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AMERICAN INTERNATIONAL UNIVERSITY BANGLADESH

Faculty of Business Administration

Assignment Cover Sheet


Students must complete all details except the faculty use part. Assignment Title: Compensation Package of TNT Express Bangladesh Assignment Number: 01 Due Date: 27.06.11 Semester: Summer 2011 Subject Code: Course Instructor:
1. 2. 3.

Subject Name: Human Resource Management

Section: A

Ahmed, Neaj

Degree Program: M.B.A

Declaration and Statement of Authorship:


I/we hold a copy of this assignment, which can be produced if the original is lost/ damaged. This assignment is my/our original work and no part of it has been copied from any other students work or from any other source except where due acknowledgement is made. No part of this assignment has been written for me/us by any other person except where such collaboration has been authorized by the lecturer/teacher concerned and is clearly acknowledged in the assignment. I/we have not previously submitted or currently submitting this work for any other course/unit. This work may be reproduced, communicated, compared and archived for the purpose of detecting plagiarism. I/we give permission for a copy of my/our marked work to be retained by the School for review and comparison, including review by external examiners. Plagiarism is the presentation of the work, idea or creation of another person as though it is your own. It is a form of cheating and is a very serious academic offence that may lead to expulsion from the University. Plagiarized material can be drawn from, and presented in, written, graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited. Enabling plagiarism is the act of assisting or allowing another person to copy your work.

4. 5.

6.

I/we understand that


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8.

Group Name (if applicable):


No. Student Name Student Number Student Signature Date 27.06.11

Adnan, Md. Fahim

10-93954-2

For faculty use only

Total Marks: _______ Marks Obtained: _______

Faculty comments___________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________

Compensation package of TNT Express

Acknowledgement
During the completion of the course Marketing Management, every student in sec: A has to make several groups to submit a term paper related to the course outline. Our course instructor Hoq, Md. Ziaul permits us to write a report on Marketing Plan related to our course lecture.

Our sincere thanks go to our course instructor Hoq, Md. Ziaul who showed immense interest and enthusiasm to help us analyze and bring out an outcome of this report. Without his help we could not do the project properly.

Table of content
Chapter Executive Summary 1.0 TNT Express-at a glance 2.0 Organization chart and number of employees 3.0 HRM functions practiced in TNT Express 4.0 Internal Alignment 5.0 Compensation Package and other benefits: 6.0 Organizational Budget of Administration 7.0 Observation 8.0 Conclusion 9.0 Reference Page no. i 1 2 3 6 10 13 14 15 16

Executive Summary
TNT Express is the leading provider of express delivery services based in the Netherlands. They provide on-demand time-definite and day-certain door to door delivery services for documents, parcels and freight. TNT Express Bangladesh, a subsidiary of the TNT Worldwide Express is the third air express industry in Bangladesh. Its main business consisted of carrying and delivering time sensitive documents and parcels worldwide to and from Bangladesh. TNT Express can be termed as the runner up industry as the market is already saturated by DHL and FedEx. So it follows a low cost strategy to increase its market share. TNT Express Bangladesh has 18% market share in the air express industry in Bangladesh. DHL Bangladesh, FedEx and other competitors are UPS, Aramex and Sky Net. Besides, it has one local competitor which is known as ABX. TNT Express is conducting a good number of marketing strategies. They are combined with World Food Program. TNT express is applying Low cost strategy, which is one of the most significant Key success factors. TNTs market size and growth potential is increasing day by day. Over the last decade especially the garments sector has been contributing to Bangladeshs economic growth. TNT increased garments exports by 10-15% annually. TNT Express has quality manpower to deliver personalized service to its clients and thereby to earn good profit and to earn its goodwill. TNT Express' IT systems are fully geared to support the company's business goals. TNT Express has already abandoned traditional business methods and shift to e-business technologies and use of Internet in their business. We recommend TNT Express to follow Best Cost Provider Strategy which is basically is a combination of both the low cost and differentiation strategy. It has the skills and capabilities to provide attractive performance and features at a lower cost than rivals. So if they add some value by providing extra services to customers it will definitely able to attract more customers.

1.0 TNT Express-at a glance


TNT Express is the leading provider of business to business express delivery services based in the Netherlands. They provide on-demand time-definite and day-certain door to door delivery services for documents, parcels and freight. Established in 1946 TNT Express is now a global integrator and offers a range of unique international express delivery services between more than 200 countries. Market leading national express delivery services is also provided in many of the major countries in Europe, Asia and Australia. They employ more than 40,000 people and have a fleet of 42 jet freighter aircraft together with 19,000 road vehicles organized by a worldwide network of nearly 857 company owned depots. Our extensive resources also include numerous state of the art sortation centers and all these efficient facilities enable TNT Express to provide the fastest and most reliable door to door transit times in the industry.

Mission
Exceed customers' expectations in the transfer of their goods and documents around the world Deliver value to our customers by providing the most reliable and efficient solutions in distribution and logistics Lead the industry by instilling pride in our people, creating value for our stakeholders and sharing responsibility for our world

Vision
Their vision strongly reflects who we are: ambitious, optimistic, result-oriented It communicates their confidence that they can always overcome obstacles and achieve our goals It is that special mark that allows them to stand out from the crowd

Standards
Aim to satisfy customers every time Challenge and improve all we do Be passionate about our people Act as a team Be honest, always

2.0 Organization chart and number of employees:

Country Manager (01)

Sales Manager (01) Sales Territory Manager (50) Sales Coordinator (30)

Finance and Admin Manager (01)

IT and operation Manager (01) Operation Supervisor (15)

HR Manager (01)

Customer Care Manager (01)

Indoor Sales Executive (30)

HR Executive (10) Customer Care Executive (30)

Asst. Manager Credit Control (05)

Asst. manager Admin (05)

Billing Executive (05)

Finance Executive (05)

Cashier (05)

Credit Control Executive (10)

POD(12)

Drier (12)

3.0 HRM functions practiced in TNT Express


The Human Resources Management (HRM) function includes a variety of activities. The activities involved and personnel policies. Usually small businesses have to carry out these activities themselves because whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation; employee records they can't yet afford part or full-time help. However, they should always ensure that employees have and are aware of personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have.
TNT Express, one of the leading courier service providers in Bangladesh has successfully operated for last several years. Previously they did not have any HR department and the HR activities were performed by Country Manager himself. Later on they realized the importance of HR department and in 2007 they appointed a HR manager. The HR activities regarding compensation management are as follows:-

Compensation Planning: To know about the compensation planning first of all we need to know why compensation planning is so important for the organization. The reasons are as follows

Recruit and retain qualified employees Increase or maintain morale / satisfaction Reward and encourage peak performance Achieve internal and external equity, Reduce turnover and encourage company loyalty

The HR manager does compensation planning through different steps Internal equity ensures that more difficult jobs are paid more. External equity ensures that jobs are fairly compensated in comparison to similar jobs in the labor market. Individual equity ensures equal pay for equal work, that is, each individual's pay is fair in comparison to that of another person doing the same or a similar job.

In this case TNT Express do compensation planning based on both the internal and external equity. Under the internal equity they ensure performance and motivation. Similarly they ensure fewer turnovers by balancing their pay structure with the competitors. If they do not balance their compensation package with the competitors, employees may quit the job. They are competitors are DHL, FedEx, UPS and Homebound. In case of managerial post their compensation package is little bit complex because some are paying higher whereas some are paying less. What should be their salary depended on Country Manager. And Country Manager selects their salary based on the experience and other individual skill. Only Country Managers compensation management is done by the parent company Netherlands because he is getting his salary in dollar. Rest of the Employees is getting salary in terms of TAKA. Sometimes the HR departments do survey to know the satisfaction level of the employees in terms of compensation. If they find any reasonable dissatisfaction they suggest the CM to increase salary.

Training: Training, another most important task of a HR. Employees needs training in order to develop their knowledge and skill. TNT express arranges lots of training programs for their employees. First the HR departments do the training need analysis, if they find any need of training of a particular employees after conducting the training need analysis, they arranges training. And all these training part is organized by HR department. Sometimes they send the employees overseas like UAE, Netherlands and Singapore for developing their skill.

Resolving Conflicts: A conflict is very common in any organization. Conflict may occur within or between the organizations. If conflict occurs among the employees of a particular organization we call it internal conflict. On the other hand if conflict occurs among the organizations we call it external conflict. Resolving any type of conflict is the task of HR department. If they get any complain from any employees, first they judge it then take immediate action.

Motivation: Another important task of the HR department is motivating employee. Without motivation productivity cannon maximizes. So in order to increase the employees contribution, a HR must motivate employee. To motivate employees they use several techniques such as creating honorary post that means changing the designation without changing salary structure, increase salary, give non financial benefits, give vacation for free with family, giving some authority to make decision etc.

These are the activities of HR department of TNT Express. Though they are new but they perform their task successfully.

4.0 Internal Alignment


Internal alignment is an important policy in the strategic perspective of compensation. The necessity for organizations to control labor costs, while at the same time increasing productivity and enhancing quality and customer service has never been more urgent. The present competitive environment requires new strategies toward employee compensation, new management and employee practices, and new methods of educating employees to the shifting competitive environment that has brought about the necessity for these changes. At the same time that companies are examining the method and basis for compensating employees, there has been a growth in the number of companies seeking to develop high performance, high commitment work systems. These systems, based upon expanded roles for employees, require that employees accept more responsibility and accountability. Other organizational initiatives such as flatter organization structure and more fluid organization design have driven sweeping changes. Often it has been difficult for compensation systems to keep pace and support these changes. Additionally, employee compensation is a critical component to financial success. Careful attention must be placed on the development of reward systems that reflect the financial capability of the company as well as reinforce the new directions associated with contemporary organizational strategy. Compensation administration includes a collection of activities required to sustain the effectiveness of a compensation strategy. Thus issues ranging from labor market surveying to performance management to skill certification and peer review come under this umbrella. Involving stakeholders in compensation administration can reinforce the values and beliefs underlying the compensation philosophy and strategy.

As part of the aligning process, the following factors are taken into consideration by TNT Express:

1.Employees inputs and Preferences It includes perceptions of external pay equity, perceptions of internal pay equity, pay delivery beliefs in forms(cash, gain sharing, benefits) or method (individual, small group, large group), risk tolerance and trust in management.

2.Business and Operating Inputs It includes operations strategy, sales development strategy, percentage of compensation costs to total product/service costs, percentage of compensation costs to controllable product/service cost, existing markets/products, potential markets/products, anticipated volume, reinforce/enhance work design, maintain cultural change processes and other operating issues

3.Prevailing Market Practices and Trends It is concerned with the availability and quality of work force, industry practices, retention of work force, retention of key contributors, salary levels and movement, salary delivery charges

4. Compensation Philosophy and Objectives It is concerned with basically two things. These are:-

How much emphasis should be placed on rewards to drive organization. What issues are to be driven by compensation as opposed to management practices.

It also includes the targeted position in the market, targeted position in product market, relationship within total company, relationship to selection and retention, portion of pay guaranteed and at risk, and percentage of workforce bonus eligible

5. Base Pay Delivery It includes the method of delivery (Job-based vs. individual-based), number of level, structure of levels, pricing strategies, adjustment method, weighting of individual performance

6.Organization Performance or Variable Pay Role in total compensation strategy structure measures target, tolerance for pay at risk, risk - reward ratios, use of other monetary reward, use of non-monetary rewards, individual performance recognition

7. Fringe Benefits It is usually determined at corporate level; limited scope at other levels, they tie to business and human resource objectives, coverage, cost, communications (Purpose - Coverage - Value)

8. Compensation Administration Stakeholder role in compensation administration, performance management & evaluation, overtime policy (exempt & non-exempt), shift differentials, attendance policy, role of seniority Compensation decisions should be fully integrated into the organizations business and operations strategy, through its compensation philosophy. The design of compensation systems should be subsequent to, and not precede, this key analysis and decision point. For the high performance firm, an appropriate level of employee involvement can further reinforce the organizations general beliefs and values. We all know that there are two ways of determining internal alignment in an organization which are:1. Hierarchy based 2. Level based

Hierarchy Based:
Serial No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Position Country Manager Manager Sales Territory Manager Sales Coordinator Indoor Sales Executives Assistant Manager Credit Control Assistant Manager Administration Billing Executive Cashier Finance Executive Operation Supervisor POD Driver Pay level Tk.2,41,500 Tk.45,000 Tk.15,000 Tk.11,000 Tk.11,000 Tk.20,000 Tk.20,000 Tk.15,000 Tk.15,000 Tk.15,000 Tk.12,000 Tk.6,000 Tk.6,000

In the above list, we can see that the difference in pay level between the country manager and the other managers are too large. Again, the difference between the managers and sales territory manager is also large. The gap between the country manager and the manager might be reduced by increasing the salary of the managers or by decreasing the salary of the country manager. But in this case as the country manager is a foreigner, we want to increase the salary of the managers.

Level Based:
Under the level based internal alignment we consider equality of compensation package between the same level employees. Here in TNT express there is problem in Level based internal alignment in managerial post. Though the managers are in same level but they are paying differently. Here if we see their compensation package we will find that 45000 + (depend on the CM), this indicate that how the alignment is imbalanced in these post. Here we find that sales and finance manager are getting higher that other managers like HR, Customer care and IT. When we asked for reason they told us that its because of job description, experience and special skill. But we found one thing that when they hire employee from competitor organization they pay high. And when they hire new employees they pay less. So there is an imbalance situation in level based internal alignment.

5.0 Compensation Package and other benefits: Country Manager:


Tk. 241,500/ $3500 Basic Salary Other benefits: House rent Tk 30,000; Medical Facilities (with family), Phone Bill Tk10,000; Car facility for 24 hours (personal Use) Bonus 2 (100% of Basic)

Manager (4):
Tk 45,000 Basic salary + (additional amount that CM will know) Other benefits: Medical facilities; Phone Bill Tk3,500; Car facility for Pick up and Drop; Bonus 2 (100% of Basic)

Sales Territory Manager (6):


TK 15,000 Basic Salary Other benefits: Phone Bill TK 2000; Car pick and drop and sales visit; Bonus 2

Sales Coordinator:
TK 11,000 Basic Salary Other benefits: Phone Bill TK 1500; Car for pick up and Drop; Bonus 2

Indoor Sales Executive (4):


TK 11,000 Basic Salary Other benefits: Phone Bill TK 1500; Car for pick up and Drop; Bonus 2

Assistant Manager Credit Control:


TK 20,000 Basic Salary Other benefits: Phone Bill TK 2000; Car for Pick up and Drop; Bonus 2

Assistant Manager Administration:


TK 20,000 Basic Salary Other benefits: Phone Bill TK 2000; Car for Pick up and Drop; Bonus 2

Billing Executive:
TK 15,000 Basic Salary Other benefits: Phone Bill TK 1500; Car for Pick up and Drop Bonus - 2

Cashier:
TK 15,000 Basic Salary Other benefits: Phone Bill TK 1500; Car for Pick up and Drop; Bonus - 2

Finance Executive:
TK 15,000 Basic Salary Other benefits: Phone Bill TK 1500; Car for Pick up and Drop; Bonus 2

Operation Supervisor:
TK 12,000 Basic Salary Other benefits: Phone Bill TK 1500; Bonus 2

POD (Pick up and Delevery):


TK 6,000 Basic Salary Other benefits: Phone Bill TK 500; Lunch; overtime Bonus 2

Driver:
TK 6,000 Basic Salary, overtime Other benefits: Lunch Bonus 2

6.0 Organizational Budget of Administration:


Since TNT is a service providing organizaion, it is very important to have very effective and efficient workforce. In doing so, The company is giving a handsome amount to its employess in order to motivate them to work more effectively so that the customers can have maximum satisfaction. TNT is doing such kind of business in which it has to make sure that the customers are satisfied with its service. Therefore, The employees of the company have to work very hard and the effort of the employees is the biggest concern for them. Hence, it is certain that TNT has to provide good compensation package to its employees to run its operation successfully. The company has an estimated Budget of 40% of the Net Operating Expense for Compensation Package. Generally, service organizations provide huge amount of salary benefits for the employees to run the show properly because Human Resource is the biggest asset for the service organizations.

7.0 Observation
HR department is comperaively new in TNT Express Bangladesh. Previousely there was no HR department and the country manager himself lookafter all HR activities. But later in 2007 they create HR department because the company was growing and they needed separate HR department. The department is lead by the HR manager and he has 10 HR executives. We found that the department is small compare to other departments and have very less work to do. They practices HRM in a small scale. We know many HR functions but TNT Express Bangladesh practices very few of them.

Recruiting Selection Training Motivating Conflict resolving Compensation planning

8.0 Conclusion:
TNT Express is a service providing organization that has expanded worlwide. TNT Bangladesh is one of the branch of the mother company,which is concentrating on customer satisfaction. Thus, the company requires to provide maximum effort to its compensation package and other benefits.

9.0 Reference

http://www.tnt.com Direct Interview- A.K.M. Jahangir Alam


Sales Manager TNT Express Bangladesh