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February 25, 2024 Contemporary Issues in Teamwork 2

Advantages and Disadvantages of Appraisal Tools
 OUTCOME
• What do you mean by Salary Compensation?

• Understanding the concepts of developing project teams

Compensation Packages

• Understand issues of Team vs Individual pay

• Knowledge of Team Benefits, Rewards etc

• Analysis of Total Reward Framework

February 25, 2024 Contemporary Issues in Teamwork 7

 TOTAL REWARDS FRAMEWORK
• Ideal Compensation Structure. The key guiding principles for an ideal
compensation structure should encompass the following
components:

01 02 03 04

Talent Attraction Performance Alignment Robustness & Ease of

Effectiveness Administration
The structure The structure The structure
should be in line The structure
should be able to should be easy to
with prevalent should be
drive adherence to administer and
market practices. composed of
statutory should ensure
elements which are
• Compensation requirements. employee
performance
elements friendliness.
focused • Tax efficient
• Easy to • Fixed vs. elements • Consistent and
understand and variable pay easy deployment
Compare • Statutory
compliance • Simple overall
structure

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 TOTAL REWARDS FRAMEWORK
Components of Total Remuneration
Total Rewards Framework
 Total Rewards strategy seeks to meet the extrinsic, intrinsic
and social needs of the employee holistically
 Fixed: fixed salary and benefits – internal worth of the
employee, market competitiveness to attract and retain,
maintain lifestyle and security needs
 Variable: short-term and long-term – reward performance,
maximize shareholder value, achieve specific business
objectives, sales incentives, cash based incentives, equity
incentives, retention bonus, deferred pay
Compensation Practices
 Competitive pay packages are important so that top talent is
attracted, motivated and retained in the long-term to build a
successful organization.
 Supporting career growth and work-life balance, as well as
providing training and certification support, is important 21
 TOTAL REWARDS FRAMEWORK
Guaranteed Cash Basic salary
 Fixed bonus  House rent allowance
 Leave Fare Assistance  Conveyance Allowance
 Newspaper allowance  Utilities allowance
 Furniture allowance  Medical allowance
 Entertainment  Special allowance
allowance
 Mobile phone + bills
 Driver’s salary Total Cash Compensation
 Car & fuel benefit
 Performance bonus
Total Remuneration  Deferred bonus
 Provident Fund
 Group Life Insurance
 Gratuity
 Medical benefit
 Subsidized meals
 Club Membership 22
 TOTAL REWARDS FRAMEWORK
Data Representation
The compensation data is presented in the form of percentiles to
maintain confidentiality and to give a true representation of the
market’s remuneration trends and practices:

Term Definition
10th Percentile: The figure below which 10% of the relevant data fall
25th Percentile: The figure below which 25% of the relevant data fall

50th Percentile: The figure above and below which 50% of the
relevant data fall
66th Percentile: The figure below which 66% of the relevant data fall
75th Percentile: The figure below which 75% of the relevant data fall
90th Percentile: The figure below which 90% of the relevant data fall

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 TOTAL REWARDS FRAMEWORK
According to our framework the percentile ranking gives an
indication into how competitive the remuneration practices are
when compared with the market data as follows:

Percentile Ranking

Very Strong Strong Weak Very Weak

>75 >50 >25 >25

TR lies at greater than TR lies at greater than TR lies at greater than TR lies at less than 25th
75th percentile making 50th percentile making 25th percentile making percentile making
compensation highly compensation market compensation compensation highly
market competitive competitive uncompetitive uncompetitive

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 TOTAL REWARDS FRAMEWORK
Data Representation
25th Percentile (25th %ile)
The data point that is higher than 25% of a continuous data set
when sorted from smallest to largest data. This is also known as
the first quartile (Q1)

0 1 2 3 4 5 6 7 8 9 10
Data Point
Median (50th %ile)
The data point that is higher than 50% of a continuous data set
when sorted from smallest to largest data. This is also known
as the second quartile (Q2)

0 1 2 3 4 5 6 7 8 9 10
Data Point

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 TOTAL REWARDS FRAMEWORK
Data Representation
75th Percentile (50th %ile)
The data point that is higher than 75% of a continuous data set
when sorted from smallest to largest data
This is also known as the third quartile (Q3)

0 1 2 3 4 5 6 7 8 9 10
Data Point

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 TOTAL REWARDS FRAMEWORK
Fixed Pay Variable Pay Other Benefits

Basic Pay - fixed monthly pay

Variable Pay: Other Benefits
benefits extended to
employees over and
Benefits & Allowances - cash ► Conveyance above cash
based Allowance I. Short Term Incentives compensation.
► Performance They may be
components: ► Mobile Allowance Pay monetized for the
purpose of costing
► LFA
►House Rent Allowance ► Annual Bonus but are not
► Subsidized services necessarily paid out
to the employees.
►Company Car Facility ► Sales Incentive
► Medical Allowance

►Fuel & Maintenance ► Special Allowance

► Profit Sharing (short
term)

II. Long Term Incentives

Total Guaranteed Cash - Basic Pay + Monetized value of Benefits
and Cash Allowances
► ESOPs
► Retention
Bonus

Retiral & Statutory Benefits* - PF , ESI , Bonus and Gratuity ► Deferred Pay
70-85%
30-15%
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 TOTAL REWARDS FRAMEWORK
Organizational Impact
The different elements of the Total Rewards Framework may
have the following organizational impact:
Fixed Pay Variable Pay Other Benefits

A. Meet/exceed near term A. Traditional benefits given

A. Attraction of talent
business goals by some companies

 Ensure that the near

 Ensure the structure  Need to be Revaluated
term goals of the
maximizes take home periodically
company are met
 May be provided due to
a typical organizational
 Ensure the structure is simple  Short term plans help context, legacy or
to understand/compare drive performance significant advantage in
the past
B. Income Tax and Statutory B. Attract and retain top
adherence talent
 Ensure no undue exposure to  Ensures that the top
the organization and talent in senior
employees positions is rewarded
for taking long term
C. Benefits growth oriented
decisions
Impact

 Ensure that all hygiene factors

are in line with market
practices
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 TOTAL REWARDS FRAMEWORK
Leave Benefit
Annual Leave Sick Leave Casual Leave Maternity Leave Hajj Leave
calendar Days calendar Days calendar Days calendar Days calendar Days

Market 28-32 8-10 10-12 90 30

Leave Benefit
 Data shows that leaves are given on both; working and
calendar days
 All leaves provided on the basis of working days converted
into calendar days
 The most prevalent practice is of 30 days annual leave, 10
medical leave, casual 12 days, 90 days of maternity leave and
30 days of hajj leave
 A small percentage of comparators offer leave encashment,
however this is allowed at the time of separation
(termination/retirement)

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 TOTAL REWARDS FRAMEWORK
Retirement & Terminal Benefit
Group Life Insurance Provident Fund Gratuity
Normal Accidental Eligibility Contribution Eligibility

Market Rs. 500,000 to Rs. 1,000,000 to Upon 8% to 10% of 1 to 5 years of

Rs. 3,600,000 to Rs. 7,200,000 to confirmation basic salary service
36 gross salaries 48 gross salaries

Retirement + Terminal Benefits

 Group life insurance varies in its calculations when observed
in the market, it can either be a fixed amount of cash allocated
grade wise or calculated as a multiple of gross salaries
 Provident fund is calculated as a percentage of basic salary
ranging from 8% - 10%, with 10% being the most common
practice, it was observed that gross salary may be used for
provident fund calculations as well
 All comparators are providing Gratuity to its employees
Entitlement for gratuity ranges from 1 to 5 years of service
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 TOTAL REWARDS FRAMEWORK
Medical Benefit
Outpatient
Outpatient Facility (OPD) Hospitalization (IPD)
Facility (OPD)
Eligibility Coverage Eligibility Coverage Eligibility

Market Self, Spouse, & Self Self, Spouse, Through Self, Spouse,
Children Administered & Children Insurance & Children

Medical Benefits
 Few comparators in the market offer Medical OPD. The most
prevalent practice is to self administer OPD where
entitlement varies from either self, spouse and children
 Hospitalization covers self, spouse, and children and in most
cases major tests, dentistry, day-care surgeries are also
covered

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 HAVE YOU UNDERSTOOD
• Meaning of Compensation?

• Concepts of developing project teams Compensation

Packages

• Issues of Team vs Individual pay

• Knowledge of Team Benefits, Rewards etc

• Analysis of Total Reward Framework

February 25, 2024 Contemporary Issues in Teamwork 32

Thank You