COMPENSATION MANAGEMENT

Submitted by: Xxxxxxxxxxx

Symbiosis Centre for Management and Human Resource Development Symbiosis Infotech Campus, Rajiv Gandhi Infotech Park, Hinjewadi-Pune

1 Symbiosis Centre for Management and Human Resource Development

CONTENT
CHAPTER 3: INTRODUCTION CHAPTER 2: COMPONENTS OF COMPENSATION CHAPTER 3: IMPORTANCE OF COMPENSATION CHAPTER 4: EVOLUTION OF COMPENSATION CHAPTER 5: IMPORTANCE OF COMPENSATION CHAPTER 6: PAYROLL MANAGEMENT CHAPTER 7: PAYROLL OUTSOURCING CHAPTER 8: INCENTIVE MANAGEMENT CHAPTER 9: INDIAN INDUSTRY CONCLUSION 3-5 6-9 10-12 13-14 15 16-17 18-19 20-26 27-37 38

2 Symbiosis Centre for Management and Human Resource Development

CHAPTER 1: INTRODUCTION
One of the most vital resources of any organization is its human resource. HR manager is responsible for decision taken and related work done and result. The remuneration and compensation plays a key role in motivating employees to give their best output. The remuneration and compensation provided should be as per industrial standards. The structure of compensation will be a key drive to mould the mindset of employees to be in the company as well as attract new talents. Hence retention rate will improve. The remuneration provided by any organization to its employee in return to its contribution to the organization is known as compensation. It can be monetary or non-monetary benefits provided by an organization. Compensation is the key drive to improve the effectiveness of any organization by improving the efficiency of employees.

Components of Compensation System

The bases for developing compensation system are the Strategic goals and business objectives of any organization. While designing the Compensation system we should consider the type of job and responsibilities. There are three components of compensation system:

JOB ANALYSIS

SALARY SURVEY

PAY STRUCTURE

3 Symbiosis Centre for Management and Human Resource Development

Types of Compensation Management:There are two modes of providing compensation to any employee. A) Direct Compensation: All the monetary benefits provided by an organization are considered as direct compensation. B) Indirect Compensation: The non-monetary benefits such as perks, time off, medical benefits are considered as indirect compensation.

Need of Compensation Management

It helps to motivate employees in order to enhance organization productivity. Compensation is the key drive which attract employee to do work. Hence it helps organization to achieve its goal. The compensation system serves the employees to satisfy psychological and selfactualization needs. Compensation helps to attract and retain best talents in the job market for an organization.

Motivation

Compensation Package

Employee Retention

Need Satisfaction

4 Symbiosis Centre for Management and Human Resource Development

Strategic Compensation
Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In todays competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems.

5 Symbiosis Centre for Management and Human Resource Development

CHAPTER 2.COMPONENTS OF COMPENSATION

Job analysis
Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities, evaluation, etc. It helps in finding required level of education, skills, knowledge, training, etc for the job position. It also depicts the job worth i.e. measurable effectiveness of the job and contribution of job to the organization. Hence, it effectively contributes to setting up the compensation package for the job position. .

Importance of Job Analysis

Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. It forms the basis for demand-supply analysis, recruitments, compensation management, and training need assessment.

Components of Job Analysis

Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components.

6 Symbiosis Centre for Management and Human Resource Development

Job Position
Job position refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. For example management level employees receive greater pay scale than nonmanagerial employees. The non-monetary benefits offered to two different levels in the organization also vary. .

Job Description
Job description refers the requirements an organization looks for a particular job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also describes the roles and responsibilities attached with the job position. The roles and responsibilities are key determinant factor in estimating the level of experience, education, skill, etc required for the job. It also helps in benchmarking the performance standards.

Job worth
7 Symbiosis Centre for Management and Human Resource Development

Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position. Therefore, job analysis forms an important part in the formulation of compensation strategy of an organization. Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for setting up the compensation packages, for reviewing employees performance with the standard level of performance, determining the training needs for employees who are lacking certain skills.

Pay structure analysis

Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and Individual equity are the most popular pay structures. Job description provides the in depth knowledge about the job profile and its worth Pay structures are the strong determinant of employees value in the organization. It helps in analyzing the employees role and status in the organization. It provides for fair treatment to all employees. Pay structures also include the estimation of incentives. The level of incentives also depends on the level of job position in the organizational hierarchy.

Internal equity
The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior and junior level in the hierarchy. The fairness is ensured using job ranking, job classification, level of management, level of status and factor comparison.

8 Symbiosis Centre for Management and Human Resource Development

External Equity
Here the market pricing analysis is done. Organizations formulate their compensation strategies by assessing the competitors or industry standards. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. This entails for fair treatment to the employees. Sometimes organizations offer higher compensation packages to attract and retain the best talent in their organizations.

Salary analysis

9 Symbiosis Centre for Management and Human Resource Development

Organizations have to bridge the gap between the industry standards and their salary packages. They cannot provide compensation packages that are either less than the industry standards or are very higher then the market rates. For the purpose they undertake the salary survey. The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization. These reports constitute the last 2-5 years or more compensation figures for the various positions held by the organizations. The analysis is done on the basis of certain factors defined in the objectives of the research.

Objectives of Salary Survey

To gather information regarding the industry standards To know more about the market rate i.e. compensation offered by the competitors To design a fair compensation system To design and implement most competitive reward strategies To benchmark the compensation strategies

Types of Compensation Surveys

There are two types of compensation surveys undertaken by the organizations.

10 Symbiosis Centre for Management and Human Resource Development

CHAPTER 3. TYPES OF COMPENSATION

Direct compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.

Basic Salary
Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services.

House Rent Allowance

Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work.

Conveyance
Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.

11 Symbiosis Centre for Management and Human Resource Development

Leave Travel Allowance

These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization.

Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements.

Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one months salary of the employee.

Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.

Indirect compensation
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.

Leave Policy
It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.

Overtime Policy

12 Symbiosis Centre for Management and Human Resource Development

Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc.

Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security.

Insurance
Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization.

Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations, like HCL Technologies, arrange for a tour for the employees of the organization. This is usually done to make the employees stress free.

Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age.

Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons.

13 Symbiosis Centre for Management and Human Resource Development

CHAPTER 4.EVOLUTION OF COMPENSATION

There is a long history behind the present compensation systems. The compensation systems have been changed as per the changing needs of workers. Initially the organization was bureaucratic in nature which gradually changed into the participative organizations. Hence employees have started asking for their rights and appropriate compensations. There result in an increase in competition in compensation structure due increasing standards of education level and skill sets required for a job. Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of an organization.

TRADITIONAL COMPENSATION SYSTEM

CHANGE IN COMPENSATION SYSTEM

MODERN COMPENSATION SYSTEM

Traditional Compensation Systems

Employees have to work hard. Employees have to obey their respective bosses Promotion, job security and salary increments are as per years of experiences. Retirement benefits are provided. Psychological and social needs are ignored Employees are worked for money.
14 Symbiosis Centre for Management and Human Resource Development

Change in Compensation Systems

The employees started to raise their voice for their rights due to introduction of the behavioral science theories and evolution of labor and trade unions. Maslow need hierarchy reflects that employee dont work for money only. There are also other needs which are shown in bellow figure. Competition has evolved among employees. They worked hard for their job security. The compensation system is designed on the basis of job work and related proficiency of the employee.

Self Actualization Esteem

Social Needs

Safety Needs

Psychological Needs

Maslows Need Hierarchy

Todays Modern Compensation Systems

Designed on the basis of business goals and strategies. Employees can take their own decisions. Authority is being delegated. Employee feel more secured. Monetary and non-monetary benefits are provided in order to retain and attract talents.
15 Symbiosis Centre for Management and Human Resource Development

 Allowances are: Rent Allowances, Company Vehicles and Medical Benefits.

CHAPTER 5.IMPORTANCE OF COMPENSATION

It enhances the performances of employees. The standards for job evaluation will become more realistic. It will be well fit for every level of organization. The system is so simple that every employee can evaluate his own compensation. Reduce exploitation of employee. It built a strong morale of an organization. Dont violate labor law. Help in solving dispute between employee union and management. Equal and Fair pay. Motivate and encourage those who perform best and help them to excel Reward system brings a healthy relation between employee and management. Brings competition to improve the performance of employee. Provide growth opportunities for deserving employees. This minimizes the labor turnover and makes organization more stable. Stops best talents to switching over to another job. Helps in expansion and growth of organization by retaining best talents.

16 Symbiosis Centre for Management and Human Resource Development

CHAPTER 6.PAYROLL MANAGEMENT

Payroll:
The method of managing the salaries of employees in an organization is termed as Payroll. This process involves taking care of many things of which primary are: Calculating Salaries of employees. Calculating Tax deductions of employees. Administrating the benefits after retirement. Perks given to employees. Disbursements of salaries to employees.

In nutshell, this is an activity related to accounts which carry out the function of administration of salary of employees in an organization.

Payroll Accounting:
The functions like employees salaries and tax deduction are taken care by Payroll Accounting. In addition, it also carries out functions like tax return preparation, payroll records maintenance, etc.

Payroll Administration:
The managerial activities like maintenance of records of employees, employment laws reference, etc. come under the term Payroll Administration. Here, the involvement of Hr also comes into
17 Symbiosis Centre for Management and Human Resource Development

play like maintaining the daily attendance of employees, maintenance of database containing records of employees like name, employee number, employment salary, attendance etc.

Information of employees Record Maintenance Attendance

Name, Employee id, Salary, etc.

Working days Count Head Count

Records Transferred to Accounts

Gross Salary= Basic Salary + Allowances

Net Salary Calculation

Deduction Calculations Tax Management and Human and Others (if any)

18 Resource Development

Symbiosis Centre for Disbursement of Salary

CHAPTER 7.PAYROLL OUTSOURCING

The employment agreement terms in an organization can be can be classified as follows: 1. Full- time employees 2. Part- time employees 3. Contractual Basis employees The payroll of the employees may also differ depending on the employment terms for the employee. The administration of the payroll of employees becomes a little complex and complicated to manage. These complications have given rise for the demand of Payment Outsourcing. In a booming economy like India where globalization has increased the tough competition for organizations, they can address this issue of Payroll management by the involvement of Payroll Systems but this task is very time and money consuming as well as it needs expertise to make it happen successfully.
19 Symbiosis Centre for Management and Human Resource Development

Organizations can depend on Payroll management software for payroll management and larger organizations have specialized Accounts department and accounting professionals to handle the department. The payroll management software can help to a great extent in retrieving, documenting and printing the reports for the effective functioning. The challenges faced by organizations today in this increased workload, strategic role-play and globalised times have forced them to outsource these processes. Therefore, organizations choose to outsource the task of payroll management rather than spending time and money on setting up their own payroll management systems. The outsourcing of this task provides high quality, integrity and low cost solution to the organization. In short, Payroll outsourcing is done for analysis of data related to organization and to calculate the economics for the employee like gross salary, allowances, deductions, reimbursements and ultimately the net salary payable to the employee. If we look at the report of the Human Resource Management survey below, we can get to know that almost half of the organizations outsource the Payroll Managements system.

20 Symbiosis Centre for Management and Human Resource Development

21 Symbiosis Centre for Management and Human Resource Development

CHAPTER 8.INCENTIVE MANAGEMENT

Incentives are an integral part of the performance based compensation packages. It is a challenge for organizations to formulate strategies to maintain the internal equity and external equity and provide the best compensation packages to attract and retain the talented workforce. For attaining effective incentives, programs are undertaken. Employees are involved in the process so as to deliver un-biased packages to all the employees. For the effective compensation strategies, all the employees should be aware of the organizational goals and objectives and the methods used for evaluating employees performance should be fair enough and easy to understand. The performance standards established should be achievable. Deserving employees should receive significant rewards. There should be always scope for improvements. Employees performance should be evaluated on the basis of their productivity.

22 Symbiosis Centre for Management and Human Resource Development

Incentives accounts for employees high productivity. Today youngsters believe in performance based pay, thus incentives will help to motivate them to produce more. In the hospitality and retail industry it is the incentive that accounts for the overall package of the employee.

Employee Stock Ownership Plans (ESOP)

Employee Stock Ownership Plan (ESOP) is an employee benefit plan. The scheme provides employees the ownership of stocks in the company which is one of the profit sharing plans. Employers have the benefit to use the ESOPs as a tool to fetch loans from a financial institute and also for tax benefits to the employers. Organizations strategically plan the ESOPs and make arrangements for the purpose. They make annual contributions in a special trust set up for ESOPs. An employee is eligible for the ESOPs only after he/she has completed 1000 hours within a year of service. After completing 10 years of service in an organization or reaching the age of 55, an employee should be given the opportunity to diversify his/her share up to 25% of the total value of ESOPs. Law has also provided an amendment for the employees who have attained the age of 60 and their ESOP shares are allotted after December 31, 1986. The amendment provides those employees with an option to diversify their shares up to 50%. Advantages of ESOP: 1. Ownership 2. Tax-rebate 3. Retirement benefits Disadvantages of ESOP: 1. 2. 3. 4. Dependency No guarantee Lost Tax Revenue Less stock Investment

Individual employees accounts are credited with the stocks acquired by ESOP. They can also acquire stocks through stock options. Stock options provide employees the right to buy shares at a definite price* for a defined number of years in future. . *(Price for the current day i.e. the time the options are acquired is set as the definite price for the employee.)
23 Symbiosis Centre for Management and Human Resource Development

Executive Incentives
To retain the talented workforce, Organizations offer heavy incentives to executives. The immense competition in the market has forced the organizations to offer lucrative compensation packages. To mend up demand-supply disparity, they have opted the performance based incentives. Appreciation for performers and non-performer lacks behind. . Incentives are more effective in the marketing segment as it results in more and more sales. The business development executives strive for more incentives and in the effort produce more business and receive heavy perks.

24 Symbiosis Centre for Management and Human Resource Development

Figure: Executive Incentives

The issues that have come up related to executive incentives are:

People believe that the incentives offered to the executives are much more than what the stockholders receive. Some people also criticize the appraisals blaming the time duration given in achieving the set performance standards. Some people also complaint of the un-fair distributions of incentives. They believe that team members actually work and more appreciation is given to the team leader.
25 Symbiosis Centre for Management and Human Resource Development

Some people also complain that more incentives are given to place the organizations on top of the salary surveys conducted by the respected research organizations.

Incentive Plans
Organizations can opt for an effective incentive plans from the various alternatives available. The organizations usually opt for that incentive plans which suits its requirement the most. As incentives covers the financial matters, organizations need to be very focused in choosing the best alternative that is in alignment to the business goals and objectives.

The various incentives plans available are: 1.Piece Rate Piece rate incentive is given to the employees based on the number of units produced. This plan is practiced in the sectors dealing with manufacturing of products such as engineering automobile, telecommunication, FMCG, etc. 2. Commissions Commission is a variable component of compensation package. It is given on the basis of business generated by the employee. Commission is a pre fixed component say 5% of the total sales done by the employee. It is practiced in the retail, FMCG and other sectors in the marketing and sales segment.

26 Symbiosis Centre for Management and Human Resource Development

3. Bonuses Bonuses are given to employees on a pre established goal or criteria. The organizations set policies regarding the bonuses. Usually bonuses are provided during the festive season. 4. Merit Raises Merit raises are given on the basis of predetermined policies. The employees are given raise on the basis of their performance. The performance standards are set by the organizations much in advance.

27 Symbiosis Centre for Management and Human Resource Development

5. Standard Hour Pay

Standard hour plan provides incentives to employees based on the time saved by them during the job course. Employees productivity and quality is evaluated with respect to the set standards. 6. Maturity Curves Maturity curve incentive plan considers the experience and performance of an employee for giving out the incentives. It is practiced in all the industries. Experience is always given a weight-age as experienced people can produce better quality results. 7. Gain Sharing Gain sharing incentive plans undertake those employees who give outstanding performances and provide for cost saving measures. Organizations believe in sharing the profits with the employees who are responsible for producing those results. 8. Profit Sharing Profit sharing incentive plans are practiced in retail and FMCG sectors. Other sectors to implement the plan based on organizational policies. It refers to giving out the share of profits the organization earned to all the employees. Indirectly all the organizations follow the plan by giving out the dividends.

Strategic Incentive Plan

Globalized organization should formulate compensation strategies as per employees interest. With increase in number of players, competition level and high attrition rate, its a challenge for organization to retain their talented human resource. Organization need to follow systematic process. INCENTIVE SRATEGY FORMULATION PROCESS 1. Organization should understand the need of incentive plans. 2. They should set clear objectives which are aligned with organizational goals and objectives. 3. Various options for individual and group incentive plans should be explored.
28 Symbiosis Centre for Management and Human Resource Development

4. Benefits and disadvantages of each plan should be considered and from the various options available one incentive plan should be chosen. 5. Using the best incentive plan, compensation strategy should be formulated.

29 Symbiosis Centre for Management and Human Resource Development

Figure: Incentive Strategy Formulation Process

Organizations should provide rewards based on employees performance. Significant monetary and non-monetary rewards should be given. Performance standards set should be acceptable by the management and the employees. The methods of appraisal should be fair and known to all the employees. Organizations should see that all the employees receive adequate compensation based on the internal equity with respect to the industry standards. Organizations face some problems while setting up the incentive plans. Some employees do not trust the organizational policies. They complain that the performance standards set are not fair. There are also confusions related to the formulas used to calculate the payout incentives.
30 Symbiosis Centre for Management and Human Resource Development

CHAPTER 9.INDIAN INDUSTRY

Information Technology Sector
Growth in IT sector is at a high rate. Good rate of recruitment of more and more technical & professional people. The growth rate of recruitment in the sector has been observed as 14.5%. With the immense recruitments and high attrition rate, organizations focus on higher competitive packages. The average increase in the salary during 2006 was reported as 16%. The compensation package for an employee is based on various factors such as his/her educational level, relevant experience in the industry, jobs position in the hierarchy, skills and attributes and job related technicality. The top 20 highest salary payers in Indian IT sector: HCL Info systems Limited Hex aware Technologies RMSI Private Limited Cadence Design Systems Tata Consultancy Services Aztec soft Limited Nucleus Software Indus logic Kanab International Inc Cybage Software Private Limited Accel Frontline Technologies Geomatric Software Solutions Co. Ltd. Sierra Flextronics
31 Symbiosis Centre for Management and Human Resource Development

Computer Sciences Corporation Interra Systems Sasken Communication Technologies Limited NIIT Technologies Wipro Limited Infosys Technologies Limited

Entry Level Compensation Packages

Indian IT sector offers various job openings to fresh engineers or diploma holders. The candidate aspiring to join an IT organization should posses certain technical and non-technical skills and attributes. Attainment of qualified degree or diploma certificate from a reputed institute/university would be an added advantage. The desired skills are:

Effective Communication Skills Sound Technical Knowledge Strong Commitment Level Strong Analytical Skills Ability to meet deadlines

Employees are also providing certain monetary and non-monetary benefits such as allowances, accommodations, respective positions, perks, incentives, insurances, etc. These benefits differ from organization to organization.

Management Level Compensation Package

Management level compensation are somehow different from the technical one. Apart from basic salary and special allowances, employees are given some other monetary and non-monetary benefits like club memberships, annual bonus, and other special allowances. Effective communication skills, good analytical skills and sound technical knowledge are must to have a respectable position in IT sector. People working in IT sector should be willing to work at stretch, they 32 Symbiosis Centre for Management and Human Resource Development

should be able to work in pressure and meet deadlines. Also, the level of experience determines ones level of compensation package and position in the industry.

Figure: Average Salary offered in Indian IT Sector for Managerial Level Positions

33 Symbiosis Centre for Management and Human Resource Development

INSURANCE SECTOR
Privatization has brought in lot of surprises for insurance sector. In India, insurance sector is at the booming stage as only 40% of the population is insured. Private organizations are striving hard and hard to develop the sector. Organizations are coming up with newer insurance plans to attract the market such as accidental insurance, medical insurance, medi-claims, family-health insurance, dental insurance, diabetes insurance, auto insurance, etc. Government is also supporting the insurance sector to increase the Gross Domestic Product ratio from the sector which is now about 1.4% only. Following are the top players of the insurance sector offering most competitive packages to their employees:

Life Insurance Corporation New York Life Prudential Met Life Birla Insurance Kotak Mahindra

Entry Level Compensation Package

Insurance sector is at the growth stage recruiting more and more people in the industry. Organizations are providing most competitive packages to attract and retain the talent. Most of the jobs in the insurance sector are part time, providing the opportunity for the employees to earn extra apart from their regular income. The compensation is also performance based, depending upon the insurance amount and premiums. Since most of the jobs offered in the sector are in the marketing segment, candidates with marketing skills would have better career prospects. Following are the key skill requirements for the job profile in the sector:

Excellent communication skills 34

Symbiosis Centre for Management and Human Resource Development

Excellent marketing skills Good interpersonal skills Good public relations Target-oriented approach Analytical skills

Management Level Compensation Package Indian insurance sector is growing at a fast pace and offering lucrative career options. Both private and public organizations offer part time and full time employment in the sector. Excellent marketing skills and communications skills with appropriate experience level would help any individual to score well in the industry. Compensation package in the industry includes heavy perks and incentives part from basic salary structure and other special allowances. Most of the jobs in the sector are categorized in the retail and marketing segment.

35 Symbiosis Centre for Management and Human Resource Development

Figure: Average Salary offered in Indian Insurance Sector for Managerial Level Positions

IT ENABLED SERVICES
With IT industry at the boom, Indian IT-enabled services are also enjoying the returns. Recruitments are taking place at a high rate. It has also given rise to the outsourcing industry. ITenabled services cover a rage of service sectors like BPO, KPO, Hardware and Software. The compensation packages in the sector vary from job-job and company to company. Experience level also forms an integral part of the compensation package.

36 Symbiosis Centre for Management and Human Resource Development

Compensation Packages in BPO & KPO BPO and KPO units have entered the Indian markets with lucrative compensation packages and high incentives. Most of the organizations in the segment are foreign-owned. Few of the Indian organizations have also come with the BPO and KPO units.

Compensation Packages In Software & Hardware Services

Software & Hardware services have created lots of jobs in the sector. Fresh and experienced engineers are offered jobs with high packages. Top players like Microsoft, Oracle, IBM, HCL, Infosys, Satyam, Sify, Wipro, LG, and Samsung are offering lucrative packages to attract and retain talented workforce.

Entry Level Compensation Packages

BPO & KPO have come up with lots and lots of jobs for fresh graduates with handsome salary packages and incentives. They are attracting young talent. Outsourcing industry has come up with new job prospects for graduates. But it demands hard work and skilled labour. The desired skills for BPO & KPO services are:

Effective Communication Skills Strong Commitment Level Strong Analytical Skills Ability to meet deadlines.

Despite the fact that KPO & BPO do not offer job securities, the recruitment rate in the segment is very high.

Management Level Compensation Package

Employees need to work hard and achieve their targets in order to be in the lime light. High attrition rate has caused organizations offer high compensation package. Compensation plays an important part here. When the employees are provided with good packages they produce well and maintain their stability but if not they cause high attrition rate.
37 Symbiosis Centre for Management and Human Resource Development

KPO, BPO, software and hardware services offers handsome salary packages and high incentives to managerial level positions. The project managers and other top management employees enjoy monetary and non-monetary benefits from the organization. The organizations offer lucrative benefits to retain the talent in the competitive environment. With The software and hardware industry is in need of talented programmers, testers, developers and analysts to improve their productivity. Educational institutes are updating their syllabi every year to deliver updated and skilled human resource. The organizations are also providing for educational programmes for their employees or their development to reduce the recruitment cost.

TELECOMMUNICATION SECTOR
Indian telecommunication sector is witnessing a growth rate of more than 25%. With the upcoming of new upgraded technologies such as 3G, the sector will be experiencing a growth rate of more than 100%. Public players and private players are competing with each other and are developing themselves to produce more quality and deliver advanced technologies. Top players in the segment such as Bharti Airtel, Reliance Communications, Tata Teleservices, Idea Cellular, Hutchison, Essar, Nokia, Siemens, LG, Motorola, etc are investing in new projects to accommodate the 3G technology. With the business expansion and globalization of Indian organizations more and more recruitments are taking place in the sector. The sector has also provided jobs in marketing, installation and construction segments.

38 Symbiosis Centre for Management and Human Resource Development

Figure: Average salary offered in Telecommunication Sector Based on Experience

Entry Level Compensation Package

The sector is offering openings in banking, insurance, capital market, venture capital, mutual funds, bonds, commodities markets, etc. Compensation provided to fresh management graduates is also very lucrative. The sector is open for CA, CS, accountants, MBA in finance and commerce graduates.

Management Level Compensation Package

Telecommunication provides for excellent growth opportunities. In the global competitive environment experienced people have an upper hand in selecting an organization. Organizations need to offer most competitive packages and heavy perks to attract and retain the talented work force. Effective communication skills, good analytical skills and sound technical knowledge are must to have a respectable position in telecommunication sector. Organizations such as Idea
39 Symbiosis Centre for Management and Human Resource Development

Cellular, Tata Teleservices, Reliance Communications, Bharti Airtel, Nokia, Siemens, ericcson, Motorola, etc are advancing their technologies and providing most competitive compensation packages.

BANKING & FINANCE SECTOR

Basically this sector opts for large scale recruitment. Presently it has high growth rate on the prospect of global market. Job security is the plus point of nationalized bank which result in more talents to have their first preference to be an active employee of it. The banks always provide a healthy compensation packages. They also provide incentives, special allowances, travel leaves, concessions, paid vacations, paid leaves, retirement benefits along with basic salary. They also provide other allowances such as house rent allowance, transportation vehicle etc.

Figure: Average salary offered in Banking & Finance Sector Based on Experience

Entry Level Compensation Packages

The necessary skills that a candidate should possess to get into banks and financial institutes are:

Effective Communication Skills Commerce Background

40

Symbiosis Centre for Management and Human Resource Development

Excellent Marketing Skills Strong Analytical Skills Ability to meet deadlines

Figure: Average Salary offered in Indian Banking & Finance Sector for Entry Level Jobs

Management Level Compensation

The sector has witnessed 17% average increase in the salary packages in the year 2006. The compensation packages offered to managerial level employees are very much lucrative. Besides the basic salary employees are also provided with heavy perks and incentives with special allowances. They are offered club memberships, companys vehicle, travel leaves, paid vacations, etc. Organizations also conduct training and development programs for their employees professional growth. Organizations provide for certification courses and online degree courses for the employees. At higher level employees are given employee stock options. Individuals are given equal preferences on the basis of their performance.

41 Symbiosis Centre for Management and Human Resource Development

1.

42 Symbiosis Centre for Management and Human Resource Development

CONCLUSION
Today employees are treated as essential component of organization even more valuable than other assets. Employee compensation hence is very critical process on part of Human resource manager. In recent times a shift is observed in a way that employees are being compensated. The compensation plan must be communicated easily to the employees. Also fairness and transparency should also be taken into consideration while designing compensation plan. Employees must be encouraged to participate in the design of the compensation plan. There are various factors on which compensation plan should be designed. Major factors includes inter dependency of the jobs, accurate and objective measure of performance of the employee , Organizational culture of the company, management support for the staff, effective communication skills of the employee and employee flexibility towards various responsibility given. Employees should be accessed on these parameters instead of being accessed on basis of traits for the purpose for revision in compensation plan. Today there is a paradigm shift in work culture with focus on team based approach as compared to traditional approach of individualistic work approach. Now employees are rewarded and paid compensation on basis of individual performance as well as performance of the whole team. Thus rewarding of an individual should essentially be combined with certain team based reward as well. The compensation plan should be able to recognize the contribution of individual employee towards organization. Also compensation plan should recognize collaborative efforts of the team. Thus individual rewards should consider the fact that the employee has been a team player, thus fostering an environment of cooperation and collaboration. Compensation plan and reward systems are different in different organizations. There is no thumb rule that can be placed in an organization to determine what kind of plan they should place in the system or a plan that can be implemented in that particular organization. Finding and hence formulating the correct compensation plan for any particular organization will always remain the most difficult task to implement. But it can be achieved successfully with a lot of planning thus finding the right mix of rewards for the individuals and teams in their organizations.

43 Symbiosis Centre for Management and Human Resource Development