Compensation Management:Compensation is a mode through which an
organization logicallyevaluates the contribution of its employees
and provides them with financialand non-financialincentives
according to its affordability and within the government
regulationCompensation management provides a step-by-step
approaches for designing a remunerationsystem that recognizejob
requirements,employeerelatedknowledge andskills, performancerelated
incentives that link individual, team, work unit, and organization
performanceAccording to Richard l. Henderson,Compensation
management is the process by which the authority of the
organization providessome financial and non-financial benefits to
the employees for their contributionRecognition of Employees
contribution means-inancial
compensation:!heorganizationprovidesthefinancial
facilitiestotheemployeesfor doingtheir jobintheorganization
"inancial compensation includes the followings# $alary %ages
&ncentives "ringe benefits 'earness allowance (edical allowance
)ouse rent allowance *ratuity +etirement benefits!on-financial
compensation:,esides financial compensation, the organization also
provides non-financial compensation to theemployees for attracting
and performing their jobs in the organization
-on-financialcompensation includes the following# 'ignity
+ecognition %orking condition $ocial status .chievement
Compensation system Components:"b#ecti$es of compensation
Management:/bjectives of compensation are very important because it
helps the organization obtain, maintainand retain a productive work
force%ithout adequate compensation, current employees are likely to
leave &t is the main reason whymost individuals seek employment
"rom the employee0s point of view, pay is necessary of life1ay is
the means by which people provide for their own and their family
needs!he(anagement of compensationmust meet several
objectives!heseobjectivesatelistedbelow# %o ac&uire
&ualified personnel:Compensation needs to be high enough to
attract qualified personnel %o retain present
employees:Compensation levelmust be competitive in order to retain
qualified employees otherwise theymay leave %o ensure
e&uity:%orkers must be paid at a rate equal to the pay that
similar workers receive in another firm %o re'ard desired
beha$ior:*oodperformance, e2perience, loyalty,
newresponsibilitiesandbehavior canberewardedthrough an effective
compensation plan %o control costs:!he compensation system must be
cost effective %o comply 'ith legal regulations:!he compensation
system must with all sorts of legal regulations %o further
administrati$e efficiency:&-pursuingtheother objectives of
effectivecompensationmanagement, wageandsalaryspecialists should
design the compensation program in such a way that it can be
administeredefficiently .dministrativeefficiency, however, is the
secondary priority of the compensationmanagement !o manage conflict
and to ensure congenial working environment !o generate motivation
among employees !o reduce turnover !o ensure loyalty3 commitment
and participation !o reduce absenteeism !o enhance or improve
productivityactors affecting pay satisfaction:!o ensure continuity
of sound working spirit-ash and Carroll found that pay satisfaction
varies with the following factors(alary )e$el:)igher the pay,
higher the satisfaction within an occupational group Community cost
of li$ing:4ower the cost of living, higher the pay satisfaction
Education:4ower the education level, higher the pay satisfaction
E*perience:)igher the e2perience, higher the pay dissatisfaction
uture e*pectations:!he more optimistic the employee is about future
job conditions, the greater the pay satisfaction +ay basis:!he more
pay is perceived to be based on merit or performance, the greater
the pay satisfaction "ther personal characteristics:!he more
intelligent, self-assured and decisive a person is, the lower the
paydissatisfaction Conse&uences of ,neffecti$e compensation:.
compensationconsequencesof ineffectivecompensationsystem,
maybetermedasover-compensation and under- compensation%hen the
employees are paid more than what they really deserve, the system
is called over-compensation and when the employees are paid less
then they really deserve, the system iscalled
under-compensation/ver-compensation and 5nder-compensation are both
harmful to the enterprise and employeesalike !he effects of over
and under-compensation on employees and the enterprise are
statedbelow#Effects of o$er-compensation Effects of
under-compensation'emoralizing effects on other employees/ver
enthusiasm4oss of initiative"eeling guilt"eeling of discomfort4ower
performance-ot cost effective4oss of competitiveness of the
firm4oss of initiative4ack of (otivation"eeling of
insecurity"eeling of an2iety'ecline in the quality of work life1ay
dissatisfaction)igh turnover)igh absenteeism4ow 1erformance%able:
-.. Conse&uences of ,neffecti$e compensationConse&uences of
pay/issatisfaction:%hen employees are not satisfied with the
compensation package, pay dissatisfaction arises!he pay
dissatisfaction has manifold effects on employees !he desire for
more pay may lowerperformance, increasegrievances, causestress,
compel employeestosearchfor newjobsresulting in loss of time and so
on !hese are stated below#/esire for more
pay:1erformance$trikes*rievances(earch for higher paying
#obs:.bsenteeism!urnover4ow performance+ay dissatisfaction:6ob
dissatisfaction!urnover.bsenteeism1sychological withdrawal1oor
mental healthCompensation sub-systems of the re'ard system:1eople
obtain compensation rewards thatprovide money to purchase a wide
variety of goods and services to receive in kind payments ofgoods
and services that would have required the e2penditure of money!here
are eight compensation dimensions !hese are as follows#7 +ay for
'or0 and performance:,ase pay,ase pay add-ons8 +ay for time not
'or0ed:)olidays9acations:lection official%itness in court(aternity
leave1aternity leave,lood donation etc; /isability income
continuation:$hort term disability4ong term disability< )oss of
#ob income continuation:5nemployment insurance*uaranteed annual
income6ob contract5nemployment benefits= /eferred income:$ocial
security1ensions plans$avings and thrift plans> (pouse income
continuation:1ensions plans4ife insurance*roup life insurance!otal
and permanent disability? Health, Accident, )iability
protection:(edical, )ospital and surgical insurance,$ocial
security)ealth maintenance organization @)(/AB ,ncome
E&ui$alent payment:Child careCertain ta2 benefitsClub
membership*iving of gift$ubsidized food service etc!on-Compensation
sub-systems of the re'ard system:!he other major part of the
rewardsystem consists of non-compensation rewards !hese rewards are
much more difficult to classifyandtheir components far
morecomple2thanis thecaseof compensationrewards
-on-compensationrewardsareall thesituationrelatedrewardsnot
includedinthecompensationpackage:nhance dignity C satisfaction from
worked performed:nhance psychological, )ealth, &ntellectual
growth, and emotional maturity1romote constructive social
relationship with co-workers'esign job that requires adequate
attention and effort.llocate sufficient resources to perform work
assignments*rant sufficient control over the job to meet personal
demands/ffer supportive leadership C management Compensation and
benefits pac0age of AC, )imited:Compensation is really very
important matter for any business organization "or any
businessorganization,
theemployeeswhomakeuptheworkforceareveryimportant &t
isalsoveryimportant to make an attractive compensation package for
these employees !he compensationpackage must be very attractive to
increase the image of the organization as well as to retain
theemployees with the organization.C&
4imitedisalsofollowingacompensationpackagethat
helpsthemtoretainthefull timeemployeesandthecasuals
!houghtheyareonatracktocompensatetheemployeesinacompetitive
manner,but they try to giveabit higher salaries and wagesto
theemployees toremain as a competitive organization in the
market!hey judge the job positions first and then they go for the
study of the same categorized jobposition in the other
organizations, and see the pay level of these positions !hen,
.C& 4imiteddecides that how much will be paid to the positions
that they are defining or e2amining &n thiscase .C& 4imited
tries to be very fair about the pay levels !hey try to fi2 the pay
level in such amanner that is fair and effective for them and to
the employees tooAC, compensation 1 benefit pac0ages are:Allo'ances
,ncenti$es2 3enefits"fficeManagementstaffield (taff "ffice
Managementstaffield (taff )ouse+entallowance@7DDE ofbasicA
(edicalallowance@=DE ofbasicA !ransportallowance@=DE ofbasicA 4unch
)ouse +entallowance@7DDEofbasicA (edicalallowance@7DDEofbasicA
!ransportallowance @=DEofbasicA 5tility allowance@=DE of basicA
4uarterly25early:o Fearly 1rovident fund *ratuity *roup
&nsurance1olicy (edical ,enefits 4uarterly2 5early:o
Fearly4eave "are.ssistance@=DE of basicAo Fearlytwo festivalbonuses
@7DDEof basicAo Fearlyworkersparticipation"und
@=DEofbasicAallowance@!k77DD to!k 7=DDA 5tilityallowance@=DE
ofbasicA 4eave "are.ssistance@>DE ofbasicAo Fearlytwo
festivalbonuses@7DDE ofbasicAo Fearlyperformance,onus @=DEof
basicAo Fearlyworkersparticipation"und @=DEof basicAo )ong%erm:o
Guarterly salesincentive @-otfi2edAo )ong%erm: 1rovident "und
*ratuity *roup &nsurance1olicy (edical ,enefits %able: 6.. AC,
compensation 1 benefit pac0agesEmployee benefits +lan of AC,
)imited::mployee benefits plan is the most important part of an
organization &t is motivated to employee.C& 4imited
continually evaluates and reviews its employee benefits plan to
ensure that benefitsare competitive :mployee benefits plan are#,.%o
establish 'age 1 salary plan ofAC, )imited employees:%age C salary
plan comprises the following components# .C& has a competitive
monthly total base salary !he company follows an annual performance
based salary increment 1erformance bonus is available in
.C&.C& 4imited also provides night shift premium,
incentive, festive advance, transportreimbursement etc,,.%o
implement employee incenti$e plan of AC, )imited: Guality of work
output @ )ow many units producedA Guality of work output @ %hat was
the quality of the product or service being produced orservedA
(onthly sales @ )ow much sales was generatedA %ork safety record @
)ow many hazard or errors are being reducedA %ork attendance @
&f the absent is reduced or attendance is goodA,,,.%o ensure
health 1 medical allo'ance plan of AC, )imited
employees:.llemployees of .C& willreceive a monthly
medicalallowance as per respective grade of theemployee !he
allowance will be paid together with the employee0s monthly salary
and for this noreceipt needs to be submitted ,7.%o ma0e sure
effecti$e +ro$ident fund plan of AC, )imited employees:1ermanent
employeesof.C&4imitedareeligibletobecomemembersof theprovident
fund:mployees contribute 7DE of their basic to the provident fund
and the company makes equalcontribution to the fund 7.%o ma0e
situation demandingprofit sharing plan of AC, )imited
employees:!here are some employees who prefer to feel a sense of
ownershipH this also gives them directreason to want to see the
company succeed because they are financially invested .s a means
toinvigorate many companies offer profit sharing as a reward for
strong motivation in a job welldone7,.%o pro$ide fle*ible-time
benefits plan for employees in order to ensure their
right:(anyemployeewant.lternativeworkschedules
$ometimesemployeesflourishondifferentkinds of work schedules as
opposed to the traditional @and often monotonousA Ito =
schedules7,,.%oset up lea$eformarriage,maternity
lea$e,sic0nesslea$e and$acationlea$eplan of AC, )imited
employees:.C& also has paid leave for marriage, maternity,
sickness and vacation plan 7,,,.%o ma0e sure short term 1 long term
benefit plan of AC, )imited employees: (hort term benefits plan:o
Fearly 4eave "are .ssistanceo Fearly two festival bonuseso Fearly
workers participation "undo Guarterly sales incentive )ong %erm
benefits plan:o 1rovident "undo *ratuityo *roup &nsurance
1olicyo (edical ,enefits,8.%o establish gratuity plan of AC,
)imited employees:.C& has gratuityplan *ratuityis consideredas
long-termfinancial benefit for employees1ayable at the time of
leaving the company upon completion of at least B years of
continuousservice !heemployeewill receiveanallowanceequal tohis3her
last drawnbasicfor eachcompleted year of service8.%o co$er all
employees under the group life insurance plan:.C&
4imitedprovidesinsurancecoveragefor partial or permanent
disabilityanddeathundergroup life insurance8,.%o concentrate on
the)ea$e benefits plan of AC, )imited employees:.C& limited all
management staff will have the following leave entitlement in a
calendar year1rivilege leave# 8< days$ick leave# 7< days
7arious allo'ances of AC, )imited:'ifferent types of allowances
given on the basis of salary in .C& 4imited# (alary 1
3enefitsEmployee /esignation"ffice Management staff ield (taff,asic
$alary ==DD-=?DDD ;DDD-B=DD)ouse +ent allowance 7DDE of basic 7DDE
of basic(edical allowances =DE of basic 7DDE of basic!ransport
allowances =DE of basic =DE of basic4unch allowance !k77DD to
!k7=DD JJ-5tility allowance =DE of basic =DE of basic%able: 6.9
$arious allo'ances of AC, )imitedCompensation related facilities2
3enefits of AC, )imited:Employee salary:.C& 4imited is
committed about maintaining salaries and benefits that are fair to
all employeesand competitive in the local market place !he
management monitors changes in the economyand salary market to
ensure that ht overall compensation package is sufficient to
attract, recruitandretainhighqualitystaff withinthefinancial
capabilitiesof .C& 4imited .t all timesthemanagement considers
long term financial implications of changes in employee
compensation aswell as fairness to employees currently serving the
company+rinciples of salary:!he compensation structure is framed
with the objective to attract and retain high quality people!he
guiding principles of the compensation policies are#7
&ndividual0s background and :2perience8 :2ternal pay market
levels and trends @ determined through compensation surveyA;
1articular skills requirements of the company< Company0s
affordability= Company0s statutory obligations+ayment of salary:7
Mode of payment:1ayment shall only be made in ,angladeshi take
:very employee should have a salary accountin company nominated
commercial bank !he salary will be transferred to the respective
salaryaccounts from the confidential department within the last day
of each month8 +ro rate payment:&f any employee is hired in the
middle of a month the salary will be paid on pro rate basis and
thesalary can be paid in cash if the salary account is yet to be
opened; Ad$ance salary payment:-o advance salary or advance from
already earned salary can be disbursed to any employeewithout
written approval of the managing director )oan against
salary:*enerally such loan is discouraged /nly en e2treme cases,
depending on the merit, loan maybe considered and approval for loan
will require managing director0s approval,ncenti$es:Compensation
fluctuates according to: . pre-established formula &ndividual
or group goals because group goals are different from individual
goals Company earningsAn incenti$e adds to base pay: &t
controls costs because the employee is being paid for his3 her
e2tra effort and for the benefitsbrought to the organization
(otivates employees,ncenti$e pay
categories:&ndividual*roupCompany-%ide,ndi$idual incenti$e:
Guality of work output @ )ow many units producedA Gualityof work
output @ %hat was the quality ofthe productor service
beingproducedorservedA (onthly sales @ )ow much sales was
generatedA %ork safety record @ )ow many hazard or errors are being
reducedA %ork attendance @ &f the absent is reduced or
attendance is goodA :roup ,ncenti$es: Customer satisfaction 4abor
cost savings (aterials cost savings +eduction in accidents $ervices
cost savings Company- ;ide: Company profits (arket share $ales
revenue(ales ,ncenti$e:7& &nstead of performance bonus,
field sales staff will the rewarded with quarterlysales incentive
for their contribution to the company8 &&
&ncentiveschemesforeachbusinesswill be proposedby
respectivebusinesshead during budget preparation for the coming
year !his scheme willrequire approval from themanaging director and
should be communicated to field force before beginning of the year;
&&& ,asedof requirement of thebusiness, headof business
mayproposeandimplement any change of the scheme subject to the
approval of the managing director+ro$ident fund:!he company has
instituted provident fund for management staff7 .ll (anagement
employees will join the provident fund scheme after confirmation8
.longwiththeconfirmationlatter)uman+esource'epartment will
sendaprovident fundjoining and nomination form to the employee;!he
provident fund will run on contributory basis, ie 7DE of basic
salary from the employeeand equal amount from the company
Conditions with regard to provident fund shall be regulated as per
the rules of the fund :ratuity:.n employee shall be eligible for
gratuity on leaving the company after continuous and
confirmedservice of at least B years to the following terms and
conditions#,.(eparationonaccount ofsuperannuation, ill-health,
physical ormental incapacity,redundancy or termination:5ear
Amount/n completion of B years of service C having not completed
78years service)alf month0s basic salary for each completed year of
service/n completion of 78 years of service 7 month0s basic salary
for each completed year of service/n completion of 7> years of
service 8 month0s basic salary for each completed year of
service%able: 6.- :ratuities,,.7oluntary Resignation:5ear
Amount,efore completion of B years of service -o gratuity is
payable/n completion of B years of service C having not completed
78years service)alf month0s basic salary for each completed year of
service/n completion of 78 years of service 7 month0s basic salary
for each completed year of service/n completion of 7> years of
service 8 month0s basic salary for each completed year of
service%able: 6.6 :ratuities7 ,n the e$ent of death or total
disablement< gratuity 'ill be paid at the rate of t'o
monthsbasic salary for each completed year of ser$ice. ,n case of
death, the gratuity shall be paidto the legal heir2 heirs.8 %he
term basis salary, as used, means basic salary last dra'n by the
employee at thetime of separation from the companys
employment.,nsurance:!he company has instituted a fund for
management staff which provides payment of death duringservice by
any cause, e2cept in the first twelve months of insurance7
&*roup life insurance is payable under any kind of death during
service e2cept incase of suicide8 && $taff should advise )+
'epartment the particulars of their nominees includingname and
relationship; &&& &f thenomineeisaminor,thenameof
theminor0sguardianshouldalsobeadvised %A2/A,nterpretation:"rom the
above graph, it is seen that BDE employees are agree, 8DE employees
are stronglyagreeComment:(ost of the employees said that
organization provide the !.3'.?.Are you satisfied 'ith the %A2/A
offered to you by your company@+articular Respondents
percentage$atisfied > ;DE$trongly satisfied 7 =E-eutral D
DE'issatisfied 7; >=E$trongly dissatisfied D DE!otal 8D 7DDE
%able: 6..6,nterpretation:"romtheabovegraph, it isseenthat
>=Eemployeesaredissatisfied, ;DEemployeesaresatisfied with their
!.3'., and =E employees are strongly satisfied with their !.3'.
Comment:(ost of the employees are dissatisfied with the !.3'.
offered to their organizationA.Are you satisfied 'ith the insurance
co$erages offered to you@+articular Respondents percentage$atisfied
= 8=E$trongly satisfied 8 7DE-eutral D DE'issatisfied 7;
>=E$trongly dissatisfied D DE!otal 8D 7DDE %able:
6..=,nterpretation:"romtheabovegraph, it isseenthat
>=Eemployeesaredissatisfied, 8=Eemployeesaresatisfied with the
insurance coverage offered to them, and 7DE employees are strongly
satisfiedComment:(ost of the employee dissatisfied with insurance
coverage offered to themB./o your organiCations pro$ide the life
insurance facility@+articular Respondents percentage.gree 7=
?=E$trongly agree = 8=E-eutral D DE'isagree D DE$trongly disagree D
DE!otal 8D 7DDE%able: 6..>,nterpretation:"rom the above graph,
it is seen that ?=E employees are agree C 8=E employees are
stronglyagree, they are said that organization provide the life
insurance facilityComment:(ost of the employees are agree about the
organization provide the life insurance facility.D.;hat types of
insurance facilities offered to you by your company@+articular
Respondents percentage&ndividual insurance 8 7DE*roup insurance
7B IDE.ny other D DE!otal 8D 7DDE%able:
6..?,nterpretation:"romtheabovegraph, it isseenthat
IDEemployeessaidthat organizationprovidegroupinsurance facilities
to the employee, 7DEemployees said that organization also
provideindividual insurance facilities offered to their
employeeComment:(ost of the employees said that organization
provide the group insurance.../o your organiCations pro$ide the
medical facilities@+articular Respondents percentage.gree 7;
>=E$trongly agree ? ;=E-eutral D DE'isagree D DE$trongly
disagree D DE!otal 8D 7DDE%able: 6..A,nterpretation:"rom the above
graph, it is seen that >=E employees are agree, they said
organization providethe medical facilities, ;=E employees are
strongly agree with the scenarioComment:(ost of the employees said
that organization provide the medical facilities.9.Ho' 'ould you
rate the type of pension2retirement plan pro$ided to you@+articular
Respondents percentage:2cellent D DE9ery good D DE*ood = 8=E.verage
77 ==E1oor < 8DE!otal 8D 7DDE%able:
6..B,nterpretation:"romtheabovegraph, it isseenthat
==Eemployeessaid.C& pension3 retirement planisaverage, 8=E
employees said that .C& pension3retirement plan is good, 8DE
employees saidthat .C& pension3retirement plan is
poorComment:(ost of the employee said that .C& pension3
retirement plan is average.-.Are you satisfied 'ith your current
salaries@+articular Respondents percentage$atisfied 8 7DE$trongly
satisfied D DE-eutral 7 =E'issatisfied 7? B=E$trongly dissatisfied
D DE!otal 8D 7DDE%able: 6.9D,nterpretation:"rom the above graph, it
is seen that B=E employees are dissatisfied with their current
salaries,7DE employees are satisfied with their current salaries,
and =E employee are neutral positionComment:(ost of the employees
said that they are dissatisfied with their current salaries.6.Are
you satisfied 'ith your 'or0 en$ironments@+articular Respondents
percentage$atisfied 78 >DE$trongly satisfied ; 7=E-eutral D
DE'issatisfied = 8=E$trongly dissatisfied D DE!otal 8D 7DDE%able:
6.9.,nterpretation:"rom the above graph, it is seen that >D E
employees are satisfied with their work
environments,7=Eemployeesarestronglysatisfiedwiththeir
workenvironments, and8=Eemployeearedissatisfied with their work
environmentsComment:(ost of the employees are satisfied with their
work environmentsMa#or findings: "romtheanalysisit hasseenthat
employeesarenot satisfiedwiththeorganizationKsincentive systems
.C& compensation related benefits and packages are not
sufficient. (ost of the employees are dissatisfied with the !.3'.
offered by their organization &n the analysis it has seen that
most of the employees are dissatisfied with the insurancecoverage
offered to them .C& 4imited only provides the group
insurancefacility but does not provide any individualinsurance
facility "rom the analysis & found that .C& pension3
retirement plan is average %iththeorganization0scurrent
salarystructure, ma2imumamount of theemployeesaredissatisfied
Conclusion:.C& 4imited is one of the leading conglomerates in
,angladesh, with a multinational heritage &n,' .C& 4imited
has been doing corporate business and soundly maintaining
socialresponsibilities !he agenda of this company earning profit,
creating job opportunity, though tradeand commerce .chievement of
.C& 4imited is beyond description (aintaining *overnment
rulesand regulations .C& 4imited always try to contribute on
national *'1 and *-1 not only localbusiness but also
internationally .C& follows most of the compensation practices
and policy !heyalways try to contribute to employee satisfaction
and given to employees all types ofcompensationbenefits &t
hasalwaysbeenadreamtobeabletoworkfor ahighlyreputedcompany and my
dream was fulfilled for three months as & was conducting my
internship in .C&4imited &t has been an amazing e2perience
for me as & completed my internship as well as myfirst job from
such an incredible organization &n this company, interns are
not treated as guestsfor three months %e are actually involved in
real time projects where our inputs andcontributions are highly
appreciated and necessary 'uring my internship or my first job,
& wase2posedtomanyworkswhich& never thought of evendoing
.s& have)uman+esource(anagementasmy majorso workingunder
thedepartmentof)+(wasreally greattome!herefore & must
acknowledge the fact that there are countless number of things that
& learntduring my internship about how the company operates,
its day to day activities, problems thatoccur every day and how to
resolve them effectively and efficiently -o matter where &
work, &0mconfident that & will be able to apply my learning
and knowledge in any organization Recommendations: !he organization
should ensure standard incentive policy to their employees for
their highlevel of satisfaction !he organization should increase
its compensation related benefits which are provided to
theemployees !he organization should put more concentration on
!.3'. which offered to their employees !he organization should
provide effective2acceptable insurance coverage to their employees
.C& 4imited should also provide individual insurance benefit
along with group insurance !he organization0s pension3 retirement
plan should be modified in favor of their employees !he
organization may increase current salary structure of their
employees3ibliography:3oo0s: Compensation management in a
knowledge- ,ased world, )enderson & +ichard, 7Dth
edition,6un8th edition,6an87, 8D7DReports: L .C& 4imited annual
report 8DDI L.C& 4imited annual report 8D7D L.C& 4imited
annual report 8D77 L .C& 4imited $tatistical report 8D77
