COMPENSATION

MANAGEMENT
BANKING AND TELECOM SECTOR

GROUP 4:
Ekta B- 18100
Midhun G- 18103
Neha P- 18104
Srinivas P- 18110
Trupti K- 18112
Veena Shravani- 18113
Nisarga Ganesh- 18116
Sristi Roy- 18123

AUGUST 5, 2019
Contents
BACKGROUND INFORMATION ON THE TELECOM SECTOR: ............................................ 3
VODAFONE...................................................................................................................................... 4
Pay for performance: ......................................................................................................................... 5
Global Short-Term & long-term Incentive Plan:................................................................................ 7
BHARATI AIRTEL: ........................................................................................................................ 8
Reward Management......................................................................................................................... 8
Work life balance at Airtel ................................................................................................................. 9
BACKGROUND INFORMATION ABOUT THE BANKING SECTOR..................................... 12
Evaluation of compensation management: .................................................................................... 13
COMPENSATION ON THE BASIS OF EXPERIENCE ............................................................................ 14
Compensation policies and practices by RBI guidelines: ................................................................ 16
Effective alignment of compensation with prudent risk taking: .................................................... 17
Major players in Indian and Global market: ................................................................................... 18
HDFC BANK................................................................................................................................... 21
PNB BANK ...................................................................................................................................... 23
CONCLUSION: .................................................................................................................................. 27
Recommendation: ............................................................................................................................... 28
BACKGROUND INFORMATION ON THE TELECOM SECTOR:
Telecom industry is one of the fastest growing industries in the world. People are nowadays
considering having frequent communication among them. So in course of time and with the
growth rate of population and also appeal for high standard living, telecom industry is
growing in a high pace. This fastest growing industry has already attracted many marketing
geniuses, researchers, research companies to explore the opportunities. Researchers are trying
to investigate different markets and potentials of those markets. Marketing geniuses are
making theoretical forecast or theoretical model for suitable market investigation.
Multinational giants are always in a desire to be extended globally. Observation says telecom
multinationals are trying to diversify into the markets with high growth rate. A lot of studies
have provided the pathway or the map of reaching into a foreign potential market. Indian
telecom industry is such a market which has already attracted lot of researchers to explore the
opportunities.

According to India Salary Increase Survey , telecom talent is more mobile in that it can move
across different industries. So, compensation growth must factor in the industries to which
talent may move. Airtel, Idea Cellular, Vodafone India, and Reliance Jio Info COMM did not
respond to ET’s e-mails on the 2018 compensation outlook. In the past one year, right-sizing
has shrunk the employee base in the sector where staff costs make up less than 5% of
revenue. The anticipated raise in 2018 is in line with Hewitt's projections for India Inc, which
after an eight year low of 2017 may raise wages 9.6% on an average. In 2017, the average
increase was 9.4%. The telecom industry had seen raises of even 17% a decade ago. "After
merger approvals, telecom operators could roll out a 10-13% raise for employees to retain
them instead of an average of 8-9% that was paid across hierarchy,” said A Ramachandran,
partner at search firm of EMA Partners.

Ramachandran added that 2018 may see retention bonuses for the management and key talent
that are needed to chart out the structure of merged entities. Bharat Bhargava, partner,
telecom advisory services at EY, said profiles would determine compensation.

Therefore, those with skill sets developed for only telecom may be in a tough spot since their
demand in the job market would be limited. “There is consolidation. While it is driving
organisations to trim the workforce, a lot of the people are leaving voluntarily. These are
healthy increments that are being projected, especially for talent one wants to hold on to,"
said Vikram Chhachhi, principal, global consumer markets, Heidrick & Struggles.
Data collection:

Primary data and secondary data were collected for the following 2 firms-

1. Vodafone
2. Airtel

The primary information about Vodafone was collected by talking with 1 ex-employee. The
secondary information about both the company was collected from their annual report, and
sites like glassdoor and naukrihub and other sources from google (links are mentioned below)

VODAFONE
With close to 90,000 people operating in 23 countries, they needed a solution to manage all
compensation processes across the business. This included salary review, bonus, long term
incentives, and allowances.

At Vodafone, they believe in offering their employees a four-pronged total reward

proposition.

 Which is inclusive of market competitive & equitable compensation;

 Benefit plans & programs in line with employee needs and aspirations;
 Investment in the development of our People
 Safe workplace where diversity and inclusiveness are respected.

Vodafone looked at their rewards strategy from a “one size does not fit all” perspective.
Rather than selecting a standard talent suite, they chose beqom’s Total Compensation
Management solution that conformed exactly with their unique company values and
objectives

As a result, they now provide their employees with a clear picture of the link between
performance and their personal objectives, ensuring fairness and transparency across the
compensation process.

By selecting beqom, Vodafone has overcome several challenges, leading to:

  Improved efficiency by decreasing their salary review processes for over 89,000 users
from 3 months to 15 days.
 A unified view over compensation and reward processes.
 Global consistency. Local rules are now in a common framework, with easy access to
source data from anywhere in the world.

Another important sector Vodafone used to take care is Mediclaim, insurance, travel policies
is helpful for employees

Pay for performance:

Pay for performance continues to be an important principle for Vodafone when setting
remuneration policy. This ensures our incentive plans only deliver significant rewards if and
when they are justified by performance. This helped to ensuring the targets they set for
incentive plans are suitably challenging. The Committee reviews all incentive plans before
any payments are made to executives and has full discretion to adjust payments downwards if
they believe circumstances warrant it.

Every year, a formal set of surveys helps voice the opinions of our employees with respect to
their perception of the fairness of their total rewards, in comparison with what they note in
the market. Armed with this feedback, we endeavour to sharpen our proposition year on year,
for the relevant constituencies.

In fact, as an outcome of these surveys, Vodafone has been running an initiative of

“demystifying the Black Box” around Rewards. In keeping with the same, we have
endeavoured to equip our 2,500 people / team managers in understanding the science behind
rewards and recognition, so that they may practice the art of retaining and developing their
key talent.
The table below summarises the main components of the reward package

Purpose Operation
Base salary To attract and retain the best  Salaries are reviewed
talent. annually and fixed
for 12 months
commencing 1 July.
Decision is
influenced by:

 level of skill,
experience and scope
of responsibilities
of individual and
business
performance,
economic climate
and market
conditions;

 an external
comparator group
(which is used for
reference purposes
only) made up of
companies of similar
size and complexity
to Vodafone, and is
principally
representative of the
European top
25 companies and a
few other select
 companies relevant
to the sector. The
comparator group
excludes any
financial services
companies

Golden handshake policy:

The Vodafone Group is offering generous payouts, or ‘golden handshakes’, to its strong
performers who could not be accommodated in the new entity created by the merger of its
India unit with Idea Cellular, said people familiar with the development.

A golden handshake is used to describe the severance package offered when an employee is
retrenched, and is given only to those valued by the company, or the top brass whose offer
letters have this clause built in

The golden handshakes have been given from Level 1 to Level 4. Level 1is the top-rung in
the hierarchy, while senior managers fall into the Level 4 category.
All these initiatives boil down to our people experiencing objectivity and fairness.

Global Short-Term & long-term Incentive Plan:

Purpose:
 To drive behaviour and communicate the key priorities for the year.
 To motivate employees and incentivise delivery of performance over the one-year
operating cycle.
 To support and encourage greater shareholder alignment through a high level
of personal financial commitment.
Operation:
 Bonus levels and the appropriateness of measures and weightings are reviewed
annually to ensure they continue to support our strategy.
  Performance over the financial year is measured against stretching financial and non-
financial performance targets set at the start of the financial year.
 The annual bonus is paid in cash in June each year for performance over the previous
financial year.
 Long-term incentive base awards consist of performance shares which are granted
each year in June/July.
 Individuals must co-invest Vodafone shares and hold them in trust for three years in
order to receive the full target award.
 Dividend equivalents are paid in cash after the vesting date.
 All awards vest three years later based on Group operational and external
performance.

Vodafone’s 2025 goal is to become the world’s best employer for women. So other than
creating suitable work culture for women they are focusing on maternity leave, other special
benefits to encourage and retain women in their company.

The main issue Vodafone is facing:

To manage various local reward structures and legal requirements within a global framework,
as they looked towards replacing multiple existing systems.

BHARATI AIRTEL:
The emphasis of the HR team has been aligning the corporate objectives with those of the
various groups’ objectives and individual objective of the company. The emphasis of the
company has been to recruit young people.

The HR policies adopted by Airtel to derive competitive advantage through people are:

Reward Management
One of the vital motivation factors for the employees is the Reward and Recognition Policy
of Bharti Airtel.

The success of the rewards and recognition system at Airtel due to the factors below:
  The reward is reflective to the achievement
 The reward is reflective to the person
 The rewards are timely and specific

Behaviours that are rewarded at Airtel are:

 the attainment of sales goals.

 cost-saving suggestions
 exceptional customer service

Work life balance at Airtel

Some of the family friendly benefits has been designed for the employees-

 Flexibility: Employees can opt for flexible work timings, flexibility to work from
home, work from a remote location, or work part time for specified periods of time.
 Day care centre: A day care centre facility is provided within the office premises
to support working parents.
 Medical Benefits: The company provides Flexible Group Medi claim insurance to all
employees, covering all kinds of illnesses, accidents and hospital coverage for serious
ailments.
 Easy day: A Grocery shopping centre to help employees take care of their personal
chores is available at office.
 Health and Fitness Centre: World-class fitness centre and spa facility in office.
 Concierge Desk: Small errands like bill payments, finding a plumber, etc.
 Food Court: Cafeteria has a multi-cuisine food court that includes counters like
 Costa Coffee, Banana Leaf and Healthy sip n bite.
 Fun@work: At Airtel, all achievements and launches are celebrated with zest.
 Sabbatical Policy: Employees can opt for leave of 6 months for personal reasons.
Leave of up to one year may be applied for, to pursue higher education.

Some of the growth benefits available are as follows-

 Career Progression: Based on the defined career paths, career discussions between
‘employee and manager’ help them chalk out employees’ career progression.
  The process supports self-analysis of employees, keeping in mind their long-term and
short-term career plans. At Airtel, career growth is fuelled by opportunities that help
employees diversify into different functions of work.
 The opportunities available in all Strategic Business Units (SBUs) across functions
are internally advertised for employees to choose their growth trajectory.
 Continuing Education Opportunities: The program offers a range of courses in
General Management, Human Resources, Marketing & Sales, Finance, IT,
 Networks and Supply Chain from premier educational bodies and institutes.

Benefits for women include the following:

 Maternity/ postnatal benefits: Maternity leave may be extended up to 6 months.

Employees may also opt for flexible work options after joining back from

maternity leave.

 Mentoring program: Designed for high potential middle management women

employees, the program involves mentor mentee sessions and flexible

interactions to encourage a higher ratio of women employees in the top

management.

 Social & learning events focused on women’s interests: “Astitva” a celebration

of womanhood” organizes events such as senior leadership interactions, health

awareness programs, parenting workshops, etc.

Training and development:

To motivate employees to achieve better results, Airtel allows employees to identify their
training needs. The company offers ‘study while work’ programmes, leadership development
programs, general management programs, action-learning experiences, feedback tools and
development relationships.to help junior and middle management Airtel has partnered with
leading institutes across the world like, Centre for Creative Leadership (CCL), INSEAD
Business School, Indian School of Business Hyderabad (ISB), Indian Institute of Management
(Ahmadabad) has developed a suite of customized programs to cater to the top talent. The focus
of the program is to develop leadership and management skills, achieve business success,
display entrepreneurial success, empowering and developing, delighting the customer and
playing with a healthy spirit in a team to ultimately with others.
BACKGROUND INFORMATION ABOUT THE BANKING
SECTOR
Banking and finance sector are currently experiencing high growth rate nearly all over the
world including India. With increased FDI and high inflation rates, finance sector is enjoying
high deposits. Financial institutes and commercial banks are expanding their business and
going for large scale recruitments. The banks are collaborating with insurance units to
provide insurance coverage to their clients. Few of the banks are also dealing in gold and
silver. Nationalized banks are preferred more as they provide for job security. Compensation
packages in banks have always been lucrative. Incentives, special allowances, travel leaves,
concessions, paid vacations, paid leaves, retirement benefits are also offered along with basic
salary and other allowances such as house rent allowance, transportation vehicle etc.
Compensation package in finance and banking sector depends on the level of knowledge and
experience an individual have. Top players in India such as nationalized banks- Bank of
India, SBI, Indian Overseas Bank, Bank of Baroda, Punjab National Bank, HDFC, ICICI and
other private banks, financial institutes such as Bajaj Capital, Kotak Mahindra, etc, are
offering high salary packages with lucrative incentives to attract and retain their talented
work force.
Evaluation of compensation management:
With the changing hierarchical structures laborers' need and pay frameworks have likewise
been evolving. From the bureaucratic associations to the participative associations,
representatives have begun requesting their rights and fitting pay. The advanced education
guidelines and higher aptitudes required for the occupations have made the associations give
aggressive remunerations to their representatives.

With the conduct science speculations and development of work and worker's organizations,
representatives began requesting their rights. Maslow acquired the need hierarchy for the
rights system for the privileges of the employees. He expressed that employees don't work
just for money however there are different needs too which they need to fulfil from that point
of work, for example social needs, psychological requirements, wellbeing needs, self-
actualization, and so on. Presently the employees were being treated as human asset.

Their exhibition was being estimated and assessed dependent on the hierarchical and
individual execution. Rivalry among employees existed. Management were required to strive
to have the employer stability. The remuneration framework was planned based on
occupation work and related capability of the worker.

Anyway, in India, public sector bank pay is controlled by the legislature with a very restricted
variable segment. Private, remote and neighbourhood in India are statutorily required to
acquire RBI's administrative endorsement for the compensation of their entire time
executives and CEOs.

In assessing these propositions in regard of Indian banks, Reserve Bank guarantees that the
remuneration isn't intemperate, is steady with industry standards, is adjusted to the size of the
bank's the same old thing and that the variable pay segment is restricted. In July 2010, RBI
issued draft rules on Compensation of Whole Time Directors/Chief Executive Officers/Risk
Takers and Control Staff. The rules require banks' sheets to plan and receive a complete pay
approach covering all representatives (daring people and control/consistence staff).
COMPENSATION ON THE BASIS OF EXPERIENCE
In the context of Indian Banking sector, it is seen that as age increases, the compensation also
increases proportionally. So, their exist a seniority-based distinction when we talk about
compensation management with respect to banks.

ANN BANK 1

ENTRY LEVEL COMPENSATION PACKAGES

Indian finance & banking sector offers jobs in various segments. The managerial level job
share held by management professionals, commerce graduates and finance professionals.
Apart from pay packages finance professionals also get high incentives and perks. The
industry provides for special allowances such as annual bonus, house rent allowances, mobile
allowances, transportations, travel leaves, paid vacations, etc

BANK 2

Management Level Compensation

Finance sector is a promising sector where compensation is considered. 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, company’s vehicle, travel leaves, paid vacations, other
allowances and non-monetary benefits. 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 based on their performance. Nationalized banks offer job security and private
financial institutes provide high lucrative packages. With the globalization, liberalization,
business expansion, a greater number of competitors, jobs in the financial sector are also
demanding too much hard work. Earlier bank jobs were considered very comfortable ones but
now the scenario has been changed. Indian banking sector is heading for 24*7. Some of the
nationalized and private banks have started working 8 to 8

AN BANK 3

SBI first one to open

ESOP: locker for employees

Employees of state-owned banks will soon get rid of their tag of being considered as poor
cousins of their counterparts in new-age private and foreign banks in terms of remuneration
packages. According to the top official with knowledge of the issue said that the Cabinet has
given the approval to a proposal for a stock option plan for staffers of the country’s largest
bank, State Bank of India, marking a first in the Indian banking industry and perhaps for any
state-owned company. The official said the bank, which is preparing for a right offering of
over Rs 16,000 crore this fiscal, might in a good position now to unveil an employee stock
options plan (ESOP)aggregating up to 0.7% of its capital base of Rs 526 crore. Officials had
informed ET that the bank will be discussing on the proposal of merging all its associate
banks with the parent in January. Till now no official confirmation is available on whether
the board of the bank and its associates would consider this proposal. The proposal, which
intends to reward value creators for state-owned banks just like their peers in private banks
based on a defined performance criterion, has been in the making for long. A couple of years
ago the government had discussed the proposal with the banking regulator, though it’s only
now that it has been able to get the proposal off the ground. The government is the leading
shareholder in 28 banks in the country with stakes ranging from100% to 53%. By offering
stock options, it is believed that it could bring motivation among the employees which could
reflect on the performance of their organizations. However, in a stock market, which has
posted spectacular gains over the last few years, this can prove to be one of the best tools to
both retain and attract talent in state-owned banks given their inability to offer substantial pay
packets. A convincing reason now for giving the nod for stock options can be the imminent
opening of the banking sector to foreign investors a year down the line and increased
competition in the local markets. Officials are of view that the decision taken to allow SBI to
offer stock options will open the way for other state-owned banks and units to come up with
similar offers. SBI has over two lakh employees on its rolls spread across over 9,500
branches in India and 84 offices abroad in 32 countries.

Compensation policies and practices by RBI guidelines:

The compensation practices, particularly of huge money related organizations, were one of
the significant components which added to the worldwide budgetary emergency in 2008.
Representatives were time and again compensated for expanding the transient benefit without
enough acknowledgment of the dangers and long-haul outcomes that their exercises
presented to the associations. These unreasonable motivations enhanced the exorbitant hazard
taking that seriously compromised the worldwide money related framework. The pay issue
has, subsequently, been at the inside phase of the administrative changes.
The Principles are expected to diminish motivators towards over the top hazard taking that
may emerge from the structure of pay plans. The Principles call for powerful administration
of pay, arrangement of compensation with judicious hazard taking, compelling supervisory
oversight and partner commitment. The Principles have been supported by the G-20 nations
and the Basel Committee on Banking Supervision (BCBS). The Implementation Standards
are explicit standards, organizing regions that ought to be tended to by firms and
administrators to accomplish viable worldwide execution of the Principles.

Effective governance of compensation:

The firm’s board of directors must actively oversee the compensation system’s design and
operation.

• The firm’s board of directors must monitor and review the compensation system to ensure
the system operates as intended.

• Staff engaged in financial and risk control must be independent, have appropriate authority,
and be compensated in a manner that is independent of the business areas they oversee and
commensurate with their key role in the firm.

Effective alignment of compensation with prudent risk taking:

Pay must be balanced for a wide range of hazard.

• Compensation results must be symmetric with hazard results.

• Compensation pay-out calendars must be delicate to the time skyline of dangers.

• The blend of money, value and different types of pay must be predictable with hazard
arrangement.
Major players in Indian and Global market:
When it comes to making a comparison of the polices, pay structure and guideline with
respect to the global scenario we can get a lot to know who the major players in both Indian
and global market are when it comes to compensation.

The major players with respect to compensation management in Indian market can be:

 Bank of Baroda
 State bank of India
 Canara bank
 Punjab National Bank
 HDFC bank
 ICICI bank

The major players in Global market in banking sector:

 Industrial and commercial bank of China.

 China construction Bank corporation
 HSBC Holdings
 Mitsubishi UFJ financial Groups

Primary data and secondary data were collected for the following 2 banks-

3. HDFC Bank
4. PNB bank

Primary data collection

The primary information was collected by talking 2 people from the above-mentioned banks.
One was and ex-employee. The secondary information pertains to the information collected
from banks site and sites like glassdoor and naukrihub.

Secondary data collection

Research design is done with the help of the collection of secondary data also. These secondary
data which can be collected from the yearly publication of annual reports of different banks.
Quarterly reports of RBI can also be used as secondary data. Datas can be collected from
various journals and websites related to banking industry. Different statistical tools can be
applied to analyze the secondary data. A study of literature in books, journals, books,
magazines, articles, research papers, etc. can support for the collection of secondary data.
Internet also plays a crucial role to collect data for the study conducts. But some datas that
couldn’t be revealed by the banks. Collecting appropriate data and evaluating it on a regular
basis can provide both firms and supervisors with important insights into the effectiveness of
compensation programmes and potential areas of weakness. There are also some challenges
included in gathering data for the compensation including integration of data from various
sources, aggregation them in meaningful pools, data privacy issues, data integration issues. For
this reason it is important for firms to engage in a regular review of their data collection and
aggregation processes and related management information systems. An internal structured
data collection strengthens firms’ ability to establish, implement and monitor risk prevention
and mitigation strategies, and assist a more effective use of compensation as an incentive device
within a firm’s risk governance and risk management frameworks. The secondary datas
provided by different banks are to a different extend. The top banks that reveal their datas to a
certain extends are State Bank of India, HDFC, ICICI, Pnujab National Bank, etc. For example
salary structure of a bank clerk is given below. This is the basic salary structure and the
compensation that the clerk gets can be understood from here.

These are the basic data that can be considered for the compensation system. The private sector
and public sector banks offer different compensation schemes. Generally public sector banks
offer more compensations. These compensations varies upon different banks in different
schemes.
 Component Now (Per Month) Revised (Per Month)

Basic Pay 8000 12812(60.15% of DA merged in basic)

Fuel Expenses 225 225

HRA 800(10% of DA) 9121(15% of DA)

5124(40% of Basic as remaining 60% merged in

DA 8000(100% of Basic pay)
basic salary)

Total Rs – 17225 Rs – 21990

Deductions

PF 1722 2199

Tax 20 20

Union fee 40 60

Benefits funds 250 250

Total Salary in hand Rs – 15193 Rs – 19415

Nomination and Renumeration committee

As per the Companies Act 2013, both banks had nomination and renumeration committee,
which had the following composition-

i. The Nomination and Remuneration Committee will be chaired by the Chairman of the

Board.

ii. In addition to the Chairman there would be three Independent Directors.

HDFC BANK
The banks had the following compensation structure was adopted-

Composition for positions other than MD and whole time Directors basically consisted of 2
parts-

a. Fixed pay
b. Variable pay

Fixed pay is generally decided on the basis of following factors-

1. Job
2. Grade
3. Qualification
4. Performance
5. Experience
6. City class
7. Market pay position

Fixed pay comprises of 5 main parts, i.e. Base salary, Allowances, perquisites, Benefits and
Retirement benefits. Salary and allowances are the cash components of the pay and are direct
in nature. The perquisites that form the non-cash part would be in the nature of Company Car,
Hard Furnishing, Company Leased Accommodation, Club Membership and such other
benefits. They are decided upon the Job grade of the individual. Certain part of fixed pay is to
meet its statutory obligations. the organisation will provide the following Defined Contribution
and Defined Benefit Plans.

A. Provident Fund – Statutory, Defined Contribution Plan

B. Superannuation – Non-Statutory, Defined Contribution Plan

C. Gratuity – Statutory, Defined Benefit Plan

These are deferred in nature. As part of benefits organization gives assistance via medical
insurance and loans like Housing Loans, Personal Loans and Vehicle loans at concessional
rates.
Variable pay

As part of pay for performance culture, variable pay component is used so that employees are
motivated to exceed expectations. In the bank variable pay is discretionary in nature. The
quantum of Variable Pay is a function of the Bank’s, business unit’s, the individual’s
performance, role and function.

The two common methods are-

1. Quarterly/monthly performance linked pay(PLP)- These plans are formulated for sales
personnel who have origination/sales targets. To align with the principles of prudent risk
management, payouts are deferred till the end of the year and are released subject to the
attainment of the Bank’s business objectives.
2. Annual bonus plan- These are given to employees other than those covered above. Bonus
pools may be designed to meet specific business needs therefore resulting in differentiation
in both the quantum and method of payout. It is set at the risk adjusted functions of each
employee. It is paid as a % of fixed pay. In the event the bonus exceeds 50% of fixed pay
than 60% of the bonus would be paid in the financial year succeeding the performance
year and the remaining 40% would be deferred for a period of three years and would be
paid out in 3 equal tranches.
3. Another, not-so-popular method is that of sign-in bonus which could be used to lure talent.
It is not linked to fixed pay so as to avoid loading the entire cost of attraction into fixed
component of salary.

Leaves
Leaves form an integral part of compensation. The bank offers 10 sick/casual leaves to
employees in a year. There are total upto 30 days of paid privilege leaves every year.

ESOP

Employee Stock Option will be kept outside the total compensation structure for employees in
line with the guidelines prescribed by the Reserve Bank of India. However, since ESOPs are
considered as a critical retention tool. The number of Options made available to a particular
class/cadre/grade of Employees could vary at the discretion of the Nomination and
Remuneration Committee.

PNB BANK
As regards the remuneration of other officers / employees, the same is fixed as per the service
regulations / settlements reached with unions.

PNB Parivar
It was implemented in the year 2006 to act as a prerequisite to payroll processing/centralised
salary requirements. The payroll module automates the pay process by gathering data on
employee and calculating various deductions and generating employee pay reports.
Salary consist of base, allowances and benefits.
Base salary is quite low as per the industry standards. For example, employees at bank manager
level get salary around 50000 per month whereas in tune with industrial standards salary is
around 60000 per month. However, the same seems to be compensated with guaranteed 16th
month pay where ordinary companies provide only 13th month pay. Overtime pay is existent
but have to render around 3 hours at a minimum.

Allowances include monthly rice allowances, uniform allowances, health and medical
allowances. The most sought-after benefit is that of health check-ups, health and accident
insurance coverage provided to employees that also covers up to 2 dependents which you could
assign to your mom or dad or siblings)
Welfare schemes
Among the various welfare schemes in place, few are as under-
a. Staff welfare fund- for in service and retired employees
b. Group medical insurance
c. Tie-up arrangements for health check ups

Additional benefits include the following-

1. Waived annual fees in credit cards
2. 1% extra interest in FDR
 3. Discounts and early access to promos
4. Guest house facility of employees, wherever PNB guesthouses are
Leaves

PNB employees get 12 casual leaves in a year. They also get 365 medical leaves in entire
career.

Point to be noted here is that new employees are not eligible to pensions in the bank. But they
have adopted NPS, which stands for National Pension System, which is a form of retirement
planning. It provides old age income with reasonable market- based returns

PNB – compensation policy in news

PNB is contemplating to move away from Indian Banks Association (IBA)-led wage settlement
to retain talent under its own remuneration package. Public sector bank Punjab National Bank
(PNB) is contemplating to move away from Indian Banks Association (IBA)-led wage
settlement to retain talent under its own remuneration package. As of now, the industry body
Indian Banks’ Association (IBA), on behalf of all public sector banks, negotiates wage hike
with the officers’ association and employee unions. The wage settlement is applicable for five
years. In the last wage settlement, which was fixed in last November, employees were given
15% increase in wages.

Punjab National Bank (PNB) is mulling performance-linked salary structure for their top brass.
They are planning to introduce this pay structure for individuals above the general manager
grade. MD and CEO of PNB told Business Standard that the bank is seriously considering a
system of performance-based incentives. He added that there will be a component of variable
and fixed pay but the structure will evolve slowly.

Similarities between two sectors:

 Both the sectors have started ESOP as their compensation system.

 Both the sectors other than their basic are focusing on allowances, rewards, special
benefits etc.
Differences between two sectors:

 Banking sector is still following traditional methods and union based system,
specially in public sector bank. Where as in telecom industry due to high competition
they are coming up with innovative plans for increasing retention and save the cost as
well while maintaining industrial benchmark
 In public sector banks specially performance linked pay is not followed where as most
of the companies in telecom industry is following performance related pay.
 Compensation in banking sector is highly regulated by RBI or government, but in
telecom industry they have their individual flexible plans from one company to other.

Related issues in the respective sector:

PNB – compensation policy in news

PNB is contemplating to move away from Indian Banks Association (IBA)-led wage settlement
to retain talent under its own remuneration package. Public sector bank Punjab National Bank
(PNB) is contemplating to move away from Indian Banks Association (IBA)-led wage
settlement to retain talent under its own remuneration package. As of now, the industry body
Indian Banks’ Association (IBA), on behalf of all public sector banks, negotiates wage hike
with the officers’ association and employee unions. The wage settlement is applicable for five
years. In the last wage settlement, which was fixed in last November, employees were given
15% increase in wages.

Punjab National Bank (PNB) is mulling performance-linked salary structure for their top brass.
They are planning to introduce this pay structure for individuals above the general manager
grade. MD and CEO of PNB told Business Standard that the bank is seriously considering a
system of performance-based incentives. He added that there will be a component of variable
and fixed pay but the structure will evolve slowly.

BSNL fails to pay salaries for the first time; 1.76 lakh employees affected
State-owned telecom firm Bharat Sanchar Nigam Limited (BSNL) has failed to pay the
February salaries to around 1.76 lakh employees due to its financial crisis. This is the first time
the company has defaulted in payment of its monthly salaries. The fully government-owned
corporation is undergoing a major cash crunch due to the price war with private companies.
The employees' union, All Unions and Associations of BSNL (AUAB), has written to telecom
minister Manoj Sinha asking the government to release funds so that the salaries can be paid
and the firm revived.
CONCLUSION:

Telecom

 Due to high competition lowering employee turnover as well as maintaining the cost
of the company is the main focused area.
 Performance base compensation system is followed mainly by most of the companies
 Since in telecom industry major players are private sectors maintaining the
benchmark with industry standards is a major challenge as there is no hard and fast
rules governing all of them

Bank

 Banks have for long followed traditional method of compensation, where all were
paid solely on the basis of position and experience. But with liberalization, all of them
have realized the cutthroat competition and thus they all started focusing on
excellence in performance in all spheres of work. To ensure the same with the
workforce, many changes have been seen in the human resource policies of the
banking sector.
 For example, earlier the direct component on the compensation formed the essential
part of the payment. Now the components of direct compensation have been modified.
The idea is to drive excellence and for thus concepts like incentive component, sales-
based commissions, etc are gaining importance.
 Since banking sector compensation is highly regularised and union driven,
performance appraisal and performance linked pay and bonus forms and integral part
in employee retention as well as to meet cutthroat competition and cost constraints.
 However, banks incentive policies need to be more update and in-tune with global and
industry practices. For example, public sector banks are now thinking about
performance linked pays. Good change has been seen in form of no pension in banks.
Instead new methods like NPS are being adopted.

A good compensation system will

  Improve performance
 Increase retention

So in this high competitive world companies should follow strategic approach by analysing
the industry while implementing compensation policy.

Recommendation:

 Telecom sector is rapidly changing with new technology, innovations and customer
behaviour demand . so they can adopt Adapting compensation plans to market
demands where they can design or modify customized solutions, simulate and check
them prior to implementation, and easily deploy compensation plans
 Banks can adopt time-based incentive plans for non-sales employees at individual
level. This will help match pay and efficiency and will be beneficial for both
employee and company. Gantt plan or the variation of the same can be adopted.
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