Term Paper

on
Compensation Management Practices of Edison Real Estate Limited

Course Name: Compensation Management

Course Code: HRM8612

Submitted To
Dr. Md. Miraj Hossen
Associate Professor

Submitted By:

Sumaiya Taslima
ID: 2223031059
Faculty of Business Studies (FBS)
Bangladesh University of Professionals (BUP)

Date of Submission: November, 2023

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Contents
1. Introduction ............................................................................................................................. 3
2. Compensation Management Practices from the Perspective of Real Estate Industry in
Bangladesh ...................................................................................................................................... 4
3. Compensation Management Practices of Edison Real Estate Limited: .................................. 5
3.1 Basic Compensation Components......................................................................................... 6
3.2 Variable Components of Compensation Package ................................................................. 7
3.3 Non Compensation and other benefits .................................................................................. 8
4. Findings ................................................................................................................................... 9
5. Limitation .............................................................................................................................. 10
6. Recommendations ................................................................................................................. 11
7. Conclusion ............................................................................................................................. 12

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 1. Introduction
Organizations without a formal compensation program generally base the worth of the jobs on the
subjective opinions of people familiar with the jobs. In such instances, pay rates may be influenced
heavily by the labor market or, in the case of unionized employers, by collective bargaining.
Organizations with formal compensation programs, however, are more likely to rely on a system
of job evaluation to aid in rate determination. Job evaluation can help the organization retain some
control over its compensation structure even in cases when rates are subject to collective
bargaining (Bohlander and Snell, 2004). An essential component of human resource management
is compensation. It is the main driving force behind most workers. It enhances corporate
effectiveness and employee motivation.
Good compensation helps in attracting a quality workforce, maintaining the satisfaction of existing
employees, keeping quality employees from leaving and motivating them for higher productivity.
This is one element that is essential to the organization's success. The next step for HR managers
is to create and put into place a successful pay management program. An organization's base salary
structure should ideally result from its compensation plan in an internally and externally equal
manner. While compensation surveys should assure external equity, the job appraisal process
should ensure internal equity. Any basic wage and salary system's main goal is to provide a
framework for employees to be fairly compensated based on the type of work they do and how
well they do it. The pay ranges for certain jobs are determined by the base wage and salary systems,
taking into account the job's relative value to the business. The range of an employee's salary
should therefore be determined by how well they perform on the job. Setting distinct pay ranges
for the base wage and salary categories is essential to a strong base wage and salary system.
In the present era where high employee turnover and low retention rate turn into biggest nightmare
for the entrepreneurs, a sound compensation policy for the organization plays a great role in case
of providing relief to them. Concepts like performance based pay system, knowledge-based pay
system, market-based pay system are introduced by the employers to pay the employees in
different format. In addition, several incentives such as commission, profit-sharing, and health
insurance plans are offered to entice workers. In order to recruit and hire top level executives in
this highly competitive market, several firms additionally establish a distinct set of executive
compensation policies.
When creating the compensation policy for its employees, the firm appropriately takes into account
a number of pay-related factors, including wage/salary, incentives, perks, and perquisites. The only
goal here is to ensure that workers are content with their pay, as this has a significant impact on
both their personal and professional lives. Since money is what drives people to always perform
better inside the company and get recognition and prestige in society. Because of the focus on
literacy, the majority of employees nowadays are well educated, knowledgeable, and conscious of
their rights. It is now exceedingly difficult for the corporations to abuse people on any level as a
result. Similarly, they may now easily access any job belonging to any firm at any location because
of the widespread use of television and the Internet.

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As I am working as a Senior Executive of Human Resources at Edison Real Estate Limited, I want
to specify the compensation packages and policies of Edison Real Estate Limited in this paper.
Edison Real Estate Limited is one of the most renowned organizations which is committed to
fusing innovation and value in Bangladesh's developing real estate market. It provides with the
best assistance possible for residential and commercial accommodations by placing a great deal of
emphasis on design, structural dimensions, and viability in the sense of resource and space
conservation as well as environmental soundness. It also emphasizes more on employee’s
satisfaction that’s why it offers attractive compensation benefits for the employees.

2. Compensation Management Practices from the Perspective of Real Estate Industry in

Bangladesh:

Compensation management in the real estate industry of Bangladesh, like in any other sector, plays
a crucial role in attracting, retaining, and motivating talented professionals. The real estate industry
in Bangladesh has been experiencing significant growth, and effective compensation practices are
essential for companies to remain competitive and ensure the satisfaction and productivity of their
workforce. Here are some key considerations and practices related to compensation management
in the real estate sector of Bangladesh:
Market Analysis:
Conduct regular market surveys to stay updated on salary trends, benefits, and other compensation
components within the real estate industry in Bangladesh. Benchmark compensation packages
against industry standards to ensure competitiveness.
Variable Pay and Performance Bonuses:
Implement variable pay structures tied to performance metrics, such as sales targets, project
completion, or revenue generation. Performance bonuses can be a significant motivator for
employees in a commission-driven industry like real estate.
Commission Structures:
Develop transparent and fair commission structures for sales and brokerage teams. Align
commission rates with market standards and provide clear guidelines on how commissions are
earned and distributed.
Benefits and Perks:
Offer a comprehensive benefits package that includes health insurance, retirement plans, and other
relevant perks. Consider additional benefits such as housing allowances or transportation
allowances, recognizing the specific needs of employees in the real estate industry.

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Recognition and Rewards:
Establish recognition programs to acknowledge and reward outstanding performance. Non-
monetary rewards, such as employee-of-the-month recognition, can also contribute to a positive
work environment.
Career Development Opportunities:
Provide opportunities for professional development and training, demonstrating a commitment to
employee growth. Tie career development programs to compensation, such as promotions and
salary increases based on acquired skills and experience.
Employee Engagement Surveys:
Regularly conduct surveys to gauge employee satisfaction and gather feedback on compensation
and benefits. Use the survey results to make informed adjustments to compensation practices.
Flexibility in Compensation Packages:
Offer flexibility in compensation packages, allowing employees to tailor their benefits to meet
their individual needs. This could include options for flexible working hours, remote work
arrangements, or other customized benefits.
Retention Strategies:
Identify key talent within the organization and implement retention strategies, including
competitive compensation packages and career advancement opportunities. Conduct exit
interviews to understand the reasons behind employee turnover and make necessary adjustments.
Legal Compliance:
Stay compliant with labor laws and regulations related to compensation and benefits in
Bangladesh. Regularly review and update policies to ensure adherence to legal requirements.
In summary, compensation management in the real estate industry of Bangladesh should align
with industry standards, be competitive, and take into account the unique aspects of the local
market. Regular reviews and adjustments, along with a focus on employee satisfaction and
performance, are essential for the success of compensation practices in this dynamic industry.

3. Compensation Management Practices of Edison Real Estate Limited:

Edison Real Estate has created a pay plan that is intended to draw in, keep, and inspire competent
workers across all levels. The company's compensation principles aim to pay competent workers
at all levels in a way that will attract, retain, and reward them while taking internal and external
equity into account. In the meanwhile, to:
• Acknowledge individual performance and contribution;
• Reflect the relative weight of jobs;

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 • Be competitive, internally consistent, and fair; and
• Have a transparent and fair system
• Preserve the great rapport and understanding with the staff.
The following elements are taken into account to reward and set a competitive environment in
order to draw in and keep employees.

• Monthly guaranteed cash and admissible variable components

• Yearly cash and non-cash benefits (dependent on eligibility) and long term/ deferred
benefits.
In view of Company's strategic objectives and unique characteristics and environment prevailing
in the Real Estate industry, Edison Real Estate Ltd. considers cash and non-cash benefits, internal
and external equity, competitiveness, consistency, performance-based pay etc. To determine an
attractive compensation system. At a glance the overall compensation and benefits packages of
Edison Real Estate Limited are stated below:
Figure 1: Total Compensation Packages of Edison Real Estate Ltd.

3.1 Basic Compensation Components:

In the context of the Bangladesh real estate industry, basic salary, house rent allowance, medical
allowance, and conveyance allowance are important components of an employee's compensation
package. Edison Real Estate Limited also offers attractive compensation packages for employees.
Basic Salary: The basic salary is the fixed amount of money that an employee receives before any
additional allowances, bonuses, or deductions. It forms the core of an employee's compensation

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and is usually a predetermined, non-variable amount. It is the baseline amount that is subject to
statutory deductions like income tax and provident fund contributions for EREL members.
House Rent Allowance (HRA): House Rent Allowance is an allowance provided to employees
to meet the cost of renting accommodation. It is a monetary benefit given by the employer to assist
employees in covering their housing expenses. The amount of HRA can be a percentage of the
Gross Salary
Medical Allowance: Medical Allowance is an allowance granted to employees to cover medical
expenses. It is designed to assist employees in meeting costs related to health check-ups, medical
treatments, and prescriptions. For Edison Real Estate Limited, quality healthcare is important,
providing a medical allowance can be a valuable component of the overall compensation package.
Conveyance Allowance: Conveyance Allowance, also known as Transport Allowance, is an
allowance provided to employees to cover their commuting expenses between home and the
workplace.

SL No. Particulars
1 Basic (60% of Gross)
2 House Rent (30% of Gross)
3 Medical Allowance (6% of Gross)
4 Conveyance Allowance (4% of Gross)
Total Gross Salary

Figure 2: Basic Compensation Packages of Edison Real Estate Ltd

Festival Bonus: Festival bonuses are additional monetary benefits provided by employers to
employees during religious festivals, particularly Eid celebrations. Festival bonuses are commonly
provided during the two major Eid celebrations—Eid-ul-Fitr, which marks the end of Ramadan,
and Eid-ul-Adha, also known as the "Festival of Sacrifice." Employees of EREL are entitled for
yearly two festival bonuses. Festival bonus may be given considering the festival according to
calendar year.

Category Description (Considering Cut Off dates) Entitlement

Permanent all 100% of Basic
Probationary or Contractual Length of service more than 6 months 100% of Basic
Trainee Length of service more than 1 month BDT 4,000/-

3.2 Variable Components of Compensation Package:

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Overtime Allowance: Overtime allowances are additional payments made to employees for hours
worked beyond their regular working hours as stipulated in their employment contracts or by labor
laws. In the Edison Real Estate Limited, where project deadlines and workload fluctuations are
common, employees may be required to work overtime. Overtime allowances compensate
employees for the extra time and effort put into their work.
Incentives: Incentives are additional payments or rewards provided to employees for achieving
specific performance targets, exceeding expectations, or contributing to the success of the
organization. In the context of Edison Real Estate Ltd, project completion, sales targets, or client
satisfaction are key performance indicators, incentives can be a powerful motivator. For example,
sales professionals may receive commission-based incentives for achieving or exceeding sales
targets, and project teams may receive bonuses for meeting project milestones.
Basically, EREL follows joint venture incentive policy and KPI-target fill up incentive policy for
team members.
Joint Venture Incentive Policy:
It introduces a joint venture incentive policy to expand business and diversify. Joint venture total
incentive amount will be calculated based on 2 criteria:

• Joint venture project zone: Per Katha incentive will be determined based on the zone.
• Joint venture project land size (Katha): The incentive amount will be calculated based on
land size katha.

KPI-target incentive Policy:

• Evaluation of performances based on KPI score

• Divide them into zone & levels based on KPI score (Red, Yellow, Orange & Green zone)
• The setting of the improvement target
• Performance consequences after result (after 6 months)
• Offer rewards based on the accomplishment (Incentives)
Moreover, EREL ensure that all compensation components, including overtime allowances and
incentives, comply with the relevant labor laws, such as the Bangladesh Labor Act.
3.3 Non Compensation and other benefits

Insurance Benefits: Providing health insurance coverage as part of the compensation package is
a valuable benefit for employees, contributing to their overall well-being and job satisfaction. In
the real estate sector in Bangladesh, where employees may face potential health risks on
construction sites or in office environments, providing comprehensive health insurance coverage
is crucial. This coverage can help employees access quality healthcare without incurring

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significant out-of-pocket expenses. Edison Real Estate recognizes the importance of
comprehensive health coverage for their members and they offer the best possible coverage and
benefits.
Health Insurance Coverages:
1. IPD benefits include Hospitalization, surgical charges, consultation fees, medicines, medical
investigations and more.
2. Worldwide Treatment Coverage.
3. OPD facilities will cover Dental & Optical consultations, specialist visits, general
practitioner visits, medical investigations, medicines and others.
Mobile Allowances: Mobile allowances are monetary benefits provided to employees to cover the
costs associated with using their personal mobile phones for work-related purposes. In the real
estate sector in Bangladesh, where employees may need to be in constant communication with
clients, colleagues, and contractors, providing mobile allowances can help offset the expenses
related to phone usage for work. Edison Real Estate Limited also provides mobile allowances
based on employee grades.
Subsidized Lunch: Subsidized lunch involves the employer partially covering the cost of meals
for employees, typically provided on-site or through partnerships with local eateries. Given the
often demanding nature of work in the real estate industry, providing subsidized lunches can
contribute to employee well-being and save them time that might be spent sourcing meals during
the workday. It can also foster a sense of community if employees have the opportunity to share
meals together.
Employee Recognition Program: An employee recognition program involves acknowledging
and rewarding employees for their outstanding performance, contributions, and achievements. In
the real estate sector, where teamwork and individual efforts contribute significantly to project
success, implementing an employee recognition program can boost morale. Recognition can take
various forms, including awards, public acknowledgment, or even financial incentives, and should
be aligned with the organization's values and goals. For this reason, EREL organize employee
recognition program at the year of the year to recognize their contribution.

4. Findings
Compensation practices can vary widely based on factors such as company size, location, and
market conditions. However, I can provide some general insights into common compensation
practices that may be observed in the real estate industry in Bangladesh or elsewhere:
Competitive Salary Structures: Real estate firms typically aim to offer competitive salary
structures to attract and retain skilled professionals. Salaries may be influenced by factors such as
experience, expertise, and job roles.

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Commission-Based Incentives: In the real estate industry, commission-based incentives are
common, especially for roles involved in property sales. Real estate professionals, such as agents
and brokers, may receive a commission based on the value of properties sold.
Performance-Based Bonuses: Performance-based bonuses may be implemented to reward
employees for achieving specific targets or milestones. This could apply to project managers, sales
teams, or other roles with measurable performance indicators.
Benefits and Allowances: Beyond basic salary, real estate companies may provide benefits such
as health insurance, provident funds, and transportation allowances. Some companies may also
offer housing or accommodation-related benefit.
Project-Based Bonuses: Employees involved in specific real estate projects, such as development
or construction projects, may receive project-based bonuses linked to the success or completion of
those projects.
Flexible Compensation Packages: Real estate companies may adopt flexible compensation
packages that allow employees to choose from a range of benefits or tailor their compensation to
better suit their individual needs.
Professional Development Opportunities: Compensation packages in the real estate industry
may include opportunities for professional development, such as training programs, certifications,
and career advancement pathways.
Retention Strategies: Retention strategies, including salary reviews, employee recognition
programs, and career growth opportunities, may be implemented to retain experienced
professionals in a competitive job market.
Market Benchmarking: Real estate companies may conduct benchmarking studies to ensure that
their compensation packages are in line with industry standards. This helps them remain
competitive in attracting and retaining talent.
For more specific and up-to-date information on compensation management practices in the real
estate industry in Bangladesh, it would be advisable to consult industry reports, human resources
surveys, or speak directly with professionals in the field. Local business associations, industry
conferences, or professional networking events may also provide valuable insights into current
compensation trends in the real estate sector.

5. Limitation

By analyzing real estate industry’s compensation packages, I have found some limitation of
compensation packages at Edison Real Estate Ltd.

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First of all, Edison Real Estate Limited does not provide flexible compensation packages which
enables the employees to choose from a range of benefits or tailor their compensation to better suit
their individual needs. The compensation benefits of Edison Real Estate Ltd. is fixed based on the
employee grades. Edison Real Estate face budget constraints, limiting their ability to offer
competitive compensation packages. The real estate industry in Bangladesh can be competitive, as
a result Edison Real Estate limited face challenges in offering competitive compensation packages
to attract and retain top talent. This can be particularly relevant for skilled professionals in areas
such as architecture, engineering, and project management. Moreover, EREL often requires a
diverse set of skills, including legal expertise, project management, and technical knowledge. Skill
shortages in specific areas can lead to increased competition for qualified professionals, putting
upward pressure on compensation levels. As a Real estate organization, it must stay updated on
legal requirements to ensure compliance and avoid legal challenges related to compensation issues.
Furthermore, High turnover rates can be a concern in the real estate sector, and inadequate
compensation packages can contribute to employee turnover. This turnover can be costly in terms
of recruitment, training, and the potential disruption of ongoing projects. While performance-based
incentives can be effective in motivating employees, EREL have limited or inconsistent use of
such incentives. This can impact employee motivation and engagement.

6. Recommendations

Some recommendations are given for compensation management practices of Edison Real Estate
Ltd. in Bangladesh:
Legal Compliance: Ensure that compensation practices adhere to local labor laws and regulations.
Regularly update policies to stay compliant with any changes in legislation. EREL should conduct
periodic audits to confirm that compensation practices align with legal requirements.
Market Competitiveness: Regularly benchmark salaries and benefits against industry standards to
ensure competitiveness in the job market. EREL need to conduct a comprehensive salary survey
to understand the compensation landscape within Bangladesh.
Employee Communication: Communicate compensation structures transparently to employees.
Lack of communication can lead to misunderstandings and dissatisfaction. EREL need to
implement regular communication channels to address employee concerns and provide updates on
changes in compensation policies.
Performance Management: EREL should align compensation with performance by implementing
clear and fair performance evaluation systems. It can provide training and resources for managers
to effectively communicate performance expectations and feedback to employees.
Employee Benefits: EREL need to evaluate and enhance non-monetary benefits, such as health
insurance, retirement plans, and professional development opportunities. Besides, It should
regularly review the effectiveness of existing benefits to meet the evolving needs of employees.

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Retention Strategies: EREL evelop strategies to retain top talent by offering competitive
compensation packages and creating a positive work environment.
Analyze turnover trends to identify areas where compensation adjustments may be needed to
improve employee retention.
Employee Involvement: EREL can involve employees in the compensation decision-making
process where feasible. This can enhance their sense of ownership and satisfaction with the
compensation structure.
Regular Reviews: EREL can periodically review and update compensation policies to stay aligned
with changing business conditions, market trends, and employee expectations.
Implementing these recommendations can help EREL to overcome some of the limitations
associated with compensation management practices and create a more effective and equitable
system. It's essential to tailor these suggestions to the specific context and needs of the organization
and its workforce.

7. Conclusion

In conclusion, effective compensation management practices in Bangladesh play a pivotal role in

attracting, retaining, and motivating a skilled workforce. However, several challenges and
considerations must be taken into account to ensure the success of these practices. Addressing
legal compliance, cultural sensitivities, market competitiveness, and employee communication are
key factors in creating a robust compensation framework. By aligning compensation structures
with local labor laws, regularly benchmarking against industry standards, and considering cultural
nuances, organizations can enhance the effectiveness of their compensation strategies. Transparent
communication about compensation policies, coupled with fair and consistent performance
management practices, fosters employee trust and engagement.
Regular reviews and updates to compensation policies, along with a focus on equity and fairness,
help organizations stay responsive to changing market conditions and employee expectations. The
incorporation of global best practices and a commitment to employee involvement in decision-
making processes contribute to the overall success of compensation management in Bangladesh.
In essence, a well-crafted compensation strategy not only addresses the financial aspects of
employment but also serves as a critical tool for talent management and organizational success.
By overcoming the unique challenges within the Bangladesh context, companies can create a work
environment that attracts, retains, and motivates employees, ultimately contributing to the overall
growth and sustainability of the organization.

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