seasonal updates including festival specials.R World is truly a treasure house of knowledge.

Purwar Independent Director Shri Anil D. He is also the 59 . namely. the Chairman of all listed companies of the Reliance ADA Group. J Ramachandran Independent Director Shri S.Board of director’s From Annual Report – FY 2009 Shri Anil D. Ambani Regarded as one of the foremost corporate leaders of contemporary India.P.K. non-executive and non-independent Director Prof. Talwar Independent Director Shri Deepak Shourie Independent Director Shri A. Ambani (50). Ambani .Chairman Promoter. Reliance Infrastructure. Shri Anil D. Reliance Natural Resources and Reliance Power. Reliance Capital. Reliance Communications.

USA Board of Governors. Ahmedabad Executive Board. Parliament of India. Shri Ambani was elected as an Independent member of the Rajya Sabha – Upper House. a position he chose to resign voluntarily on 29th March. Hyderabad. Shri Ambani has been associated with a number of prestigious academic institutions member of: Wharton Board of Overseers. in India and abroad. In June 2004. Gujarat. Gandhinagar. 60 . the constituent companies of the Reliance ADA Group have raised nearly US$ 7 billion from global financial markets in a period of less than 3 years. He is currently a Awards and Achievements Awarded by Light Readings as the Person of the Year – 2008 for outstanding achievements in the communication industry. Under his Chairmanship.President of the Dhirubhai Ambani Institute of Information and Communication Technology. convertibles and bonds. 2006. He spearheaded the country’s first forays into overseas capital markets with international public offerings of global depositary receipts. An MBA from the Wharton School of the University of Pennsylvania. The Wharton School. Shri Ambani is credited with pioneering several pathbreaking financial innovations in the Indian capital markets. Indian Institute of Management (IIM). Indian School of Business (ISB).

2001. Indofil Organic Industries Limited. He is a qualified Chartered Accountant and Cost Accountant and has obtained his doctorate from the Indian Institute Management. J. December. Conferred ‘the CEO of the Year 2004’ in the Platts Global Energy Awards. Ramachandran. Director (52) is the Chair Professor of Business Policy at the Indian Institute of Management. Sasken Communication Technologies Limited. Redington (India) Limited. December. October 2002. Shri S. Ahmedabad. Ramachandran Prof. Bhoruka Power Corporation Limited. P. Awarded the First Wharton Indian Alumni Award by the Wharton India Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas. He is also a director of Reliance Communications Infrastructure Limited. August 2006. Talwar 61 .Voted ‘the Businessman of the Year’ in a poll conducted by The Times of India – TNS. 2006. Voted the ‘Best role model’ among business leaders in the biannual Mood of the Nation poll conducted by India Today magazine. Prof. J. Tejas Networks Limited and Infotech Enterprises Limited. Bangalore. Conferred ‘The Entrepreneur of the Decade Award’ by the Bombay Management Association.

Reliance Life Insurance Company Limited. Director (60) is Bachelor of Arts in Economics with Honours and has more than 39 years’ exposure with an emphasis on media.Managing Director of Bank of Baroda. Reliance Communications Infrastructure Limited. Wall Street Finance Limited. He is also qualified as CAIIB. 62 . Director (70) was a former Deputy Governor of Reserve Bank of India. Shri S. He has vast experience in financial services sector in the country. Union Bank of India and Oriental Bank of Commerce. Crompton Greaves Limited. Kalpataru Power Transmission Limited and Asian Oilfield Services Limited. Reliance General Insurance Company Limited. Shri Deepak Shourie Shri Deepak Shourie. P. He is member of Audit Committee of Reliance Life Insurance Company Limited. He is also director of Crompton Greaves Limited. Reliance Infratel Limited. Reliance General Insurance Company Limited and Reliance Communications Infrastructure Limited. Reliance Infratel Limited. He was also former Chairman-cum. Videocon Industries Limited. Videocon Industries Limited. AB Hotels Limited. He is graduate in Arts and Law. Housing Development and Infrastructure Limited. Housing Development an Infrastructure Limited. He is also member of the Investors Grievances Committee of the Company. Talwar is the Chairman of the Audit Committee of the Company.Shri S. Talwar. P.

Apollo Tyres Limited. He is also Director of Vardhman Textiles Limited. Deccan Infrastructure and Land Holdings Limited.consumer goods. Under his leadership. and corporate affairs. committees set up by various State and Central Governments and international institutions. all the 13800+ branches of the SBI were fully computerized by 2004. K. He was the Executive Vice President and Managing Director of Discovery Communications of India. Purwar Shri A. He was also former Managing Director of State Bank of Patiala. 63 . Shri Purwar has been associated with a number of prestigious academic institutions. Engineers India Limited. Shri A. K. IL&FS Renewable Energy Limited and India Infoline Limited. the State Bank of India had taken giant strides in technological innovations. He is on the Board of Indian Broadcasting Foundation. He is graduated in Commerce and Diploma in Business Administration. Purwar. Jindal Steel & Power Limited. Director (63) was the former Chairman and Managing Director of State Bank of India (SBI).

. it is part of a much larger compact which we have with our entire body of stakeholders: From employees. derived from the vision of our founder. While we strongly believe that our primary obligation or duty as corporate entities is to our shareholders – we are just as mindful of the fact that this imperative does not exist in isolation. economic and environmental costs and concerns. customers and vendors to business partners. This ethical standpoint. being socially responsible is not an occasional act of charity or that onetime token financial contribution to the local school. For us. and must pay back this generosity in every way they can. depend for their survival. hospital or environmental NGO. eco-system. We evaluate and assess each critical business decision or choice from the point of view of diverse stakeholder interest. 64 . like individuals. It is an ongoing year-round commitment. which is integrated into the very core of our business objectives and strategy. driven by the need to minimise risk and to pro-actively address long-term social. local communities.. and society at large.Corporate Governance Organisations. lies at the heart of the CSR philosophy of the Reliance – ADA Group. sustenance and growth on the support and goodwill of the communities of which they are an integral part.

February 14 RCOM Announces Q3 Financial Results February 17 Reliance Communications signs pact with Radio Netherlands Worldwide 2010 January 14 Reliance Big TV and Indiagames sign strategic agreement January 21 RCOM offers Cartoon Network Comics on Mobiles February 11 RCOM partners with SNDT Women's University March 15 Reliance Communications achieves a landmark of 100 million customers March 17 Reliance Communications and Polycom forge partnership to jointly drive market opportunities in India March 27 Reliance Communications commemorates 100 million customer landmark with Free Celebratory Airtime on March 28 April 27 Reliance Communications signs strategic alliance with GetJar to create India’s largest and free applications store. 2010. 65 .3 Milestones Achieved: January 18 Reliance Communications draws down ECB of US$ 255 Million (Rs 1155 Cr) for 3G Spectrum Refinancing. May 15 Reliance Communications announces Q4 financial results for the financial year ended March 31. May 5 BIG TV launches India’s first HD DVR Service May 6 Reliance Communications breaks away from tariff metering tradition of Indian telecom industry.3.

May 27 Reliance Webstore commences market roll-out of India’s cheapest touchscreen CDMA phone May 31 RCOM makes Rs 8585 crore payment towards 3G spectrum to DoT for 13 circles 66 .

DATA ANALYSIS AND INTERPRETATION 67 .

1 Based on employee response about salary 68 . NO 1 2 3 Particulars Return of the contribution to the company Reward for their work Don’t Know TOTAL respondents 49 61 5 115 Percentage (%) 43% 53% 4% 100% Interpretation: From the above table it is seen that 53% of the respondents are given salary for reward of their work. 43% of the respondents are given salary for return of their contribution for their work.of S.Data Analysis and interpretation : What do you think about your salary? Table 4. 4% people say don’t know what it means.1 Based on employee response about salary No. Chart 4.

Return of Contribution Reward Don’t know While you Inducted into the company the salary pay scale was clearly explained? 69 .

Chart 4. of Respondents 95 15 5 115 Percentage (%) 83% 13% 4% 100% Interpretation: From the above table it is seen that 83% of the respondents say that the salary structure has been explained during induction. 4% of the respondents says that they does not remember the salary structure during induction.2 company pay scale was explained before 70 . NO 1 2 3 Particulars Yes No Doesn't remember TOTAL No.Table 4.2 company pay scale was explained before S. 13% of the respondents says that the salary structure has not been explained during induction.

4% 13% Yes No Doesn't Remember 83% Whether there is a general increase in salary every year? 71 .

3 General increase in salary year by year S. 28% of the respondents says that the general increase in the salary every year is not satisfied by the employees.3 General increases in salary year by year 72 .Table 4. 19% of the respondents says that the general increase in the salary every year is partially satisfied by the employees. of Respondents 61 32 22 115 Percentage 53% 28% 19% 100% Interpretation: From the above table it is seen that 53% of the respondents says that the general increase in the salary every year is satisfied. Chart 4. NO 1 2 3 Particulars Yes No Partially TOTAL No.

Yes No Partialy 19% 53% 28% 73 .

23% of the respondents feels that the salary increases granted to employees by means of their general.4 Depend on types of salary granted for employees. NO 1 3 5 Particulars Performance General Length of Service TOTAL No.4 Depend on types of salary granted for employees 74 . of Respondents 65 26 24 115 Percentage (%) 56% 23% 21% 100% Interpretation: From the above table it is seen that 56% of the respondents feels that the salary increases granted to employees by means of their performance. S. Chart 4.What type of salary increases granted to employees? Table 4. 21% of the respondents feels that the salary increases granted to employees by means of length of their service.

5 Company has given benefits for the employees 75 .Performance General Length of Service 21% 56% 23% Does the benefits given by the company meet your needs? Table 4.

Chart 4. 34% of the respondents are not satisfied with their benefits which does not meet their needs.5 Company has given benefits for the employees 76 . NO 1 2 Particulars Yes No TOTAL No. of respondents 76 39 115 Percentage (%) 66% 34% 100% Interpretation: From the above table it is seen that 66% of the respondents benefits meet their needs.S.

6 Based on Employee Response on cash bonuses 77 .34% Yes No 66% In addition to your base salary do you regularly receive cash bonuses. Table 4.

S. NO 1 2

Particulars Yes No TOTAL

No. of respondents 60 55 115

Interpretation: From the above table the 60 employees out of 115 employees receive cash bonuses regularly and 55 employees does not received cash bonuses

Chart4.6 Based on Employee Response on cash bonuses

78

48 %
Y es No

52%

Any incentive system has been in placed now?

79

Table 4.7 Based on incentive system in company. S. No 1 2 3 Particulars Small group/Team Incentives Organization specified goal bonus Individual incentives for achieving target TOTAL No. of respondents 24 25 66 115 Percentag e (%) 21% 22% 54% 100%

Interpretation: From the above 54% respondents say Individual incentives for achieving target and 22% say Organization specified goal bonus and 21% say Small group/Team Incentives now in place in the organization

Chart 4.7 Based on incentive system in company.
80

8 Performance based salary in company 81 .Team Organization Goal Individual 22% 55% 23% What do you think about Employee performance based salary ? Table 4.

NO 1 2 3 4 5 Particulars Strongly Agree Agree Can't Say Disagree Strongly Disagree TOTAL 41 45 17 8 4 115 Percentage (%) 36% 39% 15% 7% 3% 100% Interpretation: From the above table it is seen that 39% of the respondents are agreeing the salary should be paid according to employee’s performance. 36% of the respondents strongly agrees the salary should be paid according to employee’s performance.No.of respondents S. 3% of the respondents strongly disagree their salary should be paid according to employees performance. Chart 4. 7% of the respondents disagree their salary should be paid according employees performance.8 Performance based salary in company 82 . 15% of the respondents can’t say their salary should be paid according to employees performance.

7% 15% 3% 36% 39% Strongly Agree Agree Can't say Disagree Strongly disagree Are you paid for your medical expenses by the company? Table 4.9 Based on the medical expenses for employees 83 .

Chart 4.S. of Respondents Percentage 1 Yes 2 No TOTAL 48 67 115 (%) 42% 58% 100% Interpritation: From the above table it is seen that 58% of the respondents are not paid for there medical expenses and only 42% respondents say they were paid by the company.9 Based on the medical expenses for employees 84 . NO Particulars No.

of Respondents 85 Percentage .Yes No 42% 58% How many years you are working with this company? Table 4.10 Depend on work experience of the employee. S. NO Particulars No.

27% of the respondents have been working in this company for the period of 3-10 years and 17% of the respondents have been working in this company for the period of more than 10 years. 86 .1 2 3 1-3 years 3-10 years Above 10 years TOTAL 65 31 19 115 (%) 56% 27% 17% 100% Interpretation: From the above table it is seen that 56% of the respondents have been working in this company for the period of 1-3 years.10 Depend on work experience of the employee. Chart 4.

1-3yrs 3-10 yrs >10 yrs 17% 27% 56% Do you think there is a clear connection between your job performance and compensation? 87 .

11 To distinguish the connection between job performance and compensation S. 32% of the employees feels that there is no clear connection between my job performance and my compensation.11 To distinguish the connection between job performance and compensation 88 .Table 4. Chart 4. NO 1 2 Particulars Yes No TOTAL No. of Respondents 78 37 115 Percentage (%) 68% 32% 100% Interpretation: From the above table it is seen that 68% of the employees feels that there is a clear connection between my job performance and my compensation.

32% Yes No 68% Do you think that your company giving better compensation benefits compare with other company? Table 4.12 compensation benefits compare with other company 89 .

NO Particulars No.S. not good when compared to other Chart 4. 46% of the respondents says that the benefits in the company are companies.12 compensation benefits compare with other company 90 . of Respondents 1 2 Yes No TOTAL 62 53 115 Percentage (%) 54% 46% 100% Interpretation: From the above table it is seen that 54% of the respondents says that the benefit given in my company are good when compared to other companies.

Yes No 46% 54% What type of reward offered by your company? Table 4. 91 .13 Types of reward for employees.

Chart 4. 35% of the employees say that they are satisfied with the non-financial rewards given to employees.S. of Respondents Percentage (%) Financial rewards 75 65% Non-financial rewards 40 35% TOTAL 115 100% Particulars Interpretation: From the above table it is seen that 65% of the respondents says that the financial rewards given to employees are satisfied. NO 1 2 No.13 Types of reward for employees 92 .

14 Based on Employee response on getting reward 93 .Financial Non-financial 35% 65% Are your getting rewards rarely? Table 4.

S. of Respondents Percentage (%) 1 Yes 40 35 2 No 75 65 TOTAL 115 100% Interpretation: Out of 115 employees 65% employees says that they are getting reward regularly and 35% employees said that they are getting reward rarely Chart 4. NO Particulars No.14 Based on Employee response on getting reward 94 .

35 % Y es No 65% Whether the company provides you perquisites like company cab. House Rent 95 .

15 Based on the employee response on Company’s extra allowance S. of Respondents Percentage (%) 1 Yes 15 13 2 No 100 87 TOTAL 115 100% Interpretation: Out of 115 employees 15 employees received the cab facilities and house rent allowance. and remaining 87 % employees does not receive these benefits.15 Based on the employee response on Company’s extra allowance 96 . Chart 4. NO Particulars No.Table 4.

1 3% Y es N o 8 7% Does your company have the retirement plan for the employees? 97 .

Table 4. 48% of the respondents says that the retirement plan of the company is not satisfactory.16 Based on retirement plan for employees. Chart 4. of Respondents Percentage (%) 1 Yes 60 52% 2 No 55 48% TOTAL 115 100% Interpretation: From the above table it is seen that 52% of the respondents says that the retirement plan of the company is satisfactory.16 Based on retirement plan for employees 98 . NO Particulars No. S.

48% 52% Yes No Would you like to make any changes in your organization regarding compensation? 99 .

of Respondents Percentage (%) 1 Yes 105 91% 2 No 10 09% TOTAL 115 100% Interpretation: Out of 115 employees 105 said they need changes in compensation plans and remaining 10 employees feel they are ok with the current compensation policies 100 .17 Based on Employee’s willingness to make changes in compensation S.Table 4. NO Particulars No.

Chart 4.17 Based on Employee’s willingness to make changes in compensation 9% Y es No 91% Does your organization getting feedback from employees 101 .

of Respondents Percentage (%) 1 Yes 5 4% 2 No 110 96% TOTAL 115 100% Interpretation : From the above table shows that organization doesn’t get feed back from the employees said by 96% employees and only 4% employees said organization getting feedback on compensation 102 . NO Particulars No.18 Based on Employees feedback in organization S.Table 4.

Chart 4.18 Based on Employees feedback in organization 4% Y es No 96% 103 .

Findings 5.1 Findings 104 .

• 65% respondents say’s financial reward offered by the company. • About 54% respondents say the company paid individual incentive system to achive the organizational growth. • That 53% respondents say there is a general increase in the salary every year. • About 66% respondents say the benefits given by the company meet their needs. • 68% respondent say there is a clear connection between the job performance and compensation paid by the company. • Many no of employees say that the increase of salary mainly based on performance. • 65% employee’s say’s they are getting reward regularly 105 .• It is inferred that 53% respondents feel their salary is reward for the work • It is inferred that 43% feel it is return for their contribution to the company • It is clear that 83% respondents say they were explain about their salary structure during the recruitment. • 54% respondents say Reliance communication giving fair compensation than other companies. • About 75 % employees agree with the performance based salary method.

106 .• 35% employee’s say’s they are getting reward rarely • 13% respondents say’s they are using the company cab and house rent allowance etc.2 Suggestion • The company can increase their salary according to the employee performance. • 96% respondents say company not getting feedback from the employees 5. • 87% respondents say’s they are not getting this facility • 91% employees want changes in the compensation policy in the company • 9% employee’s are satisfied with the companies compensation plan’s • 4% respondents say company getting feedback from them.

• The retirement plan has to be satisfied by the employees. 5.3 Conclusion The study reveals the satisfaction among the workers in the field of salary and rewards given to employees. • The pay scale must be properly given to employees for those who perform their job well. • The incentive scheme must be given according to their satisfaction level.• The company can increase the rewards for those who performing their job well. In short employees are satisfied with the existing benefits in the company. • The experienced employees should be moved up on to next level depending up on the department • . The pay scale must be properly given to 107 . • The experienced employees must be given high salary in the company.

In short employees are satisfied with the existing benefits in the company. 108 .employees for those who perform their job well. The experienced employees should be moved up on to next level depending up on the department.

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com/truckerwcbenefits. pp.M. 21.rcom.com www.management (Vol. CT: Elsevier Science/JAI Press. Vernon H.London: Cambridge University Press. Accidents and their Prevention.in www.rccportal. 129–173). Personal Details: 111 .com Questionnaire 1.icare.google.com www.php www. Web Pages : http://hurttrucker. (1936). Greenwich.

Add: (c). Age:Qualification:Graduation/PG Under Graduate Others Phone:- 2) What is your Salary now? a) 5000 – 15000 b) 15001-20000 c) 20001 – 30000 d) above 30001 3) What do you think about your salary? a) Return of the contribution b) Reward for working c) Don’t know 4) Had you explained about the salary while you inducted into the company? a) Yes b) No c) Doesn't remember 5) Whether there is a general increase in salary every year? a) Yes b) No c) Partially 6) In addition to your base salary do you regularly receive cash bonuses? a) Yes b) No 7) What type of salary granted to employees? a) Performance b) General c) Length of Service 8) Does the benefits given by your company meet your needs? a) Yes b) No 9) Any incentive system has been in place now in the company? 112 . Name:(b).(a).

a) Yes b) No 18) Does your company have the retirement plan for the employees? a) Yes b) No 113 .a) Small group/Team Incentives b) Organization specified goal bonus c) Individual incentives for achieving target 10) What do you think about Employee performance based salary? a) Strongly Agree b) Agree c) Can't Say d) Disagree e )Strongly Disagree 11) Are you paid for your medical expenses by the company? a) Yes b) No 12) How many years you are working with this company? a) 1-3 years b) 3-10 years c) Above 10 years 13) Do you think there is a clear connection between your job performance and compensation? a) Yes b) No 14) Do you think that your company giving better compensation benefits compare with other company? a) Yes b) No 15) What type of reward offered by your company? a) Financial rewards b) Non-financial rewards 16) Are your getting reward rarely? a) Yes b) No 17)Whether the company provides you perquisites like company cab. House Rent.

19) Would you like to make any changes in your organization regarding compensation? a) Yes a) Yes b) No b) No 20) Does your organization getting feedback from employees 114 .