A PROJECT ON COMPENSATION MANAGEMENT: An analysis with respect to Compensation system of Windsor IT Park.

RESEARCH SUPERVISOR Name: Prof. Priti

SUBMITTED BY Name:Muzaffar khan

(Submitted in partial fulfillment of the requirement of Master of Business Administration, Asian Business School, Noida-125)

ACKNOWLEDGEMENT

I would like to express my vote of thanks to Prof. Priti, for giving me there great opportunity of doing a wonderful project on Compensation Management System Her timely guidance and suggestion has helped me a lot during the course of my project. Due to her helping hands I was able to complete my project report. I would also like to express my vote of thanks to Dean Latika Sahni and seniors who has also helped and guided me out to the full extent in regards to the data collection for my project report.

Muzaffar khan

EXECUTIVE SUMMARY

Employees are no more liabilities in this modern and competition oriented companies now employees are treated as valuable asset. The Indian market which is under development is also getting more and more competitive both in terms of employees and their satisfaction. A booming industry has resulted in innovative techniques of compensation system. All major players operations with as well small players are strengthening different compensation system because their the

compensation system come under the category where factor like satisfaction and further morale, productivity and effectiveness takes place. The quality of monetary and non monetary benefits to employees makes all the differences. In the background of the above scenario, it was decided to carry out a research to determine what employees think about the compensation and benefits they are enjoying. Is compensation system gives value for their work, means total satisfaction or not. This project which was assigned to us is basically a employees survey throughout the project. I had found out the behavior of employees and their expectation the reasons of satisfaction and dissatisfaction. I hope conclusions and recommendations drawn from this report will definitely help the company to analyze the present COMPENSATION

SYSTEM and to take necessary measures so as to increase employees satisfaction and ultimately to the overall performance of the company.

TABLE OF CONTENTS 1-INTRODUCTION AND OVERVIEWS About the project Rationale of the project Objective of the project Scope of the project Limitations of the project

2-About the company Introduction Turn over/financial of the co. Customers and markets Suppliers Key techonologies Competitors

3-Litrature review Theory of compensation system Articles/case studies

4-research methodology Research methodology Research design Data collection method Research questions Finding and recommendations

5-findings and recommendations Data analysis

Data interpretation

APPENDIX AND KEY FINDINGS QUESTIONIARE

INTRODUCTION AND OVERVIEW This project is all about the Compensation and Reward system and how it plays vital role in a business organization and what type of compensation system does company i.e. Windsor IT park follows. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. This project focuses on the factor of compensation system that influences the level of satisfaction of the employees of the company. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Labor plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. The fair compensation system will help in the following:
o

An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.

It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable.

Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

The system should be simple and flexible so that every employee would be able to compute her own compensation receivable.

o o

It should be easy to implement, should not result in exploitation of workers. It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.

Such system would help management in complying with the various labor acts.

Such system should also solve disputes between the employee union and management.

The system should follow the management principle of equal pay.

It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.

Sound Compensation/Reward System brings peace in the relationship of employer and employees.

It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.

The system provides growth and advancement opportunities to the deserving employees

The perfect compensation system provides platform for happy and satisfied workforce. There minimizes the labor turnover. The organization enjoys the stability.

The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.

The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.

Many of today's senior executives name pay-for-performance as the most critical tool in achieving the greatest financial results at their companies. But, implementing real, pay-forperformance is easier said than done. Success Factors makes it easy for you to quickly and easily implement a powerful payfor-performance strategy. By rewarding great execution, you will better retain your top talent and drive organizational performance that exceeds all expectations. Plus, you'll enjoy clearer visibility into individual employee performance when it comes time to make critical compensation planning decisions

Objective of the project The present study is principally aimed at analyzing the monetary and non monetary factors that influences the productivity and efficiency of

employees, in simple term analyzing factors of compensation system that influences level of satisfaction of employees.

Scope of the project The sample size is limited to 3 and relies heavily on secondary data. This study covers the human resource department only. The research covers compensation system of Windsor IT Park. Limitations of the project Sample size is very small has been deliberately taken small due to time constraint and the research also suffers from the usual limitations of more usage of secondary data.

Employees of the company were afraid of giving the information so may be information given by them lacks reliability.

Litrature review Compensation is payment in the form of hourly wages or annual salary combined with benefits such as insurance, vacation, stock options, etc. that can positively or negatively affect an employee's work performance. An ideal compensation management system will help you significantly boost the performance of your employees and create a more engaged

workforce thats willing to go the extra mile for your organization. Such a system should be well-defined and uniform and should apply to all levels of the organization as a general system.. Plus youll enjoy clearer visibility into individual employee performance when it comes time to make critical compensation planning decisions. With effective compensation management youll also enjoy clearer visibility into individual employee performance when it comes time to make critical compensation planning decisions. These performance appraisals assist in determining compensation and benefits, but they are also instrumental in identifying ways to help individuals improve their current positions and prepare for future opportunities. Definition Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.

Research methodology The research methodology is the framework of how the research will be carried out. It refers to the various sequences of steps that are adapted in the study. It guides the research process which helps the research to have a standard and also help to measure how much have been achieved. It

describes research design, data gathering and processing procedures, nature and sources of data collection.

Research design A research design is a plan for the collection and analysis of data. Research design presents a series of guide posts to enable the researcher to progress in the right direction and includes various research methods that were used as a part of this project type of Research Design Observation and Adaptation Research Due to limited span of time we cannot extract much information through the study as we analyze just surface of the project Exploratory Research This type of research is conducted for the problem that is not clearly defined and formulating a problem for more precise investigation. As the assumption is clearly defined, this method is not applicable. Descriptive Research In this type of research method researcher has no control over the variables but only can report what has happened or what is happening. As the researchers is certain that Asian Paints is one of the largest paint sellers and mean to prove through market survey, this method is applicable. Within descriptive research, there are two categories of research. Qualitative Research Various site visits, publication are considered important for preparing the project. Literature reviews which deal on various literatures are taken into consideration. Quantitative Research

Under quantitative research, a set of questionnaire was prepared in order to know about the attitude of employees towards the compensation system of particular company.

Data collection method

The data can be classified into two groups: I. Primary Data

Data collected by the researcher for the first time from related field and possessing original character are known as primary data. Primary data are generally used in those cases where the secondary data do not provide an adequate basis for analysis. II. Secondary Data

Data collected by someone else, used already and are made available to others in the form of published statistics are known as secondary data. In this project we have also used secondary data from internet & other sources.

3.3 Sample Design Sample refers to a part chosen from the population which means part of the whole which we select for the purpose of investigation. Since, this

study is focused on the comparative study of color paints, thus, here the population encompasses all the color paints industry operating within the country. Since, study of population may not be effective due to several factors, thus sampling becomes essential to draw inference for the population. So among all the color paints industry, comparative study of Asian Paints Limited with Berger Paints has been selected randomly as for convenience sample and data are collected only from household sector.

3.4 Non-probability Sampling Non-probability sampling is that type of sampling techniques which cannot be used to infer from the sample to the general population. Any generalizations obtained from a non-probability sample must be filtered through ones knowledge of the topic being studied. As in this research study, members of the population are chosen based on their relative ease of access like households of sample is only chosen within the short span of time. The research is only limited to the particular group who are using different particular brand of paints as of possessing similar characteristics along with the judgment sampling wherever appropriate for the study.

Literature review Windsor IT Park

Case studies strategy Chief people officer Patti Wilmot on how to get pay-for-performance right November 22, 2010 | By Dina Berta

Editors note: This is part of the 2010 NRN and HVS salary study, Just rewards, from the Nov. 22 issue of Nations Restaurant News. To see the full report, available to subscribers only, go to NRN.coms Special Reports page. Excerpts, including this case study and data on the most underpaid and overpaid CEOs, as well as the methodology behind the study, are available to all NRN.com readers. Pay-for-performance has been the standard method of compensation at Dominos Pizza Inc. for the past decade because it works, said Patti Wilmot, chief people officer at the parent company to more than 9,000 pizza delivery locations. True pay-for-performance means there is a lot of skin in the game for individuals, from the CEO on down, Wilmot said. They have to have an ownership piece of the business. In a new study by HVS Executive Search and Nations Restaurant News, the companies with the strongest pay-for-performance compensation packages were most likely to have underpaid chief executives. Whether a chief executive was overpaid or underpaid in this new survey was based on a companys performance, stock appreciation and other standard indicators. Former Dominos chairman and chief executive Dave Brandon was considered underpaid by 12.58 percent in total executive compensation, according to the study based on 2009 data. Current chief executive, J. Patrick Doyle, succeeded Brandon in January. Wilmot, who helped establish the pay-for-performance model, shared with Nations Restaurant News her insights on how to make pay-forperformance work effectively.

First, the base pay has to be practical neither excessive nor insignificant. It also needs to be competitive. We strive to pay in the 50th percentile, which means 50 are paid more, 50 are paid less, Wilmot said. When our shareholders look at overall compensation, base salary is reasonable and not over the mark. Our executives like that. Its a competitive base salary with the upside in the short-term and long-term bonuses. Short-term bonuses are based on corporate earnings before income, taxes, depreciation, and amortization. A bonus will be a percentage based on an EBITDA target. We pay over the market with short-term bonuses, she said. For an executive, when we perform and reach our 'stretch' goals for our total company, we will pay more than the 50th percentile. When they reach their goals, their pay can reach into the 75th percentile. Stretch goals are financial or management targets that are achievable, but will require hard work and effort to reach. Its possible to make them, but its a stretch; its not a layup, Wilmot said. Every other company is doing the same thing. We have to be better than everyone else. Long-term incentives are all about corporate equity, but even there an executive has to meet performance targets each year for three years for that equity to vest. What the real carrot, the uniqueness about our pay-for-performance, is the more money you make the more you share in the wealth, she

said. If you dont perform, you dont get paid. Its that simple. Its that black and white. Pay-for-performance is not just for senior-level executives but also for all company employees. Goal setting and rewards are for everyone, Wilmot said. For example, employees can benefit through the Team Achievement Dividends, or TAD, which are paid out when the company meets certain objectives for the year. There is a lot of unity in that, she said, and a lot of communication about where we are against the target and what role everyone plays in hitting the target, whether they are a secretary or accountant. Wilmot has seen employees create their own initiatives to help the company reach its goals. One year, all the administrative assistants came up with the idea to cut transportation expenses by using one taxi cab driver for the corporate office and negotiating a better rate. The savings were then applied to the TAD. As simple as the concept is for pay-for-performance perform and get paid it requires a lot of attention to detail to enact it successfully, Wilmot said. It requires you to be diligent in writing objectives and communicating to the organization, she said. Everyone understands what part he or she plays and their roles. You have to reinforce consistently where you are in the progress. A company also must be committed to conducting regular and productive performance reviews so employees know where they stand in achieving their goals. Team members are responsible for

making sure they receive a review and participate in discussions about their performance. I go in ready to discuss all of my accomplishments with [chief executive] Patrick, Wilmot said. I come prepared not on what the boss will say to me, but what Im going to say. Doyle will do the same in his own review with Dominos board of directors. He will go over his 2010 corporate objectives what he achieved or didnt achieve, Wilmot said. Its not rocket science, she said. Its not unique. But its real and it works and its right for our culture.

Compromise Agreement Case Study: Compensation increased by 8,000

Summary

How Marsha Thompson increased an employees compensation by more than8,000 and helped him secure a job with a competitor by releasing him from misconceived restrictive covenants.

Situation

Cyril had enjoyed his job as a sales executive with an international insurance company for four years. He consistently met targets and had recently been promoted with a pay rise.

However, a few days after returning from annual leave, an hour into his shift Cyrils line manager told him he was dismissed with immediate effect. He was handed aCompromise Agreement and called into a meeting with his line manager, senior manager and HR manager.

The senior manager said words to the effect of: I am sure this will come as a shock, but your role is no longer required and we are making you redundant giving you one months notice from today. You can choose to work your months notice or leave today.

Cyril was told he would be paid one months notice in lieu if he left that day and returned the signed Compromise Agreement. He was also advised his PC, email and mobile phone had been locked. Understandably, Cyril was shocked as this was the first time he was aware his role was redundant or that the company was planning to dismiss him. Neither did he know the company was undergoing a redundancy exercise.

Cyril told the assembled managers he wanted time to consider his position. However, his HR manager advised him that if he left the office to clear his head and returned, security would escort him off the premises. Feeling thoroughly humiliated, Cyril was escorted by security to his desk for his belongings and then off the premises.

Convinced that the companys actions were unlawful and that this was not a genuine redundancy situation as no one else had been made redundant, Cyril rangmartin searle solicitors in Croydon for advice.

What martin searle solicitors did

Marsha Thompson advised Cyril he had a potential claim for unfair dismissal as the company had failed to follow a fair redundancy procedure. In particular, his former employer had failed to:

Advise Cyril he was at risk of redundancy;

Inform and consult with him;

Fairly select him for redundancy;

Consider suitable alternative employment;

Give him the right of appeal.

In addition, the company had overlooked its own internal redundancy policy.

Marsha sent a without prejudice and an open letter to the company setting out the basis of Cyrils potential claim for unfair dismissal. The company had no defence.

The result

Cyrils former employer instructed solicitors and Marsha negotiated a severance package of 10,000, equivalent to about six months net salary. This was an increase of 8,334 on the previous offer made with the Compromise Agreement.

During the negotiations, Cyril was offered a role with another insurance company. The company had also required Cyril to sign various covenants restricting him from working with competitors. These restrictions were not in his employment contract. Marsha was able to exclude these from the Compromise Agreement enabling him to take up this new position.