TERM PAPER

``Design detail guidelines for total compensation policy and

implementations for the organization you are working or
you love or you expect``
Course Title: Strategic Management
Course Code: C-5404

Submitted To:
Dr. Mostafizur Rahman
Associate Professor
Department Of Managemant
Faculty of Business Studies
Hajee Mohammad Danesh Science and Technology University

Submitted By:
Md. Md. Montasir Ebna Salam
ID: E190512026
Batch: 12th
Program: MBA (Evening)
Faculty of Business Studies

Date of Submission: 29 July 2022

Organizations across industries constantly strive to attract, recruit and retain

skilled and efficient employees in today's competitive marketplace. Banking
 sector of Bangladesh, being one of the highest paying industries, is a popular
destination for the job seekers towards the lucrative compensation packages
offered. Banks mutually aim at the same basic principle, hiring highly skilled
employees to ensure satisfactory customer services, and thus get locked into the
fierce competition for surviving in the market. Employees of the banking sector
are thought to be under the immense pressure of task overload and ridiculous
stretching in working hours because of continuous incremental changes in market
demands. Employee motivation and performance are at stake because of the
increased stress, work overload, strain, and unfavorable work-life-balance. Banks
are relentlessly trying to neutralize the impact of those problems and motivate
their employees in many ways, one of them being the strategic compensation
policies. Moreover, the success of attracting, hiring and retaining skilled
experienced employees largely depends on strategic compensation packages
offered. On top, well thought out compensation strategy is utmost important for
keeping the cost structure down to maintain market competitiveness and
sustainable profit growth.

Compensation includes all direct and indirect, monetary and nonmonetary rewards
which employees receive in exchange for job performance and individual
contribution to the organization It is an entitlement to employment in the
organization and a useful practice to attract, inspire and retain proficient
employees for accomplishing organizational goals. Several contemporary research
papers have focused on strategic compensation management, pay structure design
being at the focal point, to acquire and hold best performers, form equitable pay,
and establish a clear pay for performance system. This paper is intended to
examine how two competitor Bangladeshi commercial banks are setting
compensation strategies to attract, hire, motivate and retain their employees in
long run.

As I am an employee of Bank Asia Ltd, I am illustrating my organization & its

compensation policy.
“For A Better Tomorrow” is the mission of Bank Asia Limited through a
contemplation of assuring ‘A professional term of Bankers is running the day-to-day
operation of the Bank’. Bank Asia Limited is a schedule Bank under private sector
established under the ambit of Bank Company Act, 1991 and incorporated as a
Public Limited Company under Companies Act, 1994on September 28, 1999. The
Bank started commercial banking operations effective
from November 27, 1999. It was the time when a rapid economic development in the 
countryconcurrent with urbanization and life style change created demands for new
products and services. Bank Asia Limited is one of the most successful banks among
the third-generation private banks. The bank has successfully entered its tenth year
of operations. With professional and dedicated team of management having long
experience, commendable knowledge and experience in conventional and modern
banking, the bank has achieved success among its peer group within a short span of
time. Since its humble beginning in 1999, it set milestone by acquiring the business
operations of the Bank of Nova Scotia of Canada, first in the banking history of
Bangladesh. It again repeated the performance by acquiring the Bangladesh
operations of Muslim Commercial Bank Limited (MCB), a Pakistani Bank. This has
added to the strength and courage of the bank. With all recourses, the management of
the bank family believes that
the bank would be able to encounter problems that may arise both at micro and macr
oeconomiclevels.Within a short span of time Bank Asia has established itself as one
of the first growing
local private banks. It has at present a network of thirty two branches serving many o
f the leading corporate houses and is gradually moving towards retail banking.

Compensation Strategies
Compensation strategy includes rewards, benefits, career growth opportunities,
working environment and all other things which generate value to employees in
return for their performance and it should be aligned with human resource
management, business level and organizational development strategies for
attaining whole organizational strategic objectives. Organizations formulate
reward strategy to achieve its' short and long-term goals through cost saving and
producing a maximum result on assumed payment strategy; and make a brand for
the employment opportunity in the competitive market. While designing pay
policies, organizations make their own choices for specific policies, strategies,
principles, structures and procedure based on their perspectives and approaches
after considering the impact of those significant decisions on overall
organizational performance. Being similar in nature of jobs, employees, market,
size, and so on, different organizations may choose different compensation system
to ensure separate effectiveness for achieving the similar type of goals after
realizing the degree of consequences of different pay design. Recently many
organizations are generating their own innovative reward strategies which are
related to organizational performance and managers are also measuring the lead or
lag position of reward strategies in the market while making decisions for pay
strategies.

Compensation Objectives
The efficient practice of pay structures has a great impact on successful
recruitment and selection, employee motivation, turnover, employee commitment
to the workplace, employees' behavior, productivity, performance level and
stability , overall organizational performance and persistent competitiveness in the
market, along with maintaining an effective and efficient cost structure. Equitable
compensation system enables an organization to attract, motivate and retain best
employees and thus stable and skilled employees ensure successful
implementation of organizational strategies to enhance the business growth. There
is a correlation between compensation and employees' job satisfaction Job
satisfaction is also positively related to pay, promotion, security, challenging work
and interesting job. Other organizational outcomes like sales growth, better
customer satisfaction, cost reduction and improve employee safety situation.

Compensation Policies and Techniques

To develop a suitable salary range, organization should focus on competitors pay
data along with the evaluation of other compensation features like sacrificed pay
in other organization, individual contribution, duties and responsibilities,
educational requirement, level of experience, productivity, internal equity,
effectiveness and so on. A market survey is important to ensure external equity.
Market assessment is essential for getting information about other organizations'
methods of payment to arrange a fair and justifiable pay level, mix and select a
mode of rewards like individual or group, performance or seniority base and
others. Assessment of external alignment helps in arranging strategic
compensation packages along with increased benefits and decreased costs to strive
in the market. Organizations can use both pay survey and job evaluation data to
create a market line after plotting data on a graph to get the trend line through
regression analysis. Then organizations develop their pay structures by
accumulating several jobs into pay grades and generating pay ranges.

As an imperative task of human resource management, Job analysis presents detail

information about elements of job which is beneficial to create a job description,
job specification, and job classification. job evaluation, attract candidates, recruit
and select employees and also assists in arranging training contents, designing
 performance appraisal layout, career planning and development, determining
compensation packages and incentive program, enlightening operational
environment and setting promotion schedule. Job evaluation determines the
relative value of a job which is necessary to design basic pay for arranging
internally equitable compensation packages. Benchmark jobs and organizations
must be considered to certify internal and external alignment of strategic
compensation packages.
Incentive denotes both monetary and non-monetary mode of employees' earnings
like commissions, bonuses and awards which arise from their excessive effort to
accomplish their performance in a definite way. Properly designed and well-
managed individual and group incentive packages motivate employees to perform
with applying their skills and increased effort which ultimately influence overall
organizational performance. Individual incentives also termed as skill or knowledge
or competency-based pay is a way of rewarding employees for their skills,
knowledge level and competencies which are separate from their position. Pay for
performance system contains sales commission and piece-rate which are traditional
forms of incentives ; lump-sum bonuses for achieving specific target as a form of
flexible pay ; and individual merit pay for former proficient performance than other
employees . Organizations can practice individual incentives in the form of gain
sharing, profit sharing and stock ownership after measuring the capability of their
compensation system while some organizations are practicing seniority-based pay
for their employees.

Employees' benefits are the indirect form of compensation packages which are
viewed as financial safety to appointed employees and their family members
though it is the source of expense to organizations. Benefits can be classified as
legally required and optional benefits. Legally required benefits include workers'
compensation, medical and personal leave, redundancy pay, insurance and social
security while optional benefits contain time off pay, health insurance, retirement
or pension plan, life insurance and dependent care.Another way of classifying
benefits are

(i) traditional base which include medical leaves, allowances, dependent care
facilities, cost of living adjustment, hardship allowance for challenging
task;

(ii) family-work life balance services contain flex work time, refreshment tour,
and
(iii) Special benefits include expatriate training and facilities
The administrative part of compensation focus on development and execution of
compensation strategies and policies for providing fair, equitable and regular pay
to employees . Compensation manager should circulate compensation information
to employees with ensuring continuous communication and inspire them to
involve in pay decision for making them conscious about the desirability of
payments and make the periodical adjustment. Organizations prepare their own
compensation system on the basis of operational rules-regulations, technological
advancement, strategic importance and the marketplace which varies from other
organizations and even past to present and future. They cannot implement a
modified compensation decision without experiment the new changes of
compensation system.
Pay and Allowance

The scale of pay and other allowances of officers and employees of the bank are prescribed by
the Competent Authority from time to time. The initial pay of an employee appointed or
promoted to the higher post are ordinarily fixed at the initial stage of the scale of pay of the post
to which he promoted or appointed. President and Managing Director to Banking Officer the
salary breaks down are Basic pay, House Rent Ceiling, Conveyance Allowance, Medical
Allowance and Entertainment Allowance. Here House Rent Ceiling is 54%, Conveyance
Allowance is 26%, Medical Allowance is 10% and Entertainment Allowance is 10% of basic
salary. Tellers and Trainee Officers are got Consolidated Salary only, because they are on
provision period. Top level Officers from President and Managing Director to First Assistant
Vice President (FAVP) got extra charges like House Maintenance, Utilities and Car
Maintenance. Deputy Managing Director (DMD) and Senior Executive Vice President (SEVP)
got Electricity, Gas, Telephone and Domestic Aids also. President and Managing Director to
Executive Vice President (EVP) got direct car from the bank. From Senior Vice President (SVP)
to First Assistant Vice President (FAVP) got Car Loan facility. And President and Managing
Director to First Assistant Vice President (FAVP) got House Loan also. These loan special for
bank staff only, and the name of these loan are Staff Car Loan, Staff House Building Loan. The
bank takes only 7% interest on these loan. Group Insurance facilities will get the entire
confirmed employee. This insurance basically health insurance and will get facilities on only
hospitalization. In this insurance officers and executives will get the benefit of one spouse and
two children.

Kinds of Terminal Benefits

The following kinds of terminal benefits are allowable to a regular and full-time employee of the
bank.
1. Gratuity
2. Contributory Provident Fund
3. Benevolent Fund

Festival Bonus
Regular employee will be entitled to Festival Bonuses payable on the occasion of Eid-ul-Fitre
and Eid-ul-Azha. The bonus amount will be the half of his/her salary.

Performance Bonus
If the bank makes profit, the employees will be entitled to 3% of pre-tax profit as performance
bonus. Fifty percent of such bonus distributed on the basis of basic pay of an employee, and
balance fifty percent on the basis of performance of individual employees. Performance appraisal
for the purpose made on the criterion set by the management time to time.
Cash award
The Competent Authority may grand cash reward to any of its employee for performance of a
work which is occasional in character and innovative or research and development oriented
warranting special merit as to justify the payment of the same.

Rewards for Passing Banking Diploma Examination

The employee who will pass Banking Diploma Part-I Examination in the first chance will get
cash reward of TK.25,000 and those who will pass Banking Diploma Part-II Examination in the
first chance will get cash reward of TK.50,000. Those who will pass Banking Diploma Part-I
Examination in the first chance securing highest mark will receive an additional cash reward of
TK.25,000 and those who will pass Banking Diploma Part-II Examination in the first chance
securing highest mark will receive an additional cash reward of TK.50,000. The cash rewards for
Banking Diploma Part-I and Part-II Examination in one more than one setting will be TK.
10,000 and TK. 20,000 respectively.

Annual Increment
 
If employee’s service records and Annual Confidential Report (ACR) are satisfactory then the
Competent Authority sanctions the increment on the salary. The percentage of salary increment
is not fixed; it varies on Competent Authority decision. If the service records and Annual
Confidential Report (ACR) are not satisfactory of an employee then the Competent Authority put
him/her on special report for a period not exceeding six months and upon receipt of such report
may sanction the increment either from demonstration or from immediate effect or may defer it
for the whole year. If an employee recognized of his/her outstanding and meritorious
performance then the Board may decide to give him/her another special increment in one year
period of time.

Travel allowance and Daily Allowance

When bank send any employee for training and call any employee for interview then the bank
will give him/her travel allowance and daily allowance. In this case the employee has to claim
his/her allowance with bus/ train/ plane tickets. Human Resource Department will verify the
claim and pay the employee

An organization's success depends on its well-motivated and efficient employees. A set of

suitable compensation strategies and techniques helps to attract and retain the best employees
in the organization.. Compensation packages are different for each employee in Bank Asia
Ltd based on their performance.