MANAGERIAL COMPENSATION

SALARY ANALYSIS- TRANSFORMER SALES

BY:
Anshu Sethia
Anurag Anand
Ayushi Anand
M. Kavita
Rohit Mittal
Shweta Shukla
Sugam Malhotra
Vineet Gijre

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Table of Contents
ENTRY LEVEL ................................................................................................................................................. 3
LARSEN & TOUBRO ................................................................................................................................... 3
SALARY COMPONENTS.......................................................................................................................... 3
INCENTIVES AND ALLOWANCES............................................................................................................ 3
SIEMENS .................................................................................................................................................... 4
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 4
SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED .................................................................................... 5
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 5
COMPARATIVE ANALYSIS .......................................................................................................................... 5
MANAGER LEVEL ........................................................................................................................................... 7
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS ................................................................... 7
COMPARATIVE ANALYSIS .......................................................................................................................... 8
GM LEVEL .................................................................................................................................................... 10
SALARY STRUCTURE OF LARSEN & TOUBRO ........................................................................................... 10
RECOMMENDATIONS ................................................................................................................................. 11
BASIC SALARY .......................................................................................................................................... 11
ALLOWANCES .......................................................................................................................................... 11
VARIABLE PAY ......................................................................................................................................... 12
SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE............................................................................. 12
SALARY STRUCTURE OF A MANAGER ..................................................................................................... 13
SALARY STRUCTURE OF A GENERAL MANAGER ..................................................................................... 14

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ENTRY LEVEL
LARSEN & TOUBRO
SALARY COMPONENTS

Components of the salary

Amount (INR)

Percent of CTC

Basic

120000

HRA

60000

50

Conveyance

36000

6.07

180000

30.35

75000

12.64

Special Allowance
Team Performance Bonus
Total Base (A)

471000

INCENTIVES AND ALLOWANCES

Components
LTA

Amount (INR)

Percent of CTC
20,000

3.37

6,000

1.01

Medical

36,000

6.07

CCA

60,000

10.11

Telephone

Total Incentives (B)

1,22,000

Total (A+B)

5,93,000

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SIEMENS
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS

Components
(A)

Basic Salary

Amount

Amount

Percent

(INR p.m.)

(INR p.a.)

of CTC

11696

140352

Allowances / Benefits
House Rent Allowance

5,848

70176

50

Conveyance Allowance

1,100

13200

3.3

Medical Allowance

1,250

15000

3.75

Special Allowance

6,048

72576

18.14

Leave Travel Allowance (#)

1,333

15996

3.99

Total Allowances/Benefits

15,579

186948

Base Pay (A+B)

27,276

327300 (C)

81.82

16,843

4.21

6,751

1.68

23,594 (D)

5.89

Based on Basic
pay

Based on target
Pay

(B)

Retiral Benefits (Annual)

Company's Contribution to PF (12%
of Basic Salary)
Company's Gratuity Provision
(4.81% of Basic Salary)
Total Retiral Benefits
(E)
(F)

Total Fixed Pay (TFP) (C+D)

Performance Pay @ 100% p.a. on
Base

3,50,904
49,096
4,00,000

(G)

Target Pay p.a. (E+F)

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SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED

SALARY, ALLOWANCES AND INCENTIVES COMPONENTS

EARNINGS

Amount (INR p.m.) Amount (INR p.a.) Percent of CTC

Basic

14,455

1,73,460

HRA

7,227

86,724

49.99

800

9,600

2.59

10,456

1,25,472

33.90

Rs. 32,938

3,95,256

1,735

20,820

5.62

360

4,320

1.16

2,095

25,140

Rs. 30,843

3,70,116

CONVEYANCE ALLOWANCE
SPECIAL ALLOWANCE
Total
DEDUCTIONS
PF
CANTEEN
Total
Net Salary

COMPARATIVE ANALYSIS
Schneider Electric Infrastructure Limited, L&T and Siemens are in transformer industry but still
their compensation structure varies.
Particulars

L &T

Siemens

Schneider

50%

50%

50%

Conveyance

6.07%

3.3%

2.6%

Special allowance

30.35%

18.14%

34%

Medical Allowance

6.07%

3.75

N\A

Leave Travel Allowance

3.37%

4%

N\A

HRA

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From the above table it can be seen as in HRA all the companies have a standard of 50% of
Basic, but variance is there w.r.t. conveyance and special allowance. Where in L&T conveyance
is 6% in Schneider it is 2.6% only.
Siemens pays a special allowance of only 18.14% as compared to other to companies which pay
a significant amount of 30%-34% of total pay.
Schneider as compared to other two companies does not pay Medical allowance and LTA.

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MANAGER LEVEL
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS

SNo.

Amount

Heads of Payment
L&T

(A)

Basic Salary p.m.

(INR)
Siemens

25,000

29,241

House Rent Allowance

10,000

14,621

Conveyance Allowance

15,000

1,100

Medical Allowance

3,000

1,250

Special Allowance

25,000

20,645

Telephone

1,000

CCA

7,500

Education Allowance

1,500

8,333.33

30,000

1,333

Allowances / Benefits p.m.

Loan
Leave Travel Allowance (#)
(B)

Total Allowances / Benefits p.m.

10,1333.33

38,949

(C)

Base Pay p.m. (A+B)

12,6333.33

68,190

(D)

Base Pay p.a. (C*12)

15,16000

81,8280

Company's Contribution to PF (12% of Basic Salary)

36,000

42,107

Company's Gratuity Provision (4.81% of Basic Salary)

14,430

16,878

(E)

Total Retirals p.a.

50,430

58,985

(F)

Total Fixed Pay (TFP) p.a (D+E)

15,66,430

8,77,265

Ecal & Reptation Pay

10,00,000

Performance Bonus

1,50,000

1,22,741

Retirals (Annual)

(G)

Max Variable Component

11,50,000

1,22,741

(H)

Target Pay p.a. (F+G)

27,16,430

10,00,006

(I)

Target Pay p.m.

2,26,369.16

83,333.83

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COMPARATIVE ANALYSIS

S.No

Heads of Payment

As % Of Basic Salary
(per month)
L&T

(A)
Basic Salary p.m.
Allowances / Benefits p.m.
House Rent Allowance
Conveyance Allowance
Medical Allowance
Special Allowance
Telephone
CCA
Education Allowance
Loan
Leave Travel Allowance (#)
Total Allowances / Benefits
(B)
p.m.
(C)
Base Pay p.m. (A+B)
(D)
Base Pay p.a. (C*12)
Retirals Annual
(E)
Total Retirals p.a.
Total Fixed Pay (TFP) p.a
(F)
(D+E)
Ecal & Reptation Pay
Performance Bonus
(G)
Max Variable Component
(H)
Target Pay p.a. (F+G)
(I)
Target Pay p.m.

40.00

Siemens

As % Of Target Pay
(per annum)
L&T

Siemens

50.00

55.81

81.83

1.86

5.90

57.67

87.73

42.33

12.27

As % Of Target Pay
(per month)
L&T

Siemens

11.04

35.09

4.42
6.63
1.33
11.04
0.44
3.31
0.66
3.68
13.25

17.55
1.32
1.50
24.77
0.00
0.00
0.00
0.00
1.60

44.76
55.81

46.74
81.83

The composition of the salary structure of manager sales in transformer industry varies with the
company they are working in. For example, as illustrated above, the HRA varies between 40%
and 50% in Larsen and Toubro and Siemens. The ratio of variable to fixed pay also varies from
company to company. Larsen and Toubro emphasize more on variable pay, which is similar to
industry pattern for sales whereas in Siemens the fixed component is more. The max variable
component in L&T is around 43% while in Siemens its only 12%.

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GM LEVEL
SALARY STRUCTURE OF LARSEN & TOUBRO
Components of the salary

Amount (INR)

Percent of CTC

Basic

6,00,000

HRA

2,40,000

40

Conveyance

2,40,000

5.384

Special Allowance

4,00,000

8.973

Performance Bonus

3,00,000

6.729

Ecal & Reptation Pay

2,00,0000

44.86

Total

Incentives and Allowances

37,80,000(A)

Amount (INR)

Percent of CTC

Uniform Allowance
LTA

50,000

1.122

Telephone

24,000

0.538

1,00,000

2.243

1,74,000(B)

3.903

24,000

0.538

CCA

1,80,000

4.038

Loan

3,00,000

6.729

Medical
Food Coupons
TOTAL
Education Allowance

TOTAL
TOTAL SALARY (A+B+C)

5,04,000(C)
44,58,000

We could not do a comparative analysis for GM level as we could not get data for this position.

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RECOMMENDATIONS
With the analysis of salary structures, we have come up with the salary structure for an entry
level employee, manager and general manager for a company involved in transformer sales.
The components across the levels are divided into following buckets

Basic salary

Allowance kitty

Special allowance

Variable component

Retiral Benefits

The components would vary across the levels.

We have adopted a Flexible compensation plan (Cafeteria plan) for the compensation
structure across levels. This would allow the employee to design his/her allowance according to
his/her needs, which would lead to employee satisfaction.

BASIC SALARY
Every employee would be paid a fixed amount of basic salary depending on the level s/he falls.

ALLOWANCES
Every employee will be given fixed amounts for

Allowance kitty

Special allowance

List of allowances for allowance kitty & special allowance

The employee will have the discretion to opt for allowances of his/her choice in the allowance
kitty and special allowance. Employee may also restructure the amount between the
allowances in each bucket. The components in each of the bucket would vary across every level.

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VARIABLE PAY
The variable pay across the levels will be disbursed based on the following to factors:

Unit Performance

Company performance

Weight age for the Unit performance would be 60 % while that of the companys performance
would be 40 %. This was a common trend observed across organizations involved in transformer
business.

SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE

COMPONENTS

Allowance Kitty

Basic
HRA
Conveyance
Food Coupons
Medical Allowance
LTA

Total Allowance kitty

Special Allowance
Total Fixed Salary

Special Allowance

Variable

Team Performance Bonus

Retiral Benefits

Special Allowance
Uniform Allowance
Entertainment Allowance
Mess Allowance
Total

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PF
Gratuity
CTC

Amount (INR)
1,62,000
81,000
9,600
48,000
15,000
12,000
1,65,600
47,113
3,74,713

% OF CTC
36.00
18.00
2.13
10.67
3.33
2.67
36.8
10.47
83.27

54,000

12.00

13,495
7,792
4,50,000

3.00
1.73

Amount (INR)
40,000
5,000
2,113
47,113

Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market
leader and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we
decided to keep ourselves at 112th percentile of the median.
The team performance bonus is a total of 12% of the total pay. This 12% is further divided into
40% organizational performance and 60% unit performance. This gives us the internal alignment
for the role.

SALARY STRUCTURE OF A MANAGER

Allowance Kitty

Total Allowance Kitty

Special Allowance
FIXED SALARY
Variable Salary

Retirals Annual

COMPONENTS
Basic Salary p.m.
House Rent Allowance
Conveyance Allowance
Medical Allowance
Telephone
Food Coupons
Education Allowance
Loan
Leave Travel Allowance (#)
Special Allowance
Performance Bonus
Company's Contribution to PF
(12% of Basic Salary)
Company's Gratuity Provision
(4.81% of Basic Salary)
Total Retirals p.a.
CTC

Special Allowance
Uniform Allowance
Fuel
Entertainment Allowance
Messing Allowance
Total

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INR
% OF NET SALARY
4,00,000
25.00
2,00,000
12.50
9,600
0.60
15,000
0.94
25,000
1.56
48,000
3.00
25,000
1.56
2,00,000
12.50
12,000
0.75
5,34,600
33.41
78,160
4.89
10,12,760
63.30
5,20,000
32.50
48,000

3.00

19,240

1.20

67,240
16,00,000

4.20

Amount (INR)
40,000
30,000
5,000
3,160
78,160

SALARY STRUCTURE OF A GENERAL MANAGER

Heads of Payments

Individual Components

Allowances Kitty

Amount (In Rs. p.a)

% of CTC

Basic Salary

4,80,000

15

House Rent Allowance

2,40,000

7.5

Conveyance Allowance

9,600

0.3

Medical Allowance

15,000

0.47

Telephone

40,000

1.25

Food Coupons

48,000

1.5

Education Allowance

25,000

0.78

4,00,000

12.5

12,000

0.38

149600

24.68

4,09,712

12.8

Loan
Leave Travel Allowance (#)
Total Allowances Kitty
Special Allowance

Special Allowance

0
Company's Contribution to PF

Retirals Annual

(12% of Basic Salary)

57,600

1.8

Company's Gratuity Provision

(4.81% of Basic Salary)

23,088

0.72

80,688

2.52

14,40,000

45

Total Retirals p.a.

Performance Bonus
CTC

32,00,000

Special Allowance
Uniform Allowance
Fuel
Entertainment Allowance
International travel allowance
Driver Allowance
Total

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Amount (INR)
40,000
50,000
5,000
2,00,000
1,14,712
4,09,712