AMITY UNIVERSITY UTTAR PRADESH NOIDA

AMITY SCHOOL OF BUSINESS

Term Paper Report

Case study

On

COMPRATIVE STUDY ON COMPENSATION

MANAGEMENT BETWEEN THE PRIVATE AND PUBLIC

SECTOR BANKS

Name of the Student: DIVYA GUPTA

Enrollment Number: A3923014062

Class Roll Number: 48

Program: BBA+MBA (Dual)

Batch: 2014-2018

Faculty Supervisor: Dr. LK TYAGI

 ACKNOWLEDGEMENT

I express my sincere gratitude to my FACULTY GUIDE Prof. Dr. L.K. TYAGI, for his able
guidance and support throughout my project, without which the present work would not have
been possible.

Lastly, I would like to thank the Almighty God for everything. This report would never have
been a success without his blessings.

Signature:

(Student)

DIVYA GUPTA
CERTIFICATE OF GUIDE

This is to certify that the project work titled “A STUDY ON COMPARTIVE ANALYSIS
ON COMPENSATON MANAGEMENT BETWEEN PRIVATE AND PUBLIC
SECTOR” is a bonafide work of Ms. DIVYA GUPTA Enroll No: A3923014062 carried out
in partial fulfillment for the award of degree of BBA+MBA (DUAL) under my guidance.

This project work is original and not submitted earlier for the award of any degree/diploma or
associate ship of any other university/institute.

Signature of Guide

(PROF. DR. L.K. TYAGI)

DECLARATION BY STUDENT

This is to certify that I, DIVYA GUPTA, a student of BBA+MBA (Dual) Degree of 2014-2018
Batch, Amity School of Business, Amity University Uttar Pradesh, and Noida have worked
under the guidance and supervision of PROF. DR L.K TYAGI for NTCC term paper.

This report has the requisite standard for the partial fulfillment of the Post Graduate Degree in
Business Administration. To the best of my knowledge no part of this report has been
reproduced from any other report and the contents are based on original research.

I am aware that in case of non-compliance, Amity School of Business is entitled to cancel

report.

Signature (Student)

Name of the student – DIVYAGUPTA

Enrolment No. – A3923014062

Batch: 2014-2018
ABSTRACT

Compensation is the term which is the most important for the employees and for everyone who
is working in the organization.. Compensation is the award for the employees as it motivates
and encourages employees to work in the organisation for the achievement of the organisation
objectives. It is the responsibility of all the organisation human resource department to provide
good wages and fair treatment to each and every employee of the organisation. Good wages
and benefits to the organisation are the source to keep the talented employees within the
organisation.as they are the future growth of the organisation. Compensation is the
remuneration which he or she received by contribution to the organisation. Compensation is
the organised practice which is followed by every organisation in terms of mentally and non-
monetary benefits.
Therefore, workers must be remunerated for their services to the organisation. Compensation
to employees for their services is important responsibility of human resource management.
Every organization must offer good wages and fringe benefits to attract and retain talented
employees with the organization. If at any time, the wages offered by a firm are not competitive
as compared to other firms, the efficient workers may leave the firm. Therefore, workers must
be remunerated adequately for their services. Compensation to workers will vary depending
upon the native of job, skills required, risk involved, native of working conditions, paying
capacity of the employer, bargaining power of the trade union, wages and benefits offered by
the other units in the region or industry etc. considering that the current trend in many sectors.
Compensation is the remuneration received by an employee in return of his/her contribution to
the organization. It is an organized practice that involves balancing the work-employee relation
by providing monetary and non-monetary benefits to employee’s compensation is an integral
part of human resource management which helps in motivating the employees and improving
organizational effectiveness

Keywords:
▪ Compensation, Organizational Productive, Monetary Benefits ,Bonus
Payment, Performance Pay, Efficiency Wages ,Salary
BACKGROUND OF THE STUDY

Compensation is a wide concept, which refers to the huge financial and non financial rewards
to the employees for the rendered services to the organisation. Compensation is for everybody
weather a person working in a private sector or in public sector or in local business or in
household work or wherever. Compensation is a structured form of wage which a person gets
in some or another form.it is provided in a variety of compensation packages - salary, hourly
profit etc. a company just cannot ignore compensating employees as it keeps encouraging
employees for the achievement of the objectives. Compensation do include health care, paid
leaves, housing, maternity leave and some other benefits. The main motive of the
compensation process is to compensate such talented people who are the future growth of the
organisation. To hire well qualified employees and to retain the present worked skilled
workforce.

Compensation refers to a wide range of financial and non financial rewards to employees for
their services condensed to the organization. Employees in both the private and public sectors
are provided with a variability of compensation packages–salaries or hourly charges and
profits, which can include the provision of employer supported health care, employer
contributions to a retirement plan, paid leave and other incremental forms of compensation.
The how and why of employees compensation between the public and private sectors has long
been an issue of debate, and has progressed to the forefront as state and local resources
continue to be stressed. This analysis will provide an overview of wages and profits of public
and private sector employees in order to provide some content to the debate about public sector
compensation
OBJECTIVES OF THE STUDY:

1. Comparative study of compensation management of public and private sector.

2. To investigate the salary structure of the private and public sector in the Indian
companies.

3. To study how compensation affects productivity of the employees of the private and
public sector.

4. To examine the Effectiveness of compensation management in the public and private

sector.
RESEARCH METHOLOGY

The research is descriptive in nature and analytically studied, which will analysis and compare
the difference compensation management system in private and public sector. The differences
can be analysed easily and the information collected. There will be personal
Interviews with the employees of the organisation. To know whether they are satisfied with the
compensation management system of the organisation or not. The collected data will be
organized through the conversation over the telephonic information the employees will
provide.

PRIMARY RESEARCH

Telephonic interview and through observation. Questions will be presented in such a way
which doesn’t hurt anyone’s sentiments and will be presented in front of the employees for the
flexibility of the employees and easy understanding of the research.

SECONDARY RESEARCH

The information will be collected through the books, references, internet, personal knowledge
interview etc.
 COMPENSATION SYSTEM IN PRIVATE SECTOR

 Leaders from various companies describe a variety of compensation practices

that have been successful in retaining key talents and skills of the workforce.
Many of the formalities which are to be fulfilled by both sectors externally are
almost the same. Particularly the legal duties. Some of the successful parameters
which are being practiced in the private organizations are as follows:

 Main focus on career growth, as well as career opportunities for all the
employees, career increase of rate for key skills and talents, and technical
career-tracks

 Skill-pay programs that communicate development and pays in one package.

 When employees become a number and the company does not focus on their
development and career growth, they leave.

 Sharing the organization's success with employees to make them feel

comfortable and part of the organization bonuses that destabilize the workforce
and do not sustain the organization for the long term even though they put out the
initial start-up fire.

 Giving incorporated pay and total rewards programs customized to the

workforce segment.

 Making sure compensation also keeps pace with career growth. Pay main talent
well; pay the most for the best talent because they are worth that investment.

 Hiring people for creativity, the potential for creativity and idea people, and
rewarding those people well.
NON FINANCIAL COMPENSATION:

Non financial compensation is the different aspect of the compensation which is not included
in the direct pay to the employees. They are included in the extra activities practiced in the
organisation to make the employees develop themselves for their won purpose and to develop
according to the organisations needs.

▪ alternative work schedules:

▪ There are many alternatives to the traditional 5 day working, Like 8 hours working
schedule.
▪ on the job training:
▪ This is the best way develop the employees skills, and showing them how to perform
the task in the organisation. This help the employees to develop their self esteem. Etc.
▪ Work life balance:
▪ Work life balance is the main in once life as u have to balance your personal and
professional life. Here the employer understand the need of the employees situations
▪ Developmental opportunities:
▪ Training and the opportunities for the employees to expand their knowledge and
improve their skills.
▪ Casual dressing:
▪ In some of the organisation sat is the working day and keeping the dress code casual
keep the employee relaxing and happy to cheer up and work relax.
▪ This is how HDFC bank keep their employees motivated and encouraged with the
benefits and the compensation management of the organisation. Hdfc bank as the
private bank and the one of the trusted banks in India have the strength to keep their
employees motivated.

▪ Great brand image

▪ high level of customer satisfaction

▪ good compensation management

▪ good place to work

▪ beneficial effects
▪ dedicated workforce is constraine
COMPENSATION SYSTEM OF HDFC BANK:

Compensation management helps the HDFC bank to determine the relatives’ worth of the job
in an organisation in a systematic, consistent and accurate manner. It also help in estimating the
basic pay for each and every employee according to the job accordance.

DIRECT COMPENSATION:

 Basic salary :

 Basic salary is the basic pay received by the employee of the organisation in line to the
work done in the organisation by him or her for a certain period of time. A day, a week,
a month, etc. It is the money which is received by the employee form the employer by
rendering the services.

 House rent allowances:

 It is the organisation responsibility to keep their employees happy so they provide

accommodation to their employees especially who are from different states or country
for their safety purpose and as matter of extra benefit to the employee.

 Conveyance:

 Travelling and transportation is the main issue in the organisation. So the organisation
provide the transportation services to the employees for the travelling purposes. This
keeps employee happy and motivate.

▪ Leave travel allowances:

▪ Every employee need leaves to balance the work life. So HDFC bank is one of the
organisation which provide paid leaves to the employees. Weather they are going for
the office purpose or for some personal work.
▪ Medical reimbursement:

▪ Organisation also look after their employees’ health. So they provide medical
allowances to the employees to keep them healthy and fit so that the employees can't
miss any day of the work and work in the organisation just to keep the management
happy and achieving of objectives.

▪ Bonuses:

▪ Bonus is paid to the employees during the festive seasons to motivate them to provide
them with the social security.

▪ Special allowances:

▪ Special allowances are the allowances which include the meals. Movie tickets, picnics,
etc just to keep the employee happy and motivated. This could be the special as it
COMPENSATION SYSTEM IN STATE BANK OF INDIA:

State bank of India is an Indian multinational public sector banking and financial service
provider company. Working with SBI means working with market leader company or bank
among the all the banks. The salary/ compensation system of the bank is as appropriate as the
other public banks or as other all reputed company have. The compensation management
system of the SBI provides as excellent offers and amazing salary to the employees to keep the
employees motivated and to keep the customers happy with the services of the bank.

▪ There are several perks that are provided to the employees of the SBI bank.

▪ one of the best perk and the attractive feature is the best class entry level compensation
package

▪ They have best service to the probationary officers with the minimum of rupees. 7.55
lakhs and maximum of rupees. 12.93 lakhs. Which shows that the compensation
management of the organisation have the best benefits. Like, conveyance. Rental
allowances etc.

▪ SBI bank have the best compensation policy in the organisation to keep their employees
motivated and encouraged so that they can help the organisation achieve the
organisation objectives and the main customer satisfaction.

▪ They have the best training and development strategy to develop their employees and to
keep their skills developed with the changing environment.

▪ This is how the employees of the public sector banks are more motivated and skilled and
enthusiast towards their work and towards the organisation. Public sector have the best
in their policies and best within the organisation.
▪ Now lets look forward to some of the compensation management system provided by the
organisation to their employees.
 Housing:

▪ As it is the public sector bank so it the government responsibility to keep their

employees safe and secure, so the housing rent allowance is included in the
compensation system of the organisation which is provided to the employees as a
▪ Part of the packages. This becomes more prominent as the employee move up to the
ladder.
▪ Medical allowances:
▪ Health comes first in all the way to keep the employees healthy and to keep check on
the employees family well- being is important to the bank and they take care of the
employees medical expenses.(100% for the employees and 75% to the family). The
bank also provide group insurance over and above the compensation packages.
▪ Travel:
▪ The employee gets leave travel concession to visit places within the India. Holiday
homes and bank guest’s houses are available for the employees at major cities and
tourist destinations.
▪ Leave policy:

The employees are provided with the attractive leave policies, which includes 33 days of
privilege leaves and 12 days of casual leave annually along with sick leaves and the maternity
leaves. Women and single men with children or aged parents have the provision to take
sabbatical leave up to 2 years.

Other benefits:

As it is the bank and the public sector bank , so the bank also do provide housing loans, car
loans, personal loans, on concessionary rate of interest. Also the organisation provide
scholarship to the meritorious children of the employees .
FINDINGS:

 The compensation management policy different banks have different and also very
beneficial
 The compensation management of public banks are more appropriate
 The compensation policies of private banks are beneficial but conflicts arises
frequently
 The compensation policy public banks are beneficial for the employees because
they are under government acts
 The public compensation policy are more than that of private
 The public sector takes time to complete procedure but they play their role
effectively.
 The compensation management policy private banks are more motivating because
they have to keep up according to the employees.
 Also the private banks policy are motivational because of the environment of the
organisation.
 Public sectors have the conflicts when compensating their employees. Because they
have long process to carry.

 There exists no significant difference between the banks in all the other constructs
of Training & Development procedures because the significance value is above the
Standard norm. It means that both the banks follow similarly in the above
procedures.

 There exists significant difference between both the banks relating to the Usage of
Merit based pay system, Satisfaction with job evaluation & legal regulations of pay
system, Linkage of Compensation with performance, Salary & other benefits
comparable to market. This is so because Public sector bank has its own strategy
and procedures to adopt Compensation practices than Private sector banks

 There exists no significant difference between the banks in all other constructs of
Compensation practices because the significance value is above the standard norm.
Both the banks follow in the same manner in all the other Compensation
 CONCLUSION:

Due to Globalisation, Public sector banks are facing stiff competition from Private sector
banks. The public sector banks are finding it difficult to cope up with competition. Most of the
public sector banks are providing Training & Development facilities, excellent Compensation
packages so that employees are willing to perform better.
So, the HRM activities relating to Training & Development procedures is good in both the
banks whereas Compensation practices of the Private sector banks should be designed in such a
way to make them to be on par with the Public sector banks, so that it will contribute to the
betterment of the banks

According to my findings are the analysis I have done. I have come up with the conclusion that
the private sector compensation management policies are much better and beneficial for the
employees and also for the organisations.
There are many public banks who have the best compensation policies within the organization
and which are followed by the private sector policies.

There are policies which are very common in nature but have different procedure to follow.
The research about the compensation management was very satisfying experience for me.not
only practically but also academically.

The banks compensation management policy is to provide the fair and consistent basis for
motivating and rewarding employees appropriately according to their work and their
contribution towards the organization.
REFRENCES:

1. Bhargava Deepti, HR Practices in Public and Private Sector Bank, (Rajsamand: IJBEMR, 2010).
Chakrabarty KC, RBI Monthly Bulletien Human Resource Management in Banks-Need for a
New Perspective (2012

2. Shikha N. Khera Human Resource Practices and their Impact on Employee Productivity: A
Perceptual Analysis of Private, Public and Foreign Bank Employees in India, DSM Business
Review Vol. 2, No. 1 (June, 2010)

3. Armstrong, M (2005). A Hand book on Human Resources Management Practices; UK; Kogan
page, 986p
4. Armstrong, M. & Brown, D (1998). Relating Competences to pay; The UK experience,
Compensation and Benefit Review 18(2); 295-310

5. Gunderson, Morley (1979). Earnings Differentials between the Public and Private Sectors.
Canadian Journal of Economics 12, 2: 228–42.

6. Bender, Keith A. (1998). The Central Government-Private Sector Wage Differential. Journal
of Economic Surveys 12, 2: 177–220