Human Resources

Chapter 5
Terminologies
Compensation and Benefits
Internal and External Equity
Wages vs Salaries
Pay Compression ; Pay inversion
Individual Incentive Plans
Gainsharing
ESOP
Terminologies contd
Pay for knowledge Benefits
Skill based pay Mandated Benefits
Social Security
Provident Fund
Worker’s Compensation
Non mandated Benefits
Health Insurance
Benefit Plans
Contribution Plans
Wellness
Case study 1
Design a compensation package for an organisation with a 1 crore turnover. It
should include salaries plus benefits as deemed fit. This is a start up with 35
employees. The company is privately held. Assume 15% of the turnover is used
in infrastructure management. Following is the break-up of the employees:
1. 2 Founder directors
2. 4 Designers: they design the service offering
3. 15 coders/programmers: They code based on designer inputs
4. 7 customer support staff; non technical, answering calls
5. 3 customer support; technical; supporting the phone based customer support
6. 4 Office staff for administrative work: low skills
Case Study 2
Design a pay structure for a privately held bed and breakfast. The place
has 10 rooms . Breakfast is served on the premises. The room rents range
from Rs 3500 – Rs 5000 (based on group bookings, off season etc).
The B and B is owned by a husband and wife team. Wife usually
manages the front desk. The husband is a handyman running repairs
and driving the customers from the train station.
Assume it is the high season and all the rooms are booked for the next
3 months.
Decide how many extra staff will they need for help and their wage
structures. Assume cost of breakfast for 10 guests is 3000/.
Case study 3
An auto ancillary company has 200 employees world wide. Two of its division are not achieving growth
goals. The two division have total of 60 employees. The revenue of these two divisions has collectively
reduced from 50 lakhs to 47 lakhs. The cost of employee salaries is 30 lakhs, out of which cash payout is
22 lakhs and the various benefits amount to 8 lakhs. Benefits include provident fund, accidental
insurance, paid leave for 25 days, free transport, free meal.
Suggest restructuring of salaries for the two divisions. The management has decided to retain all
employees. But reduced the cost of employees to salaries to 25 lakhs.
The breakup of employees is:
1. 2 divisional heads
2. 1 sales lead and 4 sales officers
3. 4 foreman and 35 semi skilled staff
4. 5 packing staff; low skills
5. 4 drivers
6. 5 office administration ; clerical /office assistant
Case study 4
ABC is a start up with 23 employees. It created gaming software. It is
currently limited to India. Revenues are 10 lakhs. It has recently been
awarded 25 lakhs in funding to go international. ABC currently has a
flat structure with no significant job design. The team is 20 engineers
and 3 office assistants. All engineers take home 30,000 and the 3 office
assistant take 10, 000/- each.
Suggest a salary structure to ABC. They need to onboard a team of 5
more engineers in India and 2 in US.
Ensure 20% of funds are available for infrastructure
Case Study 6
ABC is going through a sales slump. Based on a consultant’s report, the
management decides to hire 5 senior sales personnel. The average
salary in ABC is 10 lakhs per annum. For 120 people. The pay grades
are based on skills