Course Code: HRM 8402

Course Name: Human Resources Management

ASSIGNMETN NO. 3

Submitted To,
Sabrina Sharmin Nishat
Assistant Professor, Faculty of Business Studies [FBS]
Bangladesh University of Professionals [BUP]

Submitted By,
Tasmia Tahrat Anila
ID No. 2223032144
Faculty of Business Studies [FBS]
MBA [Professional] Program, BUP

Date of Submission: 14th Mar’2023

Question No 1: In your opinion what kind of non-Traditional Compensation system would
be appropriate for new\ small ventures in Bangladesh? Give arguments in favor of your
opinion.

In my opinion, profit-sharing or equity-based compensation systems can be an appropriate non-

traditional compensation system for new/small ventures in Bangladesh. These systems can align
the interests and incentives of the employees with those of the company and create a sense of
ownership and engagement among the workforce.

Profit-sharing refers to a system where employees receive a share of the profits of the company
in addition to their base salary. This system can motivate employees to work harder and smarter,
as they directly benefit from the success of the company. For example, a startup in Bangladesh
may offer a profit-sharing plan to its employees where they receive a certain percentage of the
company's net profit each year. This can create a sense of teamwork and shared purpose among
the employees, as they work towards a common goal.

Equity-based compensation refers to a system where employees receive ownership or stock

options in the company in addition to their base salary. This system can align the interests of the
employees with those of the company, as they become partial owners and can benefit from the
success of the company in the long term. For example, a small business in Bangladesh may offer
stock options to its employees, giving them the opportunity to invest in the company and share in
its growth and success.

Both profit-sharing and equity-based compensation systems can be attractive to new/small

ventures in Bangladesh, as they can offer a non-traditional and flexible approach to
compensation that can help attract and retain talented employees. These systems can also be
cost-effective, as they allow the company to share its success with its employees without
increasing fixed costs such as salaries and benefits.

There are several reasons why an equity-based compensation system could be appropriate for
new/small ventures in Bangladesh:

Incentivizing employees: Offering equity in the company can be a powerful incentive for
employees to work hard and help the company succeed. When employees have a stake in the
company's success, they are more likely to work hard, take ownership of their work, and be
invested in the company's long-term growth.

Cash Flow: New/small ventures may not have a lot of cash on hand to pay high salaries and
benefits. Equity-based compensation can be a way to attract and retain top talent without putting
undue strain on the company's cash flow.

Building a Team: New/small ventures often need to build a team of talented individuals quickly
in order to succeed. Offering equity in the company can be a way to attract experienced
professionals who may not be willing to take a chance on a new venture without the potential for
significant financial upside.

Long-term Growth: Equity-based compensation can align the interests of employees and the
company in the long term. When employees have a stake in the company's success, they are
more likely to think about the long-term growth of the company, rather than just short-term
gains.

However, it's important to note that an equity-based compensation system requires careful
planning and implementation. Companies need to have a clear understanding of their valuation,
ownership structure, and legal requirements for offering equity to employees. It's also important
to set clear expectations with employees about the potential risks and rewards of owning equity
in a new/small venture.

Overall, profit-sharing and equity-based compensation systems can be appropriate for new/small
ventures in Bangladesh as they can create a sense of ownership, engagement, and alignment
among the workforce while also being cost-effective. However, it is important to note that these
systems require careful planning, communication, and transparency to ensure that they are fair,
effective, and sustainable for both the company and its employees.
Question No 2: Do you think compensation received by the government employees in
Bangladesh is justified considers the price hike of all kinds of essential goods at this
movement why or why not?

The question of whether the compensation received by government employees in Bangladesh is

justified in light of the current price hikes of essential goods is a complex one that depends on
various factors. On the one hand, it is essential to ensure that government employees receive fair
compensation for their work, including salaries and benefits that enable them to maintain a
decent standard of living. On the other hand, rising prices of essential goods can create
significant economic challenges for many people, particularly those who are less well-off.

In Bangladesh, the government has implemented a range of measures to try to address the issue
of price hikes, including increasing subsidies for essential goods and implementing policies
aimed at stabilizing the market. However, there is no doubt that many people in Bangladesh
continue to struggle with the effects of rising prices.

Regarding compensation for government employees, it is worth noting that different factors can
influence how fair and adequate their compensation is perceived to be. These factors can include
the level of education and skill required for the job, the demands of the work, the cost of living in
different regions of the country, and the availability of other job opportunities.

Ultimately, the question of whether government employee compensation in Bangladesh is

justified in light of current price hikes will depend on individual perspectives and priorities.
Some people may feel that government employees are paid adequately given the demands of
their work and the economic challenges facing the country, while others may believe that more
needs to be done to address income inequality and ensure that everyone can meet their basic
needs. It is difficult to determine whether the compensation received by government employees
in Bangladesh is justified in light of the price hikes of essential goods without more specific
information about the salaries and benefits received by these employees and the current
economic conditions in the country.

For example, in general, compensation for government employees in Bangladesh includes basic
salary, allowances, and benefits such as health insurance and retirement plans. The level of
compensation varies depending on the job title, seniority, and qualifications of the employee.
According to a report by the World Bank, the average salary of a government employee in
Bangladesh in 2018 was around BDT 19,000 per month (approximately USD 224).

On the other hand, the price hike of essential goods in Bangladesh can have a significant impact
on the purchasing power and standard of living of people, especially those with low or fixed
incomes. Factors such as global commodity prices, exchange rates, transportation costs, and
domestic supply and demand can affect the prices of essential goods such as food, fuel, and
medicine.

Whether the compensation received by government employees in Bangladesh is justified in light

of the price hike of essential goods depends on several factors, including the overall economic
and social conditions in the country, the level of inflation and cost of living, and the value and
importance of public sector jobs in the society. It is also important to consider the budgetary
constraints and fiscal sustainability of the government.

In general, it is challenging to compare compensation levels across different countries and

sectors, as the context and circumstances vary widely. However, it is essential to ensure that
compensation levels are fair, equitable, and sustainable, and that they reflect the skills,
contributions, and responsibilities of the employees.

However, it is worth noting that rising prices of essential goods can create significant economic
challenges for many people, particularly those who are less well-off. It is important to ensure that
government employees receive fair compensation for their work, including salaries and benefits
that enable them to maintain a decent standard of living.

The government has implemented measures to try to address the issue of price hikes, including
increasing subsidies for essential goods and implementing policies aimed at stabilizing the
market. However, it is clear that many people in Bangladesh continue to struggle with the effects
of rising prices.
Question No 3: If we consider money as the most important motivator, which other
component of a compensation package should be next most important motivator for
employees in your perception? Why?

While money is often a significant motivator for employees, research has shown that there are
other components of a compensation package that can be equally important or even more
important for employee motivation and satisfaction.

One such component is benefits, including health insurance, retirement plans, and other perks
such as paid time off, flexible working arrangements, and employee development programs.
These benefits can be important motivators for employees because they demonstrate that the
employer is invested in their well-being and values their contributions to the organization.

Another component that can be important for employee motivation is recognition and rewards.
This can include bonuses, promotions, public recognition for a job well done, and other forms of
acknowledgment that show employees that their hard work is appreciated and valued by the
organization.

Opportunities for career advancement and professional development can also be important
motivators for employees. These opportunities can include training programs, mentorship, and
leadership development programs, among others. By investing in their employees' professional
growth, employers can show that they are committed to helping their employees achieve their
career goals and aspirations.

For example, in a tech company where salaries are already competitive, offering benefits such
as generous paid time off, a comprehensive health insurance plan, and a 401k matching program
can be highly valued by employees. These benefits provide a sense of security and support for
employees, which can lead to higher levels of job satisfaction and engagement.

Similarly, in a creative agency where the work can be demanding and stressful, offering perks
such as a flexible work schedule, the ability to work remotely, and opportunities for professional
development can be highly valued by employees. These perks provide a sense of recognition and
autonomy, which can lead to higher levels of motivation and productivity.
Overall, while money is certainly an important component of a compensation package, it is not
the only motivator for employees. Benefits, recognition and rewards, and opportunities for career
advancement and professional development can also be important factors in driving employee
motivation and satisfaction. By offering a well-rounded compensation package that includes both
financial compensation and non-financial benefits and perks, organizations can create a work
environment that is attractive, engaging, and motivating for employees.

Question No 4: Pay for performance and pay for skill _ can we apply both these methods in
our country? Why or why not? Can you identify any disadvantages of pay for performance
method? Explain.

Yes, it is possible to apply both pay for performance and pay for skill methods in any country,
including yours. However, the feasibility and effectiveness of each method will depend on the
specific context and circumstances of the organization and the broader economic and social
conditions in the country.

For example, in a manufacturing company, pay for skill can be an effective approach for
compensating employees. In this type of organization, employees who possess specific
technical skills, such as welding or programming, are highly valued and in demand. Offering
higher pay rates or bonuses for employees who possess these skills can incentivize employees to
invest in their training and development, leading to a more skilled workforce and better
outcomes for the organization.

Pay for performance and pay for skill are both methods of compensating employees that can be
applied in any country, including yours. However, the feasibility and effectiveness of each
method will depend on the specific context and circumstances of the organization and the
broader economic and social conditions in the country.

Pay for performance is a compensation method that rewards employees based on their individual
performance, typically measured by specific goals or targets. This approach can be effective in
motivating employees to perform at a high level and achieve their objectives. However, it can
also create a competitive work environment where employees are focused solely on achieving
their own goals, rather than collaborating with their colleagues or working towards broader
organizational objectives.

Pay for skill, on the other hand, rewards employees based on their level of skill or expertise,
typically measured by certifications, education, or experience. This approach can be effective in
attracting and retaining highly skilled employees and encouraging ongoing professional
development. However, it can also create a situation where employees are incentivized to remain
in their current roles and not pursue opportunities for growth or advancement.

It is possible to apply both pay for performance and pay for skill methods in the same
organization, and in fact, many organizations do use a combination of both approaches.
However, it is important to carefully consider the potential advantages and disadvantages of each
method and to design a compensation package that aligns with the organization's values and
objectives.

One disadvantage of the pay for performance method is that it can create a situation where
employees are solely focused on achieving their individual goals, which can lead to a lack of
collaboration and teamwork. It can also create a sense of unfairness if employees perceive that
the performance metrics are arbitrary or unfair. Additionally, it can be challenging to measure
performance accurately, especially in roles where success is difficult to quantify or where
external factors beyond the employee's control may influence outcomes.

On the other hand, in a sales organization, pay for performance may be a more effective
compensation method. In this type of organization, employees who exceed their sales targets or
bring in new business are highly valued and rewarded accordingly. Offering bonuses or
commissions for high performance can incentivize employees to work harder and achieve better
results for the organization.

However, one disadvantage of pay for performance is that it can create a competitive work
environment where employees are solely focused on achieving their individual goals, which can
lead to a lack of collaboration and teamwork. For example, in a call center where employees are
measured on the number of calls, they handle, a pay for performance approach can create a
situation where employees are solely focused on handling as many calls as possible, rather than
working together to improve customer satisfaction
Additionally, it can be challenging to measure performance accurately, especially in roles where
success is difficult to quantify or where external factors beyond the employee's control may
influence outcomes. For example, in a marketing role where success may be influenced by
market trends or consumer behavior, it can be difficult to attribute sales or other outcomes solely
to the efforts of the individual employee. This can create a sense of unfairness if employees
perceive that the performance metrics are arbitrary or unfair or resolve complex issues.

Overall, while pay for performance can be an effective way to motivate employees and drive
performance, it is important to carefully consider the potential disadvantages and design a
compensation package that aligns with the organization's values and objectives.