INTRODUCTION

Compensation Management is an integral part of the management of the organization.

Compensation Management contributes to the overall success of the organization in several

ways. To be effective, the managers must appreciate the value of competitive pay, their human
resources, and have an investment view of payroll costs. We want to maintain pay levels that
attract and retain quality employees while recognizing the need to manage payroll costs.

The term compensation as a substitute word for wages and salaries is of recent origin. Wages is
now considered as a cost factor. Therefore, strategic management of wages and salaries is very
important for organizations. It has become imperative for organizations to balance the cost of
compensation and employee motivation (for retention) to survive in a competitive world.

Employee compensation is a better term than employee benefits or wages or salaries. What the
employee provides the employer is a labor service, usually known as work. This labour service
consists of many different kinds of employee behavior, such as showing up regularly and on
time, carrying out tasks dependently, cooperative with others and making useful suggestions.

Pay or compensation represents an exchange between the employee and the organization. Each
gives something in return for something else. In the past, the compensation issue was often
confidential and governed by individual employer’s preference and choice. However, in today’s
competitive world, compensation issues are more transparent.

Different scholars in different countries have defined the world compensation from different
perspectives. Globally, almost every country views compensation as a measure of justice. Also,
some countries (particularly developed ones) consider compensation as a means of protection
against potential job loss.

Compensation should be fair, irrespective of economic consideration. Many scholars believe that
compensation is the outcome of productivity. In India, right from Vedic Age, the volume of work
and the time required to perform the work were considered to decide compensation

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The modern definition of compensation, however, considers both intrinsic and extrinsic
components of compensation. While extrinsic compensation covers both monetary and non-
monetary rewards, intrinsic compensation covers both monetary and non-monetary rewards;
intrinsic compensation reflects the employees mental satisfaction with their job
accomplishments.

While it may be a touchy subject, pay is a critical factor in the work lives of employees. Jobs are
accepted or rejected based in part on starting salary and the opportunity for future increases in
pay. Employees compare their pay to that of others in the same line of work. They constantly
compare their pay level to their level of contribution, trying to determine whether the ratio of
give and receive is a fair one. While it may not be a frequent topic of open discussion, employees
think about pay often.

Pay is a topic with many different shades and a variety of implications. Whenever approaching
the subject, it is important to work out the details beforehand so that specifics can be clearly
communicated. For the manager, this means that the increase amount is nailed down before
discussing a promotion with an employee. No chance of misunderstanding or false expectations
can be permitted. Far too often, managers are apt to discuss generalities. "It will mean a good
increase." What exactly does that mean in terms of the employee's monthly budget? If care is not
taken here, good news can become the source of conflict and resentment.

By the same token, if asked for a raise, the manager should request that the employee suggest a
specific number that he believes reflects his value. Once the employee provides that number, the
manager can do his homework and decide what, if anything can be done. The employee can then
be given a definitive response.

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 OBJECTIVES OF THE STUDY

 To understand in detail how to establish pay rates to different level of employees in

PHOENIX MOTORS LTD, Hyderabad.
 To understand the impact of compensation management on performance level in
PHOENIX MOTORS LTD, Hyderabad.
 To identify the satisfaction level of employee’s of their compensation.
 To know the various types of compensations provided by the company.

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 SCOPE OF THE STUDY

 The study focuses on compensation management in the particular company.

 The study helps to determine the relative worth of a job in an organization in a
systematic, consistent and accurate manner.
 It gives the detail information on employee compensation based on their performance and
employee levels in the particular company.
 Compensation management is the tool used by the organization to foster the values,
culture and the behavior they require.
 This project is to study the compensation management strategies & to evaluate the
behavior & performance of employee on their work.

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 NEED FOR THE STUDY

 The compensation management play’s vital role in the employee productivity.

 The study compensation management gives the brief information about the employee
 It explains employee reward system and determines the performance of employee on
their work.

 Attracting and Retaining Personnel: From organization’s point of view, every

organization wants new talent and skill from outside ,for this purpose the compensation
management targeted at attracting and retaining right human resource at right place in the
organization time to time.
 Motivating Personnel: Compensation management targeted at motivating human beings
or employees for higher productivity. Compensation can be designed or planned to
inspire or encourage people through financial and non- financial compensation.
 Optimizing Cost of Compensation: Compensation management targeted at Optimizing
cost of compensation by maintaining relation between performance and compensation of
every employee.
 Consistency in Compensation: Compensation management tries to obtain consistency in
both internal and external for remunerating employees. Internal consistency consist
payment on the basis of criticality of jobs and employees' performance on jobs. External
consistency involves similar remuneration for a job in all organizations}.

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 RESEARCH METHODOLOGY

To achieve the objective of research, a planned and strategic descriptive investigation is carried
out. Descriptive study is helpful to know the proportion of people in the given population who
have behaved in a particular manner making projection of a certain things or determining the
relationship between two or more variables. Descriptive study tends to be rigid and its approach
cannot be changed every now care should be taken only in the initial stages of planning and
research otherwise data collected with the study a training programs conducted for the
employees in the organization.

Data sources:

Data is collected from primary and secondary sources. Collection of the data is primary aspect in
the research process. Data which is collected for the purpose of research helps in proper analysis
to develop findings which are help full to conduct research effectively. The data source which is
very important in the collection of data is both primary and secondary.

Primary data:

The primary data is collected through questionnaire. These questionnaires are asked to be filled
by the employees (respondents).

Secondary data:

International, National Articles, publications and books are taken as secondary source to identify
the gaps in the researches and gaining conceptual knowledge building insight into the concepts

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RESEARCH DESIGN:

 Sample: The employees of the organization are considered as the sample for the survey.
 Sample size: Sample size 100.
 Sample Technique: Simple Random
 Type of study: The present study is partly explorative, partly descriptive and partly
casual.
 Period of the study: 45 days

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 LIMITATIONS OF THE STUDY

 As time was a constraint this study is restricted to only 100 employees.

 The study is done in only one organization hence it cannot be generalized to the whole
industry.
 Another major constraint was the time. The study is undertaken for a period of 45 days
only.
 The study was time bound because the employees had to be disturbed from their work
and prior appointments had to be taken.
 The finding of the study cannot be applicable to other organization in the industry.

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 REVIEW OF LITERATURE

Compensation Management

Compensation Management is an integral part of the management of the organization.

Compensation Management contributes to the overall success of the organization in several

ways. To be effective, the managers must appreciate the value of competitive pay, their human
resources, and have an investment view of payroll costs. We want to maintain pay levels that
attract and retain quality employees while recognizing the need to manage payroll costs.

Pay is a difficult topic of conversation in most organizations. In fact, the topic is altogether taboo
in many workplaces. It simply isn't discussed unless absolutely necessary. And, when it is
necessary, such as when a pay raise (or lack of one) must be explained to an employee, many
managers find themselves at a loss for words. As the dreaded date of such a discussion
approaches, managers may begin checking their sick time banks to see if they can disappear for a
day or two.

While it may be a touchy subject, pay is a critical factor in the work lives of employees. Jobs are
accepted or rejected based in part on starting salary and the opportunity for future increases in
pay. Employees compare their pay to that of others in the same line of work. They constantly
compare their pay level to their level of contribution, trying to determine whether the ratio of
give and receive is a fair one. While it may not be a frequent topic of open discussion, employees
think about pay often.

Approaches of compensation management

There are 3P approach of developing a compensation policy centered on the fundamentals of

paying for Position, Person and Performance. Drawing from external market information and
internal policies, this program helps establish guidelines for an equitable grading structure,
determine capability requirements and creation of short and long-term incentive plans.

The 3P approach to compensation management supports a company's strategy, mission and

objectives. It is highly proactive and fully integrated into a company's management practices and

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business strategy. The 3P system ensures that human resources management plays a central role
in management decision making and the achievement of business goals.

 Paying for position

 Paying for person
 Paying for performance

Because it is so important to employees, the issue of pay deserves to be clearly addressed. In

spite of their hesitance, managers are capable of dealing with this sometimes difficult issue in a
professional and effective manner. By keeping the following basic points about pay in mind, they
can address virtually any pay-related topic with their employees in a professional and productive
manner.

Specificity is Key

Pay is a topic with many different shades and a variety of implications. Whenever approaching
the subject, it is important to work out the details beforehand so that specifics can be clearly
communicated. For the manager, this means that the increase amount is nailed down before
discussing a promotion with an employee. No chance of misunderstanding or false expectations
can be permitted. Far too often, managers are apt to discuss generalities. "It will mean a good
increase." What exactly does that mean in terms of the employee's monthly budget? If care is not
taken here, good news can become the source of conflict and resentment.

By the same token, if asked for a raise, the manager should request that the employee suggest a
specific number that he believes reflects his value. Once the employee provides that number, the
manager can do his homework and decide what, if anything can be done. The employee can then
be given a definitive response.

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Pay is Relative

What one employee considers a fantastic increase maybe an insult to another? Each individual
has a unique set of creativity and competencies. Pay should be based on the performance,
position and the competencies/skills the person is having.

Pay is Not Created Equal

Various forms of pay have different purposes. The two most common forms of direct cash
compensation in most companies are base pay and bonus. Base pay is the annual salary or hourly
wage paid to an employee given the job he holds, While bonus is typically (or at least should be)
rewarded based on the achievement of a goal of the organization.

Discussions about bonus payments should be as specific as possible. This is the opportunity to
point out particular accomplishments that contributed to overall team or company success. Even
if the bonus is paid to all employees based on a simple overall company profit target, the
manager should use the opportunity to point out specifically how individual employees helped
achieve that target.

Distributing bonus checks presents a unique motivational opportunity for a manager. Handing
money to an employee while discussing actions and behaviors he would like to see repeated,
creates a powerful link between performance and reward.

Discussions about base pay increases can be a bit different. Most companies claim to link their
annual base pay increases to performance. In reality, however, base pay decisions take into
account a variety of factors, including the relative pay of others in the same job, the company's
increase budget, market practices and where the individual falls within his pay range. Even when
performance is a factor, the manager is faced with the difficult task of evaluating an entire year's
worth of activity and then categorizing it according to the percentage increase options allowed by
the budget. It becomes very difficult to pinpoint specific employee actions or accomplishments
as the reason for the increase.

For these reasons, it's appropriate for the discussion about base pay increases to be more general
and balanced. Both strengths and weaknesses of the employee should be addressed. The actual
increase is then based on an overall assessment, as opposed to a link with one or two specific

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outcomes. Any other factors that impact the increase percent, such as budget or pay range should
be openly discussed as well.

Compensation Policy - Macro and Micro Level Organizations

The compensation and benefit level is the average compensation paid to employees. This has two
implications. The first is external: how does the organization compare with other organizations?
This question is a strategic one of how the organization wishes to position itself in the
marketplace. The second implication is internal. The average compensation is a reflection of the
total compensation bill of the organization. Labor is one of the claimants on organizational
resources. The size of the compensation and benefits bill is a reflection of who gets what within
the organization.

The decision on compensation levels (how much will the organization pay?) may be the most
important pay decision the organization makes. A potential employee's acceptance usually turns
on this decision, and a large segment of the employer's costs are determined by it.

Compensation decisions are typically micro (individual) or macro (total organization) focused.
Although organizations are under no constraint to separate these decisions, a course of study
should. In practice, most unsophisticated organizations make the decision on compensation level
(how much to pay) and compensation structure (relationships to competitors) at the same time.
More administratively advanced organizations realize that individual decisions within a proper
administrative structure are more consistent, fair, and cost-effective over time.

The compensation level decision may be considered the most important one for individuals. In
terms of both employee attraction and cost considerations, it is often considered by most
managers as a primary consideration. Also, it seems essential to recognize that compensation
level decisions can never be completely separate from job-mix, hiring standards, personal
decisions, and internal labor markets/relationships. For these reasons, compensation level
decisions are typically the focus of a manager's attention. From the organization's perspective,
however, one individual's compensation decision typically goes unnoticed at the end of the year.
Structure decisions (and the level of those structures) are what show up on an income statement.

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The term compensation level simply means the average compensation paid to workers at some
level of analysis, e.g. the job, the department, the employing organization, an industry, or the
economy. The importance of the compensation level decision to organizations rests on its
influence in getting and perhaps keeping the desired quantity and quality of employees. If the
compensation level is too low, the applicant pool may dry up and recruitment efforts may meet
with little success. Equally serious, some employees (often the best ones) may leave. At the
extreme, the organization may experience difficulties with state and federal regulatory bodies
administering minimum compensation laws and prevailing wage laws. Also, the organization
may be confronted with concerted organizing drives if no union is present, or pressing
compensation demands from existing unions. It is less apparent, but equally real, that a low
compensation level may attract only less efficient workers, with the result that labor costs per
unit of output rise.

STRATEGIC COMPENSATION LEVEL DECISIONS

Most employees are aware that some employers pay more than others for the same type of skill
in the same market.

The actual cost to employers of employee service is total hourly compensation plus benefits.

Unfortunately, labor cost per unit is not information that is easily obtained by employers. It must
be estimated from in-house information on the average productivity of employee groups and
organization units and from the average pay of these groups.

The information available on what other employers pay comes only as a result of search. This
search takes the form of compensation surveys conducted or purchased by the organization.
These surveys invariably show a range of compensation paid for the same job by different
employers. This range tends to be narrower for the skilled occupations and wider for the
semiskilled. One reason for this is the difficulty of job comparisons. Another is difference in
employee quality. But these differences are never as wide as compensation differences.

The major reason for finding out what others are paying for jobs is to decide how to position
your organization in relation to others and the labor market.

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High-Compensation Employers

High-pay organizations tend to share a number of characteristics: larger size, higher profits, and
a lower ratio of labor costs to total cost, few industry competitors, and unionization. Larger
organizations tend to pay higher wages and benefits for a number of reasons. One is that they
usually are able to. Large organizations often tend to have some financial surplus, which they
can use in various ways. Another reason is that they may be willing to pay more to attract a pool
of competent applicants. Still another may be a perceived obligation to counter lower job
satisfaction. Finally, those large organizations that are not unionized are continuing targets of
union organizers.

Low-Compensation Employers

Low-pay employers tend to be relatively small, to occupy competitive product markets, to have
low profit margins, and to be typically nonunion. They have low-paying ability because of the
constraints of their product market. Most of their compensation decisions may be explained by
this low ability to pay.

Low-pay employers may gauge their position by comparing themselves with the largest and most
visible employers. Using compensation surveys, they usually pay attention to rates for specific
jobs for which there is an active outside market. The starting rate for new production workers
may be particularly significant. A job on which attention is focused obviously varies by industry.

The minimum feasible compensation is one that will obtain just enough employees to maintain
desired employee levels for some period, typically six months. But often organizations pay
above this minimum, hoping to obtain employees of higher quality; lower their turnover rates;
and lower their recruitment, hiring, and training costs.

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LABOR MARKETS AND COMPENSATION LEVEL STRATEGIES

Labor markets fluctuate in terms of the number of employees and employee hours needed. These
swings in labor demand affect employer compensation decisions and compensation differentials
among companies. High-pay employers are less affected by these swings because their
compensation is high enough above the area level so that they are little affected by short-run
changes. They try to limit compensation level changes to once a year and tend to set prices by a
percentage markup over average unit costs of production.

Low-pay organizations adjust to changes in labor demand by deciding how far they can lag
behind high-paying organizations. During an economic upswing, high-pay employers will be
increasing wages, salaries, benefits, and employment. Low-pay employers, to hold down
turnover and to increase employment, will have to raise compensation more than high-paying
firms. The compensation gap between high-paying and low-paying firms thereby narrows during
an upswing.

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 THEORITICAL FRAMEWORK

COMPENSATION

Compensation and Reward system plays vital role in a business organization. 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. 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. Similarly the labour expects wages from the process.

Labour plays vital role in bringing about the process of production/business in motion. The other
factors being human, has expectations, emotions, ambitions and egos.

Labour therefore expects to have fair share in the business/production process. Therefore a fair
compensation system is a must for every business organization. The fair compensation system
will help in the following:

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 his
own compensation receivable.

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.

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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. This
minimizes the labour 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.

The sound compensation system is hallmark of organization’s success and prosperity. The
success and stability of organization is measured with pay-package it provides to its employees.

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TYPES OF COMPENSATION

Direct Compensation

Direct compensation refers to monetary benefits offered and provided to employees in return of
the services they provide to the organization. The monetary benefits include basic salary, house
rent allowance, conveyance, leave travel allowance, medical reimbursements, special
allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.

Basic Salary

Salary is the amount received by the employee in lieu of the work done by him/her for a certain
period say a day, a week, a month, etc. It is the money an employee receives from his/her
employer by rendering his/her services.

House Rent Allowance

Organizations either provide accommodations to its employees who are from different state or
country or they provide house rent allowances to its employees. This is done to provide them
social security and motivate them to work.

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Conveyance

Organizations provide for cab facilities to their employees. Few organizations also provide
vehicles and petrol allowances to their employees to motivate them.

Leave Travel Allowance

These allowances are provided to retain the best talent in the organization. The employees are
given allowances to visit any place they wish with their families. The allowances are scaled as
per the position of employee in the organization.

Medical Reimbursement

Organizations also look after the health conditions of their employees. The employees are
provided with medi-claims for them and their family members. These medi-claims include
health-insurances and treatment bills reimbursements.

Bonus

Bonus is paid to the employees during festive seasons to motivate them and provide them the
social security. The bonus amount usually amounts to one month’s salary of the employee.

Special Allowance

Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses,
reduced interest loans; insurance, club memberships, etc are provided to employees to provide
them social security and motivate them which improve the organizational productivity.

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INDIRECT COMPENSATION

Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu
of the services provided by them to the organization. They include Leave Policy, Overtime
Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement
Benefits, Holiday Homes.

Leave Policy

It is the right of employee to get adequate number of leave while working with the organization.
The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and
maternity leaves, statutory pay, etc.

Overtime Policy

Employees should be provided with the adequate allowances and facilities during their overtime,
if they happened to do so, such as transport facilities, overtime pay, etc.

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Hospitalization

The employees should be provided allowances to get their regular check-ups, say at an interval
of one year. Even their dependents should be eligible for the medi-claims that provide them
emotional and social security.

Insurance

Organizations also provide for accidental insurance and life insurance for employees. This gives
them the emotional security and they feel themselves valued in the organization.

Leave Travel

The employees are provided with leaves and travel allowances to go for holiday with their
families. Some organizations arrange for a tour for the employees of the organization. This is
usually done to make the employees stress free.

Retirement Benefits

Organizations provide for pension plans and other benefits for their employees which benefits
them after they retire from the organization at the prescribed age.

Holiday Homes

Organizations provide for holiday homes and guest house for their employees at different
locations. These holiday homes are usually located in hill station and other most wanted holiday
spots. The organizations make sure that the employees do not face any kind of difficulties during
their stay in the guest house.

Flexible Timings

Organizations provide for flexible timings to the employees who cannot come to work during
normal shifts due to their personal problems and valid reasons

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COMPONENTS OF COMPENSATION

JOB ANALYSIS

Job analysis is a systematic approach to defining the job role, description, requirements,
responsibilities, evaluation, etc. It helps in finding out required level of education, skills,
knowledge, training, etc for the job position. It also depicts the job worth i.e. measurable
effectiveness of the job and contribution of job to the organization. Thus, it effectively
contributes to setting up the compensation package for the job position.

Importance of Job Analysis

Job analysis helps in analyzing the resources and establishing the strategies to accomplish the
business goals and strategic objectives. It forms the basis for demand-supply analysis,
recruitments, compensation management, and training need assessment and performance
appraisal.

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Components of Job Analysis

Job analysis is a systematic procedure to analyze the requirements for the job role and job
profile. Job analysis can be further categorized into following sub components.

Job Position

Job position refers to the designation of the job and employee in the organization. Job position
forms an important part of the compensation strategy as it determines the level of the job in the
organization. For example management level employees receive greater pay scale than non-
managerial employees. The non-monetary benefits offered to two different levels in the
organization also vary.

Job Description

Job description refers the requirements an organization looks for a particular job position. It
states the key skill requirements, the level of experience needed, level of education required, etc.
It also describes the roles and responsibilities attached with the job position. The roles and
responsibilities are key determinant factor in estimating the level of experience, education, skill,
etc required for the job. It also helps in benchmarking the performance standards.

Job Worth

Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the
organization. It is also known as job evaluation. Job description is used to analyze the job
worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the
outcome from the job profile. Once it is determined that how much the job is worth, it becomes
easy to define the compensation strategy for the position.

Therefore, job analysis forms an integral part in the formulation of compensation strategy of an
organization. Organizations should conduct the job analysis in a systematic at regular intervals.
Job analysis can be used for setting up the compensation packages, for reviewing employees’
performance with the standard level of performance, determining the training needs for
employees who are lacking certain skills.

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PAY-STRUCTURES

Once job analysis has been done organizations need to decide upon the pay structures. Pay
structure refers to the process of setting up the pay for a job in an organization. The process deals
with internal and external analysis to estimate the compensation package for a job profile.
Internal equity, External equity and Individual equity are the most popular pay structures. Job
description provides the in depth knowledge about the job profile and its worth.

Pay structures are the strong determinant of employee’s value in the organization. It helps in
analyzing the employee’s role and status in the organization. It provides for fair treatment to all
employees. Pay structures also include the estimation of incentives.

The level of incentives also depends on the level of job position in the organizational hierarchy.

Internal Equity

The internal equity method undertakes the job position in the organizational hierarchy. The
process aims at balancing the compensation provided to a job profile in comparison to the
compensation provided to its senior and junior level in the hierarchy. The fairness is ensured
using job ranking, job classification, level of management, level of status and factor comparison.

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External Equity

Here the market pricing analysis is done. Organizations formulate their compensation strategies
by assessing the competitors’ or industry standards. Organizations set the compensation
packages of their employees aligned with the prevailing compensation packages in the market.
This entails for fair treatment to the employees. At times organizations offer higher
compensation packages to attract and retain the best talent in their organizations.

SALARY-SURVEYS

Organizations have to bridge the gap between the industry standards and their salary packages.
They cannot provide compensation packages that are either less than the industry standards or
are very higher than the market rates. For the purpose they undertake the salary survey. The
Salary survey is the research done to analyze the industry standards to set up the compensation
strategy for the organization. Organizations can either conduct the survey themselves or they can
purchase the survey reports from a reputed research organization. These reports constitute the
last 2-5 years or more compensation figures for the various positions held by the organizations.
The analysis is done on the basis of certain factors defined in the objectives of the research.

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Objectives of Salary Survey

To gather information regarding the industry standards

To know more about the market rate i.e. compensation offered by the competitors

To design a fair compensation system

To design and implement most competitive reward strategies

To benchmark the compensation strategies

Types of Compensation Surveys

There are two types of compensation surveys undertaken by the organizations.

Standard Surveys

Standard surveys are undertaken by organizations on a regular basis. These surveys are
conducted annually based on the organizational objectives. These surveys attempt to cover the
same companies every year and provide the same time of analysis. The reports are published
annually by the research organizations. The organizations willing to formulate their
compensations strategies based on the surveys purchase the reports from the research
organization.

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Custom Surveys

At times, a few organizations need to know some specific information. The surveys which cater
this need are known as custom surveys. The organizations either higher research organizations to
conduct theses surveys for them or they themselves conduct the survey by sampling few of the
competitors on their own. These surveys do not have any time interval. They are undertaken as
the need arises. They focus on important issues usually one or two.

Survey Reports

The survey reports consist of the analysis and conclusion drawn from the evaluative data based
on the objectives of the study. The reports also include the data, facts and figures to support the
analysis and conclusion. The supportive data and annexure provided in the report form the basis
for the un-biased conclusion and validation of the analysis.

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 INDUSTRY & COMPANY PROFILE

PHOENIX MOTORS PROFILE:

PHOENIX motors were established on 21st march 2003. Phoenix motors are the most trust
worthy dealers of Hero motor vehicle in twin cities of Hyderabad & secunderabad.

Hero , in association with Phoenix Motors, opened up a pre-owned vehicle showroom `Sure' in
Hyderabad, which it claimed was the first such in south India. Sure will have Hero’s range of pre-
owned vehicles which come through a system of 110 points of quality check leading to quality
certification. Apart from hosting trained technicians, ‘sure’ offers finance and document
verification services. A vehicle sold here comes with one year or 10,000 km warranty. Speaking
after the launch of the showroom, the Deputy General Manager of Hero, Mr. Rajesh Mukhija,
said it is Hero's continued endeavor to service customers to buy original Hero products from an
authorized source.

Phoenix Motors, the Hero dealership here, opened an automated additional workshop at
Ramantapur. The workshop is spread over a 6,400 sq ft space, having a huge parking facility.

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THE LEGEND OF HERO

What started out as a Joint Venture between Hero Group, the world's largest bicycle
manufacturers and the Motor Company of Japan, has today become the World's single largest
two wheeler Company. Coming into existence on January 19, 1984, Hero Motors Limited gave
India nothing less than a revolution on two-wheels made even more famous by the 'Fill it - Shut
it - Forget it ' campaign. Driven by the trust of over 5 million customers, the Hero product range
today commands a market share of 48% making it a veritable giant in the industry. Add to that
technological excellence, an expansive dealer network, and reliable after sales service, and you
have one of the most customer- friendly companies.

Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of saying. The
founder and patriarch of the $3.2 billion Hero Group is your classic first generation entrepreneur.
He is a man who started small, dreamt big and used a combination of grit and perseverance to
create one of the country's largest corporate groups and the World's No.1 Two Wheeler
Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the time
when the freedom movement in India was taking shape in the late 1920s, he walked into a newly
opened Gurukul (Indian heritage school) near his home in Kamalia (now in Pakistan). He was
only six years old then.

Thus began an extraordinary tale of courage and perseverance. Brijmohan began his business
story after partition in 1947, when he and his brothers relocated to Ludhiana. The family set up a
company that provided poor people with basic transport (cycles). Three decades later, as India
evolved, he added a second crucial chapter - which visualized affordable and technologically
superior transport to millions of middle class Indians.

29
Building Relationships

When Brijmohan and his brothers started out, there was no concept of organized dealer
networks. Companies just produced, and most dealers functioned like traders. Brijmohan
changed the rules of the business by trusting his gut instincts; introducing business norms that
were ahead of their time, and by investing in strategic relationships. Brijmohan built a series of
bonds and networks with hundreds of family members, vendors, dealers and employees. Much
like the Japanese keiretsu system, these networks are now the glue that holds the Hero Group
together.

"Thanks to the relationships that we have nurtured so passionately in the Hero Family, the
younger generations of some of our bicycle dealers have become dealers of Hero Moto Corp.
These relationships have survived through generations - through bad times and good times'' the
patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been personally responsible for
kindling a spirit of entrepreneurship amongst his employees, and today, 40 of his former
employees are successful entrepreneurs.

Staying Ahead

Though not technically qualified in the conventional sense, few of his contemporaries have
understood the dynamics of technology better than Brijmohan Lall has. He could always
visualize the applicability of technology before others could. For example, in the 1980s, when all
two-wheeler companies in India opted for two-stroke engine technology, Brijmohan preferred a
four-stroke engine - a technology that dramatically increased fuel efficiency and reduced
maintenance costs. This technology was one of the biggest reasons for Hero Moto Corp's
stupendous success.

30
A Corporate Citizen

A frugal upbringing and a value system modeled on the famous Gurukul system - which stresses
the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a strong sense of social
commitment and responsibility.

There is a special place in his heart for Ludhiana, the city where he took roots. Today, Ludhiana
is a modern, bustling city, but Brijmohan has played no mean role in its evolution. Several
schools and educational institutions in Ludhiana owe their existence to the Munjal family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the Ludhiana
Flying Club. He's also set up the not-for-profit Dayanand Medical College and Hospital-an
institute now rated as one of the best medical colleges in India, in terms of infrastructure, quality
of staff and alumni profile.

In and around Dharuhera, near the first Hero Moto Corp plant, Brijmohan and his family have
left their stamp of philanthropy. The Raman Kant Munjal Foundation - which Brijmohan set up
in memory of his eldest son, today runs a higher secondary school and a very modern and well-
equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and
provides education, vocational training, drinking water, roads, streetlights and sewerage.
Customer satisfaction, a high quality product, the strength of technology and the Hero group's
dynamism have helped HHML scale new frontiers and exceed limits.

In the words of Mr. Brijmohan Lall Munjal, the Chairman and Managing Director, "We will
continue to make every effort required for the development of the motorcycle industry, through
new product development, technological innovation, investment in equipment and facilities

31
MILESTONES

1983

 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
 Shareholders Agreement signed

1984

 Hero Honda Motors Ltd. incorporated 1985

 First motorcycle "CD 100" rolled out

1987

 100,000th motorcycle produced

1998

 2,000,000th motorcycle produced1999New motorcycle model - "CBZ" introduced

 Environment Management System of Dharuhera Plant certified with ISO-14001 by DNV
Holland
 Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory of founder
Managing Director, Mr. Raman Kant Munjal20004,000,000th motorcycle produced
 Environment Management System of Gurgaon Plant certified ISO-14001 by DNV
Holland
 Splendor declared 'World No. 1' - largest selling single two-wheeler model
 "Hero Honda Passport Programme" - CRM Programme launched2001New motorcycle
model - "Passion" introduced
 One million production in one single year

32
  New motorcycle model - "Joy" introduced
 5,000,000th motorcycle produced2002New motorcycle model - "Dawn" introduced
 New motorcycle model - "Ambition" introduced
 Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh and
Zaheer Khan as Brand Ambassadors2003Becomes the first Indian Company to cross the
cumulative 7 million sales mark
 Splendor has emerged as the World's largest selling model for the third

1989

 New motorcycle model - "Sleek" introduced1991New motorcycle model - "CD 100 SS"
introduced 500,000th motorcycle produced

1992

 Raman Munjal Vidya Mandir inaugurated - A School in the memory of founder

Managing Director, Mr. Raman Kant Munjal1994New motorcycle model - "Splendor"
introduced
 1,000,000th motorcycle produced1997New motorcycle model - "Street" introduced
 Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated

calendar year in a row (2000, 2001, 2002)

 New motorcycle model - "CD Dawn" introduced

 New motorcycle model - "Splendor +" introduced
 New motorcycle model - "Passion Plus" introduced
 New motorcycle model - "Karizma" introduced

2004

33
 New motorcycle model - "Ambition 135" introduced
 Hero Honda became the World No. 1 Company for the third consecutive year.
 Crossed sales of over 2 million units in a single year, a global record.
 Splendor - World's largest selling motorcycle crossed the 5 million mark
 New motorcycle model - "CBZ*" introduced
 Joint Technical Agreement renewed
 Total sales crossed a record of 10 million motorcycles2005Hero Honda is the World No.
1 for the 4th year in a row
 New motorcycle model - "Super Splendor" introduced
 New motorcycle model - "CD Deluxe" introduced
 New motorcycle model - "Glamour" introduced
 New motorcycle model - "Achiever" introduced
 First Scooter model from Hero Honda - "Pleasure" introduced2006Hero Honda is the
World No. 1 for the 5th year in a row
 15 million production milestone achieved2006Hero Honda is the World No. 1 for the 5th
year in a row
 15 million production milestone achieved2007Hero Honda is the World No. 1 for the 6th
year in a row
 New 'Splendor NXG' launched
 New 'CD Deluxe' launched
 New 'Passion Plus' launched
 New motorcycle model 'Hunk' launched
 20 million production milestone achieved2008Hero Honda Haridwar Plant inauguration
 New 'Pleasure' launched
 Splendor NXG launched with power start feature
 New motorcycle model 'Passion Pro' launched
 New 'CBZ Xtreme' launched
 25 million production milestone achieved
 CD Deluxe launched with power start feature
 New 'Glamour' launched

34
  New 'Glamour Fi' launched2009Hero Honda Good Life Program launched Hunk'
(Limited Edition) launched
 Splendor completed 11 million production landmark
 New motorcycle model 'Karizma - ZMR' launched
 Silver jubilee celebrations

2010

 New model Splendor Pro launched

 Launch of new Super Splendor and New Hunk

2011

 New licensing arrangement signed between Hero and Honda (Hero Honda is renamed as
Hero)
 Launch of new refreshed versions of Glamour, Glamour Fi, CBZ Xtreme, Karizma
 Crosses the landmark figure of 5 million cumulative sales in a single year

35
INITIATIVES

 An Environmentally and Socially, Aware Company

 At hero , our goal is not only to sell you a bike, but also to help you every step of the way
in making your world a better place to live in. Besides its will to provide a high- quality
service to all of its customers, Hero takes a strand as a socially responsible enterprise
respectful of its environment and respectful of the important issues.

 Hero has been strongly committed not only to environmental conservation programmes
but also expresses the increasingly inseparable balance between the economic concerns
and the environmental and social issues faced by a business: businesses must not grow at
the expense of mankind and man’s future but rather must serve mankind.

 “We must do something for the community from whose land we generate our wealth.” A
famous quote of Mr. Brijmohan Lall Munjal, our CMD.

36
CURRENT NEWS

HERO HONDA, A Leader by a MILLION ENDS FY O4 – 05 WITH 26, 21, 400 Motor cycles
sold

ANNUAL GROWTH 27%

MARKET SHARE AT 50%

HERO SELLS 2, 31,593 MOTORCYCLES IN MARCH 05.

Hero, the ‘World No.1’ two-wheeler manufacturer, is cruising ahead in top gear. The company
closed the FY 2004-05 with an incredible 26,21,400 motorcycles, an impressive jump of 27 per
cent over the previous FY. The company had sold a total of 20, 70,157 motorcycles in 2003-04.
The year-on-year growth registered by the company is extremely significant considering its
extra-ordinarily huge volume base. The lead over the No-2 two wheeler company is now over 1
Million.

During the month or March 2005 the company sold an enormous 2,31,593 units translating into a
rise of 21 per cent over the same month last year. (1,92,181 units). Hero sold in excess of 2 lakh
plus units during every single month beginning October 2004.

MARKET SHARE NOW 50% The Company like in the past continues to enjoy a lion’s share of
the motorcycle market. The company’s market share for the period April – February 05 stands at
50% in motorcycles. The company had ended the FY 2003-04 with a 48% market share in
motorcycles. The company’s market share in the total two wheeler markets for the same period
stands at 40%.

37
LAUNCH OF ‘SARVA GUNA SAMPANNA’ SUPER SPLENDOR

March 2005 also saw Hero launch its much-awaited 125cc offering, the ‘Sarva Guna Sampanna’
Super Splendor, which has received a phenomenal response from across the country. The bike,
which comes with’s next-generation Quantum Core Engine, promising an unprecedented
combination of top-class fuel-efficiency and improved power.

The company also launched a unique marketing promotion across seven key markets to build
awareness about the strengths of Super Splendor. Road shows including an abstract virtual
reality show and product related audio-visuals offered a first-time experience to interested
customers.

EXPORTS UP By 63%

The company increased its exports by 63%, selling 64,015 bikes in the FY 04-05.

A SPECIAL HONOUR

The financial year was also marked with one of the highest civilian honors, the Padma Bhushan
being awarded to Dr. Brijmohan Lall, Chairman, Hero Group, for his invaluable Life time
achievement award for management (2003)-all India management association, degree of doctor
of letters” honoris causa (2004)-Banaras Hindu University

The Technical Collaboration Agreement was signed today by Mr.S.Toshida, managing director
and chief operating officer for Regional Operations (Asia and Oceania), Motors Co. Ltd. Japan
and Mr. Pawan Munjal, managing director, Hero Motors.

Hero Motors has inked an enquiry and Technical Collaboration Agreement with in 1984 and is
now renewed for another 10 years.

The Hero group owns 26% stake each in Hero, which is the world single latest two-wheeler
maker. The remaining share hold is in the hands of the public.

38
Addressing the Media immediately after the signing ceremony, Mr.S.Toshida said “Hero has
been one of the most successful two-wheeler joint ventures of worldwide and relationship will
only be made stronger and solid.

Further elaborating, he said,” would with the latest and most advanced engine technology, with
full technical support and assistance for new product introductions and other area of our joint
operations. Hero will definitely be a part of integrated India strategy to develop business in India.
It has strengthened its R&D facilities in India and together with the R&D in Japan will continue
to provide Hero with the Leading Edge Technology.”

Mr. Brijmohan Lall, Chairman, Hero Motors Ltd said, Hero is a SHOWCASE of an ideal
partnership where both partners have combined their unique strengths and created the World No
1 two wheeler company. The successful relationship that has matured over the last 20 years will
continue to grow even stronger.

MARKET SHARE RISE BY 3% Points

Leading the industry growth almost single handedly, the company would end the year with 47%
market share in motorcycles-a remarkable increase of 3%over last fiscal. The company had
ended the FY2002-03 with a 44% market share.

GROWS FASTER THAN THE INDUSTRY, ON A BASE OF 1.68 MILLION UNITS

Fortifying its undisputed leadership, the company recorded 23% sales growth for the full year.
As against a 13%sales growth recorded by a motorcycle industry during the first eleven months
(April-Feb), Hero grew by 20%.

39
NEW MODELS- A COMPREHENSIVE SUCCESS

All the five models launches by the company during the year: the entry level CD-dawn;
splendor+, passion+ with enhanced styling; the country first premium sports bike Karizma: and
the restyled Ambition 135 was all-round success.

Mr. Brijmohan lall, chairman, Hero Motors Ltd, applauding the company’s performance, said,
”this new world record of selling 2 million motorcycles exemplifies the potential of the company
and the unmatched equity of the Hero brand. It is pleasing to note that the company performed
equally well in all the four zones of the country-a unique strength. I would like to take this
opportunity to congratulate and thank the entire Hero team, and all our partners and associates,
for their invaluable contribution.”

Enthused by the world record performance Mr. pawan munjal, managing director, Hero Motors
Ltd, said. “This is a direct outcome of our customer focused strategies. Comprehending the
changing customer needs and fulfilling them with matching products has been our core strength.
During the year the company once again demonstrated its intrinsic capabilities. Going forward,
we would continue to offer products with the latest technology, styling and performance.”

Mr. Atul Sobti, Senior Vice President, Marketing and Sales, Hero Motors Ltd. Said, ”with the
voluminous success of CD-Dawn, splendor+, super splendor and Passion+, the company ended
the year with an undisputed leadership of the entry and the executive segments – the core of the
Indian motorcycle industry. The company also strengthens its position in the premium segment
in the launch of Ambition 135.

The company increased its exports by 72%, selling 39,255 bikes in the FY 03-04.

Other records and achievements

 Hero had recorded superb financial results during the first nine months f the financial
year. The company’s financial performance was globally acknowledged with the
company receiving 2 of the most reputed Awards.
 The year saw the company recording another astonishing world record-selling over 2 lack
units in a single month, thrice during the second half of the current fiscal.

40
DATA ANALYSIS AND INTERPRETATION

1. What types of compensation are available in your organization?

TABLE – 4.1

Attributes No. of respondents % of respondents

Direct compensation 46 46%
Indirect compensation 26 26%
Both 28 28%

CHART – 4.1

Type of compensation in the organization

28%

Direct compensation
46%
Indirect compensation
Both

26%

INTERPRETATION:

According to above chart, 46% respondents are compensated with direct compensation, 26% of
the respondents are compensated with indirect compensation and the remaining 28% of the
respondents are compensated with both types.

41
 2. On what basis does your organization provide compensation to its employees?

TABLE – 4.2

Attributes No. of respondents % of respondents

Base pay 31 31%
Commissions 15 15%
Overtime pay 8 8%
Merit pay 10 10%
Profit sharing 5 5%
Stock options 4 4%
Allowances 15 15%
Benefits 12 12%

CHART – 4.2

Basis for compensation

40

30

20

10

0
Base pay Commissions Overtime Merit pay Profit Stock Allowances Benefits
pay sharing options

INTERPRETATION:

According to the graph, 31 respondents are provided with Base pay, 15 respondents each shared
with commissions and Allowances, 8 respondents with overtime pay, 10 respondents with merit
pay, 5 respondents with profit sharing and 4 respondents with stock options.

42
 3. What kind of compensation do you prefer?

TABLE – 4.3

Attributes No. of respondents % of respondents

Monetary 38 38%
Rewarding 13 13%
Motivation 18 18%
Otheres 31 31%

CHART – 4.3

Preferred kind of compensation

40
35
30
25
20
15
10
5
0
Monetary Rewarding Motivation Others

INTERPRETATION:

According to the graph, 38 respondents prefer financial composition, 13 respondents prefer

reward kind of compensation, 18 respondents prefer motivation and the remaining 31
respondents prefer in other type of compensations.

43
 4. What is your level of satisfaction with the compensation you receive?

TABLE – 4.4

Attributes No. of respondents % of respondents

Highly satisfied 22 22%
Satisfied 34 34%
Neither satisfied nor dissatisfied 17 17%
Not satisfied 16 16%
Highly dissatisfied 11 11%

CHART – 4.4

Satisfaction with the compensation

35

30

25

20

15

10

0
Highly satisfied Satisfied Neutral Dissatisfied Highly
dissatisfied

INTERPRETATION:

Majority of the respondents (56) are satisfied with the compensation which they received from
the organization. 27 respondents are dissatisfied with the compensation. The remaining 17
respondent showed a neutral response.

44
 5. What is your level of satisfaction with the salary administration policy in your
organization?

TABLE – 4.5

Attributes No. of respondents % of respondents

Highly satisfied 32 32%
Satisfied 37 37%
Neither satisfied nor dissatisfied 16 16%
Not satisfied 11 11%
Highly dissatisfied 4 4%

CHART – 4.5

Salary administration policy

40
35
30
25
20
15
10
5
0
Highly satisfied Satisfied Neutral Dissatisfied Highly
dissatisfied

INTERPRETATION:

Majority of the respondents (69) are satisfied with the salary administration policy in the
organization in which 32 respondents are highly satisfied and 37 respondents satisfied. 16
respondents are neither satisfied nor dissatisfied with the administration policy. The remaining
15 is not at all satisfied with the salary administration policy.
45
 6. What is your feeling on the compensation package provided to the employees by your
organization?

TABLE – 4.6

Attributes No. of respondents % of respondents

Fair 40 40%
Good 35 35%
Satisfactory 14 14%
Poor 8 8%
Worst 3 3%

CHART – 4.6

Compensation package

40

35

30

25

20

15

10

0
Fair Good Satisfactory Poor Worst

INTERPRETATION:

Almost all the employees are happy with the compensation package except to 11 respondents.

46
 7. To what extent do you think cash is king in the employee compensation?

TABLE – 4.7

Attributes No. of respondents % of respondents

To a great extent 18 18%
To a certain extent 46 46%
To a little extent 36 36%

CHART – 4.7

Cash is king in the employee compensation

18%

36%

To a great extent
To a certain extent
To a little extent

46%

INTERPRETATION:

According to above graph, 46 respondents feel that the cash is king in terms of employee
compensation to a certain extent, 18 respondents feel to a great extent and 36 respondents feel
that cash is king in terms of employee compensation to a little extent.

47
 8. According to you, does your compensation fit with the value of your position?

TABLE – 4.8

Attributes No. of respondents % of respondents

Yes 88 88%
No 12 12%

CHART – 4.8

compensation fit with the value of position

12%

Yes
No

88%

INTERPRETATION:

With the above statement in the pie chart, 88% of the respondents agree that the compensation is
fit with the value of the position but only 12% of the respondents did not agree with the
compensation fit with the value of position.

48
 9. What are the job analysis techniques used in your organization?

TABLE – 4.9

Attributes No. of respondents % of respondents

Interviews 16 16%
Questionnaires 22 22%
Observation 29 29%
Others 33 33%

CHART – 4.9

Job analysis techniques

35

30

25

20

15

10

0
Interviews Questionnaires Observation Others

INTERPRETATION:

From the above graph, 33 respondents are using various techniques in job analysis, 29
respondents through observing, 22 respondents through questionnaires and the remaining 16
through interviews.

49
 10. Which of the following methods are used in your organization for job evaluation?

TABLE – 4.10

Attributes No. of respondents % of respondents

Ranking 32 32%
Classification 35 35%
Factor comparison 19 19%
Point method 14 14%

CHART – 4.10

Job evaluation methods

35

30

25

20

15

10

0
Ranking Classification Factor comparison Point method

INTERPRETATION:

Pertaining to the job evaluation method in the organization, first place goes to classification with
35 respondents, second place goes to ranking with 32 respondents, third place goes to factor
comparison with third place and the fourth place goes to point method with 14 respondents.

50
 11. At present, the salaries in your company with reference to the market are.?

TABLE – 4.11

Attributes No. of respondents % of respondents

Above market 23 23%
Below market 19 19%
Can’t say 58 58%

CHART – 4.11

Salaries with reference to market

23%

Above market
Below market
Can’t say
58%

19%

INTERPRETATION:

Among the respondents, 58% of the respondents are not aware of the market value with the
current profile of the respondents. While 23% of the respondents feel it is above market level and
the remaining 19% of the respondents feel it is below the market level.

51
 12. How far is the compensation policy in your organization able to retain employees?

TABLE – 4.12

Attributes No. of respondents % of respondents

To a great extent 28 28%
To a certain extent 29 29%
To a little extent 25 25%
Can’t say 18 18%

CHART – 4.12

compensation policy and employee retention

29
28
30
25
25
18
20

15

10

0
To a great extent To a certain extent To a little extent Can’t say

INTERPRETATION:

From the above graph, 25 respondents feel that compensation policy is able to retain employees
to a little extent, 29 respondents feel it for to a certain extent and 28 respondents feel it to a great
extent. The remaining 18 respondents have no idea on retention of employees through
compensation policy.

52
 13. The dependency of the employee productivity on the employee compensation,
according to you is ______

TABLE – 4.13

Attributes No. of respondents % of respondents

Very high 28 28%
High 42 42%
Average 17 17%
Low 9 9%
Too low 4 4%

CHART – 4.13

Dependency of the employee productivity on

compensation

45
40
35
30
25
20
15
10
5
0
Very high High Average Low Too low

INTERPRETATION:

According to the above graph, the employee productivity on the employee compensation is high
with 42 respondents, very high with 28 respondents, average with 17 respondents, and low with
9 respondents and too low with 4 respondents.

53
 14. What is your level of satisfaction with the communication of the pay programs in
your organization?

TABLE – 4.14

Attributes No. of respondents % of respondents

Highly satisfied 14 14%
Satisfied 16 16%
Neither satisfied nor dissatisfied 35 35%
Not satisfied 24 24%
Highly dissatisfied 11 11%

CHART – 4.14

Communication of the pay programs

35
35
30 24
25
20 16
14
15 11
10
5
0
Highly satisfied Satisfied Neutral Dissatisfied Highly
dissatisfied

INTERPRETATION:

According to the graph, 14 respondents are highly satisfied and 16 respondents are satisfied with
the communication of the pay programs in the organization.24 respondents are dissatisfied and
11 respondents are highly dissatisfied with the communication of the pay programs in the
organization. 35 respondents have shown neutral response on the communication of the pay
programs.

54
 15. Rate the following statement with your level of agreement or disagreement.

“The compensation policy in your organization helps employees and their families achieve
improved quality of life and financial security.”

TABLE – 4.15

Attributes No. of respondents % of respondents

Strongly agree 22 22%
Partially agree 31 31%
Neither agrees nor disagrees 30 30%
Partially disagree 15 15%
Strongly disagree 2 2%

CHART – 4.15

The compensation policy helps in achieving improved quality of life

35

30

25
No. of respondents

20

15

10

0
Strongly Agree Neutral Disagree Strongly
agree disagree
Series 1 22 31 30 15 2

55
INTERPRETATION:

From the above graph, regarding the above statement 30 respondents neutral response, 31
respondents agree and 22 respondents strongly agree that the compensation policy in the
organization helped the employees and their families to achieve improved quality of life and
financial security. The remaining 17 respondents disagree that the compensation policy in the
organization did not help the employees and their families to achieve improved quality of life
and financial security.

56
 FINDINGS

1. About 46% of the respondents are compensated with direct compensation and 26% of the
respondents are compensated with indirect compensation and the remaining is
compensated with both.
2. The majority of the organizations are providing compensation on the base pay,
commissions, overtime pay, merit pay, profit sharing, stock options, allowances and other
benefits.
3. Most of the respondents prefer financial compensation followed by other types of
compensations.
4. Half of the respondents are satisfied with the compensation which they receive from the
organization.
5. More than half of the respondents are satisfied with the salary administration policy in the
organization.
6. About 90% of the respondents are satisfied with the compensation package provided in
the organization.
7. About 46 respondents feel that the cash is king in terms of employee compensation to a
certain extent, 18 respondents feel to a great extent and 36 respondents feel that cash is
king in terms of employee compensation to a little extent.
8. About 88% of the respondents agree that the compensation fit with the value of position
in the organization.
9. About 33% of the organizations do not have any specific job analysis techniques, 29% of
the organizations follow observation, 22 respondents follow questionnaires and the
remaining respondents’ uses interview techniques for job analysis.
10. Majority of the organizations uses ranking and classification methods in job evaluation
method.

57
11. Above half of the respondents are unaware of the market value of salaries compared with
the present salaries in the organization.
12. Only 18% of the organizations are unable to retain the employees with the compensation
policy in the organization.
13. Almost all the employees feel that their productivity depends upon the compensation.
14. Maximum number of respondents (35) has shown neutral response on the communication
of the pay programs.
15. Among the 50% of the respondents agree with the statement that “the compensation
policy in your organization helps employees and their families to achieve improved
quality of life and financial security”.

58
 SUGGESTIONS

1. Nearly half of the employees are not satisfied with their compensation which calls for an
immediate redesigning of the salary structure or hikes. The salary administration policy
should also be taken proper care.
2. The management should not consider the compensation as the sole factor for getting the
maximum output from the employees. Apart from compensation, importance should also
be given to the other issues like autonomy, authority, work environment, motivation etc.
3. The organization should also conduct salary surveys regularly in order to have up to date
information of the salaries in the market and should in par with the market so that the
employees do not get disappointed or intend to switch to other companies.
4. The employees should be clearly communicated and encouraged to participate in the
compensation management programs.
5. The compensation policy and the salary administration should be revised regularly in
order to keep the compensation system effective.

59
 CONCLUSION

The study on the compensation management was undertaken with the objective of getting an
insight into the compensation policies and practices in an organization. The present study focuses
on understanding how the pay rates are established, the procedure involved in this. The study
aims to find out the impact of the compensation on the employee productivity and the employee
perception and satisfaction levels towards the compensation.

The study is done at Hyderabad in a single organization with the employees as the respondents of
the study. The sampling technique used was convenience sampling. The respondents were asked
to fill the questionnaires and thus the primary data is collected. Secondary data was collected
from various sources like books, survey reports, web etc. The study is based on the hypotheses
that the employee production and retention are not related to the compensation in an
organization.

The data collected from the primary source and the secondary sources was analyzed using
appropriate research tools like graphs, tables etc. From the study, it was found that the employees
are satisfied with the compensation and the salary administration policy and they feel that their
compensation is worth the value of their position. And the employees agree that the
compensation policy in their organization helps employees and their families achieve improved
quality of life and financial security.

It was also found the there is significant association between the compensation and the employee
retention and the productivity. The management should therefore consider these factors seriously
in the administration of the compensation policy. Further, the organization should take great care
of satisfying the employees in terms of their compensation by their feedback.

60
 BIBLIOGRAPHY

1. K Aswathappa, “Human Resource Management”, 6th Edition, Publisher: Tata Mcgraw

Hill Education Private Limited.
2. C. R Kothari, “Research Methodology”: Methods and Techniques, 2nd Edition,
Publisher: New Age International In 2004.
3. Tapomoy Deb, Compensation Management, 1st Edition, and Publisher: Excel Books in
2008.
4. Milkovich, Compensation Management.

Websites:

http://payroll.naukrihub.com

www.citehr.com

www.indianmba.com

www.scibd.com

www.mbaguys.net

www.payroll.naukrihub.com

ANNEXURE

PERSONAL DETAILS

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Name: _____________________________

Age: ___________

a. 15-25yrs b. 25-35yrs c. 35-45yrs d. above 45yrs ( )

Gender: ____________________

a. Male b. Female ( )

Residence: ___________________

Qualification: __________

a. Undergraduate b. Graduate c. Post Graduate d. Others ( )

Designation: ____________

Experience in the current organization:

a. Less than 1yr b. 1-2yrs c. 2-5yrs d. 5-10yrs e. above 10yrs ( )

Annual income (in lakhs):_____________

a. Below 1 b. 1-2 c. 2-3

D.3-5 e. 5-8 f. above 8 ( )

When was your organization established?

QUESTIONNAIRE

1.) What types of compensation are available in your organization?

a. Direct compensation ( ) b. Indirect compensation ( ) c. Both ( )

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2.) On what basis does your organization provide compensation to its employees?

a. Base pay ( ) b. Commissions ( ) c. Overtime pay ( )

d. Merit pay ( ) e. Profit sharing ( ) f. Stock options ( )

g. Allowances ( ) h. Benefits ( )

3.) What kind of compensation do you prefer?

a. Monetary ( ) b. Rewarding ( ) c. Motivation ( )

d. Others ( )

4.) What is your level of satisfaction with the compensation you receive?

a. Highly satisfied ( ) b. Satisfied ( ) c. Neither satisfied nor dissatisfied ( )

d. Not satisfied ( ) e. Highly dissatisfied ( )

5.) What is your level of satisfaction with the salary administration policy in your organization?

a. Highly satisfied ( ) b. Satisfied ( ) c. Neither satisfied nor dissatisfied ( )

d. Not satisfied ( ) e. highly dissatisfied ( )

6.) What is your feeling on the compensation package provided to the employees by your
organization?

a. Fair ( ) b. Good ( ) c. Satisfactory ( ) d. Poor ( )

e. Worst ( )

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7.) To what extent do you think cash is king in the employee compensation?

a. To a great extent ( ) b. To a certain extent ( ) c. To a little extent ( )

8.) According to you, does your compensation fit with the value of your position?

a. Yes ( ) b. No ( )

9.) What are the job analysis techniques used in your organization?

a. Interviews ( ) b. Questionnaires ( ) c. Observation ( )

d. Others ( )

10.) Which of the following methods are used in your organization for job evaluation?

a. Ranking ( ) b. Classification ( ) c. Factor comparison ( )

d. Point method ( )

11.) At present, the salaries in your company with reference to the market are..?

a. Above market ( ) b. Below market ( ) c. Can’t say ( )

12.) How far is the compensation policy in your organization able to retain employees?

a. To a great extent ( ) b. To a certain extent ( ) c. To a little extent ( )

d. Can’t say ( )

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13.) The dependency of the employee productivity on the employee compensation, according to
you is ______

a. Very high ( ) b. High ( ) c. Average ( ) d. Low ( )

e. Too low ( )

14.) What is your level of satisfaction with the communication of the pay programs in your
organization?

a. Highly satisfied ( ) b. Satisfied ( ) c. Neither satisfied nor dissatisfied ( )

d. Not satisfied ( ) e. Highly dissatisfied ( )

15.) Rate the following statement with your level of agreement or disagreement.

“The compensation policy in your organization helps employees and their families achieve
improved quality of life and financial security.”

a. Strongly agree ( ) b. Partially agree ( ) c. Neither agree nor disagree ( )

d. Partially disagree ( ) e. Strongly disagree ( )

Suggestions please……………………………………………………………

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