[Pakistan Army

Compensation Report]

[19 DECEMBER,2022]

[ COMPENSATION MANAGEMENT]
Authored by: [FATIMA (SP19-BBA-020)
Munaza (SP19-BBA-017)]
 Table Of Content

Contents
Table Of Content --------------------------------------------------------------------------------- 2
Overview of the organization ------------------------------------------------------------------ 3
Commanders of Pakistan Army------------------------------------------------------------ 4
Businesses run by Pakistan Army ------------------------------------------------------------ 5
Hierarchy of the Organization ---------------------------------------------------------------- 5
Objectives of the Organization, its driver and reward Philosophy: ------------------- 6
HR Strategy of Pakistan Army: --------------------------------------------------------------- 6
Reward Philosophy of Pakistan Army: ------------------------------------------------------ 6
Performance Management System of Pakistan Army: ----------------------------------- 8
Basic Course:----------------------------------------------------------------------------------- 8
Mid-Career Course: --------------------------------------------------------------------------- 8
Staff Course: ------------------------------------------------------------------------------------ 9
War Course: ------------------------------------------------------------------------------------ 9
Types of Appraisal System used in Pakistan Army: -------------------------------------- 9
Annual Confidential Reports: -------------------------------------------------------------- 9
Adverse Reports: ------------------------------------------------------------------------------ 9
Performance During Peace and Wars/Operations: -------------------------------------- 10
Arrangement of Appraisals in Pakistan Army: ------------------------------------------- 10
Stagnant: --------------------------------------------------------------------------------------- 11
Variable:---------------------------------------------------------------------------------------- 11
Performance Management and Job Analysis at Pakistan Army: --------------------- 11
Compensation Structure: ---------------------------------------------------------------------- 12
Benefits / Perks: ------------------------------------------------------------------------------ 12
Allowances : ----------------------------------------------------------------------------------- 12

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 Commissioned Officers (BPS): ------------------------------------------------------------ 13
Non-Commissioned Officer (BPS) : ------------------------------------------------------ 14
Salary structure of Pakistan Army (2022) with increments: --------------------------- 14
Retirement Program:--------------------------------------------------------------------------- 15
Methodology for determining compensation structure: --------------------------------- 15
Stage 1: ----------------------------------------------------------------------------------------- 15
Stage 2: ----------------------------------------------------------------------------------------- 15
Recommendations for designing compensation structure for the organization - 16
Market Lag Strategy: -------------------------------------------------------------------------- 16
Deductions in salary: --------------------------------------------------------------------------- 17
Pay slip of Second Lieutenant: --------------------------------------------------------------- 18
Action Plan --------------------------------------------------------------------------------------- 18
Challenges ---------------------------------------------------------------------------------------- 20
Overcome challenges for compensation in general --------------------------------------- 21
References---------------------------------------------------------------------------------------- 22

Overview of the organization

The Pakistan Army is the land service branch of the Pakistan armed forces. Its roots trace back
to the British Indian Army. The Pakistan Army is commanded by Chief of Army Staff who is a
four star ranking General. The Pakistan Army came into birth from the division of the Indian
Army on 14th August 1947.
Estimations by the International institute of strategic studies following is the Size of the
organization
560,000 active-duty personnel
550,000 reserve force
185,000 National Guard
65,000 civilians

The General Headquarter of Pakistan Army (GHQ) is in Rawalpindi Pakistan.

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Commanders of Pakistan Army
1. Commander-in-chief: President Arif Alvi
2. Chief of Army Staff: Gen. Asim Munir
3. Chief of General Staff: Lt. Gen Muhammad Saeed

Motto of Pak Army

4. Iman
A Muslim will always hold the idea of "no deity but Allah" close to their hearts. A Muslim
acknowledges that Allah alone is the Creator and Provider, and Sustainer, and that He is the real
Reality and the origin of all good and bad. He must be worshipped and obeyed alone. Since the
power to rule over a person belongs to the One who created him, the phrase "no deity except
Allah" also refers to the issue of authority. Accepting Prophet Muhammad (PBUH) as the final
Prophet sent by Allah is what it means to believe in His messenger. The representative of Allah
is the Prophet Muhammad (PBUH).

5. Taqwa
(fear of Allah) Taqwa refers to the idea of defending oneself against moral danger, maintaining
one's virtue, and shielding oneself from the anger of the Almighty. Thus, it is a type of awareness
or consciousness that one uses to prevent themselves from evil.

6. Jahad fe sabeelillah
Islam's true goal is to replace man's dominance over other humans with Allah's rule over all of
creation, and its followers will lay down their lives and everything else to accomplish goal. Jihad,
an Arabic term, implies fight. Jihad is an epic and cosmic conflict that transcends space and time
and all aspects of human thought and behavior to defeat everything that is seen as evil in the
service of that which is seen as good. Jihad is governed by Islamic law, which also places
restrictions on how it should be carried out.

Mission of Pakistan Army

The mission of the Pakistan Army is to ensure the national security and national unity of Pakistan
by defending it.
Vision of Pakistan Army
To preserve and Defend the national sovereignty and territorial integrity of Islamic Republic of
Pakistan and protect its natural interests and assets through military means and other defence
related capabilities.

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Businesses run by Pakistan Army
A. Fauji Foundation (Fertilizers, cement, food, power generation, gas exploration, LPG marketing
and distribution)
B. Askari Bank (owned by Fauji Foundation
C. Fauji Foundation Hospital

Competitors of PAK Army

• US Army.
• British Army
• Indian Army.
• Chinese Army
• Russian Army

Hierarchy of the Organization

The Hierarchy of the Pakistan Army is based on the rank system. The lowest rank in commissioned
officers is the second lieutenant while the highest is the General.

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Objectives of the Organization, its driver and reward Philosophy:

Objectives of Pak Army

• The primary purpose of the Pakistan Army is to ensure the national security and national unity
of Pakistan by defending it against all forms of external aggression and the threat of war.
• In the event of domestic and international disasters and emergencies, they conduct relief
operations and actively participate in United Nations (UN)mandated peace keeping operations.

HR Strategy of Pakistan Army:

The principal objective of military HRM is to help the association to arrive at its objectives. It
ought to relate to the hierarchical technique, and furthermore with individuals conduct and
qualities. In light of the methodology and conduct explicit HRM cycles ought to be created and
carried out. In the present cutthroat world, the organizations/associations in the Corporate Area
are additionally confronting ability deficiency, tough competition and wearing down which are
coming to generally level of all time. As such every organization is attempting to devise innovative
HR practices to draw in the best ability and hold them by giving favorable climate to work. These
practices help to help sure that the representatives have a positive outlook on their employer and
increase the value of the association.
As the HR is the strategic business partner of the organization so Army should further improve
its compensation practices as competitive compensation systems
Attract the top talent
Increase employee motivation
Boost employee loyalty
Increase productivity
Job Satisfaction
Reduced Turnover

Reward Philosophy of Pakistan Army:

Compensation

Direct compensation
1. Base pay
2. Allowances

Indirect Compensation
1. Annual Leaves

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 2. Medical Leaves
3. Maternity Leaves

The reward philosophy of an organization is a system that link an organization’s mission, vision,
objectives goals and strategies in to a framework that helps to attract, retain and reward its employees.

Benefits by the Pak Army

• Vacations and paid holiday.
• Education and training.
• Health fitness.
• Pension plan.
• Fitness membership.
• Paid sick leaves.
• Free membership of golf club.

Like other government officers army officers get facilities

• Medical treatment.
• House if married and mess if the person is single.
• Free schooling of children.
• 50 percent discount for air tickets.

Rewards by Pak Army

Nishan-e-Haider
Only members of the Armed Forces, Border Guard sin the service of the Federal Government who
have demonstrated the greatest heroism or the most conspicuous bravery under extreme danger
and have demonstrated the highest ranks of bravery or devotion to their country, land and sea, or
enemies in the air are eligible for this award. This award carries over to all ranks. Winners of this
award have the right of adding the letters "NH" to their names.
Hilal-e-Jurat
Members of the Armed Forces, Frontier Corps, and Frontier Police in the service of the Federal
Government who have demonstrated the greatest heroic deeds and displayed the highest standards
of bravery under conditions of extreme danger or committed to war (Only those who show
dedication). Countries with enemies on land, water or air are eligible for this award. This award
carries over to all ranks. Recipients have the right to add the letters "HJ" after their name.
Sitara-i-Jurat
Members of the Armed Forces, Frontier Corps, and Frontier Police in the service of the Federal
Government who have demonstrated the greatest heroic deeds and displayed the highest standards
of valor under conditions of extreme danger or committed to war. Countries with enemies on land,

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water or air are eligible for this award. This award carries over to all ranks. Recipients have the
right to add the letters "SJ" after their name.
Pak Army mostly rewards their employees in the form of awards because awards are quality
marks and it boost organization’s reputation and similarly it helps to boost workers by
highlighting their achievements.
Non Operational Awards
• Sitara-i-Basalat

• Tamgha-i-Basalat

• Tamgha-i-Khidmat

Tamgha-e-Jurat
Members of the armed forces, border guards serving the Federal Government who have shown
the greatest heroism or the most conspicuous valor under the greatest danger and have
demonstrated the highest degree of devotion to the nation. Countries with enemies on land, sea or
air are eligible for this award. This award carries over to all ranks. Recipients have the right of
adding the letters "TJ" after their name.

Performance Management System of Pakistan Army:

The performance management system of Pakistan Army is very dynamic. Performance Appraisals
are conducted at every level. These Appraisals are confidential like any other government
institution. The four basic steps of promotion of a commissioned officer include
• Basic Course
• Mid-career Course
• Staff course
• War course

Basic Course:
In order for the commissioned officer to be eligible for this course, they should at least have a
service of 1 year. Basic course is necessary to complete otherwise an officer cannot get promoted
to the next level. An officer having below 50% is considered fail.
Mid-Career Course:
To be eligible for it an officer should have at least 5 years of on-the-job training. This step requires
an officer to perform certain activities related to HR. At this level an officer is a Grade 3 officer
and after this this grade 3 officer gets appraised and performance evaluations are done through
this second promotional exam.

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Staff Course:
This is the third promotional exam. This exam requires an officer who has completed at least 11
years of his service. Here evaluations of the performance is done by appraising the accumulative
11 year of service by the officer. Then the officer gets promoted to the next stage.
War Course:
Here the trainees are required to have at least 7 years of service on the field. Successful training
completion regarding missile launching and weapon trainings promote the officer.
The Performance Appraisal system of Pakistan Army is very strict and requires the pre-requisites
and certain length of service of an officer to get them promoted to the next level. There is a proper
timeline mentioned (e.g., 1 year, 5 years, 11 years of service) and no one can be promoted without
completing these timelines.
Other than these courses, Pakistan Army also has some other performance evaluation criteria
which includes the assessment of various parameters by a comprehensive performance appraisal
system. These Parameters include the following items.
1. Leadership Skills
2. Communication Skills
3. Discipline
4. Use of Exercise of Power
5. Performance during war (if applicable)
6. Achievements

Types of Appraisal System used in Pakistan Army:

Following are the appraisal system used in Pakistan Army
I. Annual Confidential Reports (ACR)
II. Adverse Reports

Annual Confidential Reports:

The ACRs are prepared for every Army officer on annual basis to evaluate their performance
yearly. The data used by the Annual Confidential report consists of the following types
• Explicit and objective (which is the data that is recorded over time and cannot be denied and is
tangible)
• In tangible (The data which is subjective in nature )

Adverse Reports:
These reports are also known as the ‘’ clearing observations’’. These are prepared for any negative
or disapproved actions committed by the officer. This can also be prepared on a daily basis. These
reports are not directly related to the performance management system or performance appraisal

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but are indirectly contributing to the development of the Annual Confidential Reports of an
officer.

Performance During Peace and Wars/Operations:

For the peace times an Army officer is evaluated annually on the basis of an annual confidential
report. One quality of ACR is that the member or employee who prepares the ACR is evaluated
too by the General Headquarter (GHQ) in order to ensure that the performance appraisals are
conducted without any biasness and the transparency of the appraisal systems are maintained.
Also, in case of war if an officer becomes injured then there are special reward systems for the
officers. If an officer even receives a single wound in the war, then they receive a red badge on
their uniform as a symbol of a brave fighter and their name is added in the achievement list.

Arrangement of Appraisals in Pakistan Army:

Following is the arrangement of appraisal system in the Pakistan Army. The Pakistan Army
consists of two types of arrangement.
I. Stagnant
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 II. Variable

Stagnant:
The Stagnant Appraisals include the parameters such as integrity and moral values which cannot
be altered in the Pakistan Army and everyone has to abide it.
Variable:
The variable appraisals can be altered , improved , changed , updated or revised by addition and
subtraction of the parameters of the performance appraisal system

Performance Management and Job Analysis at Pakistan Army:

There is a strong positive link between the performance management system and the job analysis
in Pakistan Army. All the objectives of the institution are aligned with the job description of the
officers. The organization follows the principle of ‘’carrot and stick approach’’ which is the
reward and the punishment philosophy to ensure that every employee follows the SOP’S of
Pakistan Army and their doings are in accordance with the organization’s vision and mission and
the job descriptions are aligned with it.
It is basically the proper job analysis that enables the Pakistan Army to develop appropriate Job
descriptions which leads to effective and comprehensive performance management systems. The
proper job analysis guides the institution in terms of
✓ Discipline
✓ Development of SOPS
✓ Reward and punishment
✓ Accountability
✓ Zero error Syndrome

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Compensation Structure:

Following is the compensation structure of the Pakistan Army. The Structure of the Pakistan
Army is based on the British army ranks but the structure of ranks and the insignia are different.
The Army personnel are compensated according to their ranks and the length of service. This
includes core compensation consisting of a large amount of Seniority pay as it is a traditional
organization and merit pay in the form of special allowances provided by the government. Other
than the core compensation the benefits / perks of the Pakistan Army commissioned officers that
enhance and strengthen the compensation structure includes
Benefits / Perks:
i. Air and Rail travel concession
ii. Free medical facility for self and family members
iii. Death cum retirement gratuity
iv. Resettlement opportunities after retirement
v. Furnished government accommodations

Allowances :
i. Kit maintenance allowance
ii. Children education allowance
iii. Spouse allowance

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 iv. High Altitude allowance
v. Field area allowance
vi. Transportation allowance

The Pakistan Army ranks are divded in to three major parts

1. Commissioned Officers
2. Junior Commissioned Officers
3. Non-Commissioned Officers

The Commissioned officer ranks in Pakistan Army are as follow

1) Second Lieutenant
2) Lieutenant
3) Captain
4) Major
5) Lieutenant Colonel
6) Colonel
7) Brigadier
8) Major General
9) Lieutenant General
10) General
11) Field Marshal

Sepoy is the lowest rank while Field Marshal is the highest rank in the Pakistan Army. The pay
structure of the Pakistan army depends on the Basic pay scale
Commissioned Officers (BPS):

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Non-Commissioned Officer (BPS) :
Subedar Major BPS-16

Subedar BPS-15

Naib Subedar BPS 13 OR BPS 14

Battalion Hawaldar Major BPS-11 OR BPS-09

Battalion Quartermaster Hawaldar BPS 11 OR BPS-09

Company Havildar Major BPS 11 OR BPS 09

Company Quarter Master Havildar BPS 11 OR BPS 09

Havildar BPS-7 OR BPS- 08

Naik BPS 07 OR BPS 06

Lance Naik BPS-6

Soldier BPS-5

Salary structure of Pakistan Army (2022) with increments:

BPS SCALE YEAR MIN INCR MAX

1 2022 11720 380 23120
2 2022 11950 430 24850
3 2022 13340 510 27640
4 2022 12710 580 30100
5 2022 13180 650 32680
6 2022 13280 730 35180
7 2022 14110 800 38110
8 2022 16610 880 14010
9 2022 15110 950 43610
10 2022 15610 1040 46810
11 2022 16140 1150 50640

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 12 2022 17100 1250 54600
13 2022 18310 1370 59410
14 2022 19490 1530 65390
15 2022 20700 1730 72600
16 2022 24280 1980 83680
17 2022 38990 2990 98790
18 2022 49210 3740 124010
19 2022 75990 3970 155390
20 2022 88650 5870 170830
21 2022 76720 5000 146720
22 2022 82380 5870 164560

Retirement Program:
1. The retired Pakistan Army commissioned officers are entitled for a monthly
pension equal to 50% of their last base pay.
2. Also, the Gratuity is paid to the commissioned officer for his or her services. The
gratuity depends on the rank and BPS scale of the retired officer.
3. Other Service benefits include residential plot or flat which is given on the basis of
DSOP fund

Methodology for determining compensation structure:

Consider the Following example of the salary of a captain over a period of 5 to 7 years. The salary
structure consists of the following factors that change over time
Stage 1:
Basic Salary = 59380 PKR

Special allowance = 5938 PKR

Ad hoc allowance = 5938 PKR

Gross Salary = 77,000 PKR

Net Salary = nearly 70 thousand PKR

Stage 2:

Basic Salary = 62040 PKR

Special allowance = 6204 PKR
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Ad hoc allowance = 6204 PKR

Gross Salary = 80,000 PKR

Net Salary = nearly 73 thousand PKR

The special allowance, ad hoc allowance and other allowances such as hard area allowances,
deputation allowance changes over time from which the compensation structure is designed
accordingly.
Some other allowances that determine the compensation structure of an army officer include
High Altitude allowance
Field area allowance
Siachen allowance
Transportation allowances
Uniform allowance
Waziristan allowance

Recommendations for designing compensation structure for the organization

1. Define or review the compensation philosophy
2. Doing market research
3. Analyzing the internal compensation data
4. Aligning planning with organizational goals
5. Creating salary ranges and grades
6. Managing the compensation budget
7. Monitoring the execution of the compensation plan

Market Lag Strategy:

The Pakistan Army compared to the US and British Army pays its commissioned officer through
the market lag strategy. The base salary given to the officers are lower as compared to the US and
British Army. Thus, the core compensation is low but the benefits are higher in the Pakistan Army.
This concept can be explained with the help of following Graph

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Deductions in salary:
This includes the deductions made in the salary of a commissioned army officer. Considering the
example of an Second Lieutenant deployed in the hard area following deductions are made from
his total pay.

Income tax 390

DSOP Fund 15,000

AOB fund 1648

RENT 0

Electric 0

Gas 0

Water 0

Furniture 0

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Pay slip of Second Lieutenant:

Action Plan
Importance of action plan
• Creating an action plan can assist change makers in making their visions into reality, as well as
increasing efficiency and accountability within an organization.
• An action plan describes how your organization will achieve its goals through different steps.
This section serves as a guide for creating and implementing your group's action plan.

Internal assessment
Job analysis
• Job analysis can be used as a compensatory to identify or determine skill level. Compensable
Labor Factors. Work environment (e.g., hazards, alertness).
• Job analysis assists in determining appropriate compensation levels for jobs by identifying
required skill levels, separating out different compensable job factors, paying attention to any
special working conditions, defining levels of responsibility, and determining education, skills
and qualifications.

Job evaluation
• A job evaluation is the process of determining how much pay should be assigned to a job. This
process entails analyzing internal and external data to determine what the salary range for a given
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 position should be, what related positions should pay, and what benefits are appropriate for a
particular job.

Pay policy
• Employees feel motivated to come to work when they are properly rewarded. Their morale stays
high and job satisfaction increases. High morale ensures that employees show up every day and
are sufficiently motivated to perform their jobs to the best of their qualities and abilities

External assessment
Pay structure
• The pay structure is the basis for determining and allocating salaries. Understanding where
employees fit in the pay structure (in range, within range) informs salary decisions and enables
effective salary budget allocation. Even if you're not saving money all the time, you can make
the most of it.

Market analysis
• It also helps you understand the overall compensation package offered by your employer. Pay
equity to fairly reward employees performing the same nature and level of work. Conducting a
compensation analysis can also correct for historical pay disparities.

Market lead policy, Match pay policy and Lag pay policy
The market lead policy helps to distinguish from competitor, organization compensate their
employees more highly than the competitors on the other hand organization usually pay
employees less as compared to other organizations because they simply do not have enough
resources to provide higher rates (pay) to their employees. Market match policy helps
organization to set pay structure relative to market pay structure.

Pak Army compensate their employees through market lag policy.

Management

Communication plan
• The idea behind creating a compensation communication plan is to ensure that employees are
aware of the benefits they will get and build trust in the company and within the company. This
helps your team feel valued and, as a result, increases their chances of remaining loyal and
committed to the company.

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Pay for performance
• This is a type of financial incentive that allows employees to earn more if they meet certain
criteria or level. Specific goals are agreed at the beginning of the year, quarter, or other period.
In exchange for a higher bonus, an employee may receive a lower base salary.

Challenges
• Pakistan's recent economic conditions are alarming, but the country has faced similar pressures
for years, third of population is living below the poverty line, the country ranks150 out of 189
countries in the latest UN Human Development Index. It has a national debt of about $100 billion
and foreign exchange reserves of almost $15 billion. The Pakistani Rupee, one of Asia's worst-
performing currencies, has fallen31% in value since 2017.Butthose watching the March23rd
parade might think all is well. And they wouldn't get the impression that the military is behind
many of the country's economic problems. However, after debt repayment, the military has
become Pakistan's biggest economic burden.Officially,morethan20% of the annual budget is
already spent on the military, but the military asks for many more each year.

Pakistan army is more focused towards seniority pay so there are two
disadvantages that relates to seniority pay
• Employees less motivation to excel.
• Resentment can be increased among employees if mediocre employees will be frequently
promoted over them (senior employee)

Different factors should be observed while designing pay ranges and those can b
challenging
• First list jobs (each grade) and actual rates of pay.
• Calculate average rate of pay.
• Evaluate market rates,
• Related pay of organization’s job with the pay rates of market.
• Observe and evaluate overall market rates.
• Evaluate pay differences.
• Around the reference point decide range of pay.

There are few empirical data sources on the Pakistan army, with various concerns
about the army and its role in Pakistan security in a specific region. Maintaining a
recruitment record from 1971 to 2022 is particularly difficult.

• Pakistan army should need to develop or maintain proper HRIS system, maintaining record from
1971 to 2022 is the major and biggest concern and along this the HRIS should be strong unique

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 and rare enough because this is clear that maintaining record for armed forces is much more
important than a company's record.
• An officer should need to analyze how to manage military tools and is significantly more ,expert
than soldiers.military has played a key role in holding the state together, promoting a feeling of
nationhood and providing a bastion of selfless service. Qualities of a good soldier include
discipline reliability, courage, skills, motivation and fearlessness. Good soldiers must also be
prepared to extend their abilities, be obedient in getting tasks completed and stay focused on
safety and prosperity.

Overcome challenges for compensation in general

• Employees need and want to know how their wages are calculated, as well as the basis for any
changes. While employers are not required to disclose their employees' wages, the expectation
should be that each employee understands how their base rate is calculated.
• If an employee has a question about how their salary is calculated, the employer should provide
a pay detailing their wage, benefits, overtime pay, and any deductions. This way, the employer
can practice pay transparency with their employees while avoiding misunderstanding .

• Businesses must employ a competitive team of employees in order to be competitive. It means

that businesses must hire competitive talent from the beginning of the hiring process. One method
is to attract talent by offering a competitive pay and benefits package.

• Professionals looking for work today want to know that their salary will be equivalent with their
skills, expertise, and even the amount of work they put in. Without demonstrating to potential
new hires that you can offer them below-average pay, they are unlikely to apply for a position in
the organization. As a result, the company through its HR department must offer competitive
salary rates in order to attract qualified employees.

• Among the many problems in organization, one of the most important issues confronting HR
managers is compensation. It's not always easy to strike the right balance between paying
wages and making a profit. On top of that, there are other compensation issues, such as those
mentioned above. However, keep in mind that a company can only perform well if its
employees are happy motivated and satisfied. When compensation issues arise, address them as
soon as possible to avoid them becoming unmanageable for your company.

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i References

i
Zubair, S. S., & Khan, M. A. (2014). Job Analysis and Performance Management in Pakistan Army: A Strategic Human
Resource Management Perspective. Social Science Research Network.
https://en.wikipedia.org/wiki/Pakistan_Army
https://www.tandfonline.com/doi/abs/10.1080/01402390.2011.541765?cookieSet=1

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