Appliance Industry bba project

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PROJECT REPORT

ON

“COMPUTERIZATION COURSE REGISTATION”

IN

SWAMI SARVANAND INSTITUTE OF ENGINEERING & TECHNOLOGY

IN PARTIAL FULFILMENT OF THE REQUIRMENT FOR THE

AWARD OF DEGREE OF BCA

(SESSION 2010)

SUBMITTED TO: - SUBMITTED By: -

Lect.Gifty Chopra Gourav Sharma

Lect. Of computer Dept. Roll No:-80502219041

BCA 5TH. SEM.

PREFACE

The Bachelor of Business Administration imparts the students a tint of such virtues and prepare to take the business world in their stride. The project gives a considerable exposure to students and provides them with an opportunity to see the practical aspects of working of corporate world. This project is yet another opportunity to see the application part of what we see or learn.

This project deals with Compensation Management at the Godrej and Boyce Mfg. Co. Ltd. Under this project in the very first phase we started with studying books and gathering knowledge from the internet regarding the compensation management and the contractual labour law. If good compensation measures are taken care in an organization than there will be less attrition in the organization and which will help in retaining back the competent and the efficient employees.

In the second phase we were interested to find out what actually is implemented in the organization in order to match the compensation being paid for the services rendered by the employees, for knowing that personal interaction was carried out with the employees. We have divided the employees in two categories: -

Management Staff

Workmen

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ACKNOWLEDGEMENT

I take this opportunity to acknowledge my hearty thanks to all who have been instrumental in making this

project on “EFFECTIVENESS OF COMPENSATION MANAGEMENT” in Godrej & Boyce Mfg. Co. Ltd. possible and successful.

I’m also very thankful to Mr. Pardeep Sharma for providing me invaluable and insight information that helped me in completing the project and understanding the various operations and functions that taken care for the smooth and effective working of the organization.

Finally, my thanks are due to my parents who with their boundless love and affection have moulded me in a manner that I can stride gracefully in this world with my head held high and last but not least my deep gratitude are to the Almighty without whose grace nothing could be possible.

VIPUL

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TABLE OF CONTENTS

SR. NO.

CONTENT PAGE NO

1 CERTIFICATE

2 PREFACE

3 ACKNOWLEDGEMENT

4 CHAPTER 1 – INTRODUCTION

TO COMPANY

TO PROJECT

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6

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5 CHAPTER 2 - OBJECTIVES OF THE RESEARCH 42

6 CHAPTER 3 – RESEARCH METHODOLOGY

- LIMITATIONS OF THE RESEARCH

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7 CHAPTER 4 - DATA ANALYSIS & INTERPRETATION

CHART4. 1 HOW OFTEN IS THE SALARY STRUCTURE REVIEWED

CHART4. 2 DO YOUR COMPANY GIVE A GENERAL INCREASE IN SALARY AND WAGES

CHART4. 3 DOES YOUR COMPANY GIVE A COST OF LIVING INCREASE

CHART4. 4 DOES YOUR COMPANY HAVE A BONUS OR INCENTIVE PLAN

CHART4. 5 WHAT TYPE OF BONUS IS GIVEN

CHART4. 6 DOES YOUR COMPANY HAVE AN EFFECTIVE FORMAL EMPLOYEE MERIT REVIEW PROCESS

CHART4. 7 HOW OFTEN EMPLOYEES ARE REVIEWED

CHART4. 8 IS SALARY GIVEN ACCORDING TO NATURE OF WORK AND EFFORTS MADE

CHART4. 9 ARE THE STATUTORY BENEFITS WELL STRUCTURE AND EFFECTIVE

CHART4. 10 IS SALARY GIVEN ACCORDING TO THE LAW

FINDINGS

RECOMMENDATIONS

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CHAPTER 5 – CONCLUSION 61

BIBLIOGRAPHY 63

ANNEXURE 64

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CHAPTER 1

INTRODUCTION

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INTRODUCTION TO THE APPLIANCE INDUSTRY

The Indian appliance industry consists of at least fifteen white-goods manufacturing plants set-up by seven leading players in the Indian market. The major players in this segment include the Indian stalwarts like Godrej, Videocon and IFB as well a s the multinational giants like Whirlpool, Electrolux, LG and Samsung.

Even though globally the home appliance manufacturing industry is considered as one of the low profiles one, as compared to others like automotive industry, the Indian appliance industry is currently riding on a growth curve and is catching up fast with most of its global counterparts.

Some of the major strengths of the Indian industry include highly skilled manufacturing and R&D engineers, the capability to roll out new models every six to eight months and the availability of low – cost labour. Also most of these plants are located in tax-incentive areas around two major industrial clusters of Noida (near New Delhi) and Pune (near Mumbai). In addition, the manufacturers are also taking advantage of the various export promotion schemes of the Indian Government like EPCG (Export Promotional Capital Goods scheme) and EOU (Export Oriented Unit) status. Despite these strengths there are still quite a few opportunities for improvement of these manufacturing facilities, so that they can enhance their competitiveness, both globally as well as locally.

The Indian market size for refrigerators was estimated at 4.1 million units in 2004 and the installed manufacturing capacity of these players is above 6.5 million units per annum. Also the washing machines market in India was estimated at 1.45 million units in 2004 while the installed manufacturing capacity is near 3.75 million units. This clearly indicates a much lower capacity utilization for most of the players. The quality of the products manufactured still needs to be enhanced if they are to catch up with global standards. This could partly be due to highly labour intensive operations with low automation and also because of the privilege technology gap. The concept to market time for most of the plants in India is still higher than the global norm and except for LG, exports from India haven’t really picked up as projected. There is still seems to be quite a way to go before India becomes one of the global appliance production and export hubs like China.

MAJOR PLAYERS

GODREJ

SAMSUNG

IFB

VIDEOCON6

LG-LIFE’S GOOD

REFRIGERATION INDUSTRY IN INDIA

Refrigerators have been manufactured in India since 1950’s. till the 1980’s players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the market.

Earlier, the white goods sector was categorized as a luxury goods industry and was subject to oppressive taxation and licensing. The situation changed after the liberalization of the Indian economy in the early 1990s. the government removed all restrictions and now there is no restriction on foreign investment, and licenses are no longer required. Post liberalization, a number of foreign companies entered the market and many domestic players also diversified into refrigerators. BPL and Videocon, who already had a presence in the consumer electronics market, leveraged their strengths to enter the durables sector.

These days many foreign companies have started operating in the Indian market which provide enormous range of features like surround cooling, non-stick clear ice cubes, flat back, handle free design, deodorizing ozone spray, magic shelves, 2-door, 3-door,4-door options, capacity options, attractive colors, different temperature zones for different foods, etc. the major players in the market today are Godrej, Whirlpool, Videocon, IFB, BPL, LG and Samsung are offering a wide range of features like radial flow, permanent deodorizer, direct cooling, versa door, multi air flow, fuzzy monitor, open door alarm, maxi insulation, roll bond freezer, CFC free, flat back, super PUF, humidity control, nutrition preserving system, super X-flow cooling etc. (Business Today, Nov. 7-21- 1997). Every one of these big players wants to have a niche in the market and competition is heating up in this Rs. 700 crore refrigerator market.

In India, refrigerators have the largest aspiration value of all consumer durables, with the exception of television. This accounts for the high growth rate of the refrigerators market. The refrigerators market has been growing at rate of about 15% per year, while the consumer durables industry as a whole has grown at almost 8%.

The size of the refrigerator market is estimated to be 3.5-4 million units approximately, valued at Rs. 50 billion. The domestic penetration rate of refrigerators is about 9%. The penetration of refrigerators is considerably higher in urban areas, which account for 75% of the demand, with rural areas constituting the other 25%, the demand is also higher in the northern and western parts of the country than in the east. The south also has high demand, as the warmer growth of the south requires a refrigerators running throughout the year.

There are two basic types of refrigerators manufactured in India, direct cool and frost free. Till the 1990s only direct cool refrigerators were used in India. Videocon was the first to introduce the frost-free type. In 2000, the direct cool segment constituted almost 82% of the market, while frost free

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refrigerators took up the rest. However, of late, the frost-free market ahs been picking up at a faster rat

INTRODUCTION TO THE COMPANY

Established in 1897, the Company was incorporated with limited liability on March 1932, under the Indian Companies Act, 1913.

Godrej is one of the largest engineering and consumer Products Company in the country having varied interests from engineering to personal care products with a total sales turnover of about US $ 1.1 Billion. It is one of the most respected corporate houses known for philanthropy and initiation of labour reforms besides being recognized for values of fair, transparent and ethical dealings.

Everyday, every Indian encounters the ‘Godrej’ name sometime somewhere. A person may begin the day bathing with Godrej soap, shaving with a Godrej shaving cream, storing clothes in a Godrej Store well cupboard, cooking food in a Godrej cooking oil and preserving it in a Godrej refrigerator. Money and valuables are kept in a Godrej safe; work is done on a Godrej computer or typewriter while sitting on a Godrej chair and drinking a Godrej fruit drink.

Innovation has been the key. It is this spirit that has built Godrej and carried it for a hundred years. Taking it into diverse industries ranging from cupboards to soaps, hair dyes to edible oils, and packaged foods to refrigerators. In recent years several partnerships have been formed with international giants like General Electric, Pillsbury, Fiskars and Sara Lee, bringing Godrej membership in the Global village that will carry it forward into the 21st century.

The Godrej group owns vast tracts of land in and around Vikhroli, a suburb to the Northeast of Mumbai, India's commercial capital. Traditionally, this location has been their manufacturing base, but increasingly they have moved significant production facilities inland in search of cheaper pastures.

Godrej has always been a crusader for a better world with programs that benefit endangered forests, wild life and mangroves. Every year the Pirojsha Godrej Foundation dedicates funds towards promoting education, housing, social upliftment, conservation, population management and relief of natural calamities.

VISION OF GODREJ AND BOYCE Mfg. Co. Ltd.

“GODREJ IN EVERY HOME AND WORKPLACE”

MISSION OF GODREJ AND BOYCE Mfg. Co. Ltd.

“ENRICHING QUALITY OF LIFE EVERYDAY EVERYWHERE”

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VARIOUS DEPARTMENTS AT GODREJ & BOYCE Mfg. Co. Ltd.

HUMAN RESOURCE DEVELOPMENT / PERSONNEL DEPARTMENT

FINANCE DEPARTMENT

MATERIALS DEPARTMENT

LOGISTICTICS AND DELIVERY DEPARTMENT

QUALITY DEPARTMENT

VARIOUS FUNCTIONS PERFORMED BY HRD DEPARTMENT AT GODREJ & BOYCE Mfg. Co. Ltd.

RECRUITMENT AND SELECTION

TRAINING AND DEVELOPMENT

HUMAN RESOURCE INFORMATION SYSTEM (HRIS)

COMPENSATION MANAGEMENT

EMPLOYEE WELFARE

INDUSTRIAL RELATION

SAFETY MEASURE

GRIEVANCE HANDLING

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INTRODUCTION TO THE PROJECT

Wages and salary are the most critical aspect of the employee compensation along with other benefits. Different managements have different approach toward the compensation measure being employed in their respected organisation. To understand the structure of the compensation being provided at Godrej & Boyce Mfg. Co. Ltd. – Appliance Division, Mohali firstly we need to thoroughly understand what actually compensation is and how it is classified in to different categories. So now firstly I’ll discuss regarding the compensation management in general before focusing on the compensation management being employed in Godrej & Boyce Mfg. Co. Ltd. – Appliance Division, Mohali.

MEANING OF COMPENSATION:

Compensation refers to a wide range of financial and non-financial rewards to employees for their services rendered to the organisation. It is paid in form of wages, salaries and employee benefits such as paid vacations, insurance, maternity leave, free travel facility, retirement benefits, etc. The system of compensation should be so designed that it achieves the following objectives:-

Capable employees are attracted towards the organisation.

The employees are motivated for better performance.

The employees do not leave the employer frequently.

ELEMENTS OF COMPENSATION:

In industry, workers are compensated in the form of following benefits:-

Monthly wages and salary or total pay including basic wage, house rent allowance, dearness allowance and city compensatory allowance.

Bonus at the end of the year.

Economic benefits such as paid holidays and leave travel concession.

Contribution towards insurance premium.

Contribution towards retirement benefits such as employee provident fund.

Transport and medical facilities.

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Compensation can be classified as follows:-

Base or Primary CompensationSupplementary Compensation

Primary compensation is in terms of basic pay and non-incentive payment on the basis of time spent on the job.

Supplementary Compensation consists of incentives and variable payments, based on either individual output or output of the groups as a whole.

COMPENSATION MANAGEMENT

Compensation of employees for their services is an important responsibility of human resource management. Every organisation must offer good wages and fringe benefits to attract and retain talented employees with the organisation. If at any time the wages offered by a firm are not competitive as compared to other firms, the efficient workers may leave the firm. Therefore, workers must be remunerated adequately for their services. Compensation to workers will vary depending upon the nature of job, skills, employer, bargaining power of the trade union, wages and benefits offered by the other units in the region or industry, etc.

Compensation Management can be broadly classified into three categories:-

Wage and Salary AdministrationIncentive Plans and Fringe BenefitsExecutive Remuneration

WAGE AND SALARY ADMINISTRATION

Wage and Salary administration aims to establish and maintain equitable wage and salary structure and an equitable labour cost structure.

Wage: - Wage is a general term referring to direct monetary compensation. It is also used specifically to refer to payments to hourly rated production and service workers. These are composed pf two parts:-Basic WageOther Allowance

Salary: - Salary refers to weekly or monthly rates paid to clerical, administrative and professional employees whose performance cannot be measured directly.

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OBJECTIVES OF WAGE AND SALARY ADMINISTRATION: -

Following are the various objectives of wage and salary administration: -

To establish a fair and equitable compensation offering i.e. similar pay for similar work.

To attract competent and qualified personal.

To retain the present employees by keeping wage level in tune with the competitive units.

To keep labour and administrative cost in line with the ability of the organisation to pay.

To improve motivation and morale of the employees and to improve union management relationship.

To project a good image of the company and to comply with legal need relating to wage and salaries.

To establish job sequence and lines of promotion wherever applicable.

To minimise the chances of favouritism while assigning the wage rate.

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WAGE and SALARY

EXTERNAL FACTORS INTERNAL FACTORS

FACTORS INFLUENCING THE WAGE AND SALARY ADMINISTRATION

There are two types of factors: -

EXTERNAL FACTORS:

The important external factors affecting the wage and salary decisions are as follows: -

Demand & Supply: -The labour market conditions or demand and supply forces operate at the national and local levels and determine organisational wage structure.

Cost of living: - The wage rates are directly influenced by the cost of living of a place. The workers will accept a wage which may ensure them minimum standard of living.

Trade Union’s Bargaining Power: - The wage rates are also influenced by the bargaining power of the trade unions. Stronger the trade union higher will be the wage rates. The strength of the trade union is judged by its membership, financial position and type of leadership.

Government Legislation: - To improve the working conditions of workers, government may pass legislation for fixing minimum wages of workers. This may ensure them the minimum level of living.

Psychological & Social Factors: - Psychologically the level of compensation is perceived as a measure of success in life. Management should take into consideration the psychological needs of the employees while fixing the wage rates so that the employees take pride in their work.

Economy: - Economy has its impact on wage and salary fixation. While it may be possible for some organisations to thrive in recession, there is no doubt that economy affects remuneration decisions.

Technological Development: - With the rapid growth of industries, there is a shortage of skilled resources. The technological developments have been affecting skills levels at faster rates. Thus, the wage rates of skilled employees constantly change and an organisation has to keep its level up to the mark to suit the market needs.

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Prevailing Market Rates: - No enterprise can ignore prevailing or comparative wage rates. The wage rates paid in the industry or other concern at the same place will form a base for fixing the wage rates. If a concern pays low rates then workers leave their jobs whenever they get a job somewhere else. It will be possible to retain good workers for long.

INTERNAL FACTORS:

The important internal factors affecting wage and salary decisions are as follows:

Ability to Pay: - The ability to pay of an enterprise will influence wage rates to be paid. If the concern is running into losses then it may not be able to pay higher wage rate. A profitable concern may pay more to attract good workers.

Job Requirements: - Basic wages depend largely on the difficulty level, and physical and mental efforts required in a particular job. The relative worth of a job can be estimated through job evaluation. Simple, routine tasks that can be done by many people with minimum skills receive relatively low pay. On the other hand, complex, challenging tasks that can be done by few people with high skill levels generally receive high pay.

Management Strategy: - The overall strategy which a company pursues should determine the remuneration to its employees. Where the strategy of the organisation is to achieve rapid growth, remuneration should be higher than what competitors pay. Where the strategy is to maintain and protect current earnings, because of the declining fortunes of the company, remuneration level needs to be average or even below average.

Employee: - Several employees related factors interact to determine his remuneration.

Performance or productivity is always rewarded with a pay increase. Rewarding performance motivates the employees to do better in future.

Seniority: - Unions view seniority as the most objective criteria for pay increase whereas management prefer performance to affect pay increase.

Experience: - It makes an employee gain valuable insights and is generally rewarded.

Potential: - Organisations do pay some employees based on their potential. Young managers are paid more because of their potential to perform even if they are short of experience.

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Job Analysis

Job Evaluation

Performance Standards

Job Description & Specification

Wage Survey

Minimum Wage Level

Wage Structure

Administration of Wage Structure

Wage Payments

Performance Appraisal

THE WAGE AND SALARY DETERMINATION PROCESS

DETERMINATION OF WAGES

Steps involved in Determining Wage and Salary Rates:

Job Analysis: - Job Analysis describes the duties, responsibilities, working conditions and interrelationships between the job as it is and the other jobs with which it is associated. Job descriptions are crucial in designing pay designs and weigh compensable factors (factors on which an organisation is willing to pay-skills, experience, efforts and working environment). After determining the job specification, the actual process of grading, rating or evaluating the job occurs.

Conduct the Wage / Salary Survey: - Compensation or salary survey plays a central role in pricing jobs. Virtually every employer, therefore, conducts at least an informal survey. Employer use salary survey in three ways: -

Survey data are used to price bench mark jobs that anchor the employer’s pay scale and around which the other jobs are slotted, based on their relative worth to the firm.

Some Jobs (generally 20% or more) of an employer’s position are usually priced directly in the market place (rather than the firm’s benchmark jobs), based on a formal or informal survey or what competitive firms are paying for comparable jobs.

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Surveys also collect data on benefits like insurance, sick leave and vacations to provide a basis for decision regarding employee benefits.

Salary surveys provide many kinds of useful information about differences in wage levels for particular kinds of occupations.

Group Similar Jobs into Pay Grade: - After the result of Job Analysis and Salary Surveys have been received, the committee can turn to the task of assigning pay rates to each job, but it will usually want to first group jobs into pay grades. Pay grade is comprised of jobs of approximately equal difficulty or importance as determined by job evaluation.

Price each Pay Grade: - The next step is to assign the pay rates to pay grades. Assigning pay rates to each pay grade is usually accomplished with wage curve. The wage depicts graphically the pay rates currently being paid for jobs in each pay grade, relative to the points or ranking assigned to each job or grade by the job evaluation. The purpose of wage curve is to show the relationship between:

The value of the job as determined by one of the job evaluation methods

The current average pay rates for the grades.

Fine Tune Pay Rates: - Fine tuning involves correcting out of line rates and developing rate ranges.

Developing Rate Ranges: - Most employers do not pay just one rate for all jobs in particular pay grade. Instead, they develop rate ranges for each grade so that there might be different levels and corresponding pay rates within each pay grade.

Correcting out of Line Rates: - The average current pay for a job may be too high or too low, relative to other jobs in the firm. If a rate falls well below the line, pay rise for the job may be required. If the rate falls well above the wage line, pay cuts or a pay freeze may be required.

Wage Administration Rules: - The development of the wage rules has to be done in the next step. It is considered advisable in the interests of concern and the employees that the information about average salaries and ranges in the salaries of group should be made known to the employees concerned, the secrecy in this matter may create dissatisfaction and it may also vitiate the potential motivating effects of disclosure. Finally, the employee is appraised and the wage is fixed for the grade he is found fit.

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METHODS OF WAGE PAYMENT

The different methods of wage payments are as follows.

Time Wage System

Under this method the wages are paid according to time spent by the workers irrespective of his outputs of work done. The wage rates are fixed for an hour, a day, a week or a month. The time spent at work is recorded and wages are paid according to it.Wages are calculated as: -

Earnings = T*R

Where, T= Time Spent R= Rate of Pay

Example: - A wage rate of Rs. 15 per day is fixed in a factory. Two workers A & B attend work for 29 and 25 days respectively. The wages as per time system will be:A’s (earnings) = Rs. 15*29

= Rs. 435

B’s (earnings) = Rs. 15* 25 = Rs. 375

This method of wage payment does not give weightage to the quantity of goods produced by the workers. The supervisor may ensure the workers do not waste their time and the quality of the goods is also maintained.

This method is suitable for the situations as mentioned below: -When productivity of an employee cannot be measured or counted.Where quality of products is more important than the quantity.Where individual employee do not have any control over production.Where work delays are frequent and beyond the control of workers.

Benefits of Time Wage System: -

This method is simple and easy to understand.Workers are guaranteed minimum wages for the time spent by themThis method is acceptable to the trade unions as it does not distinguish between workers on the basis of their performance. There is less wastage as the workers are not under pressure to rush through the production.

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As the wage is paid according to the time spent, quality of the goods produced increases as the workers are not under pressure to produce more.

Drawbacks of Time Wage System: -

No incentives are given for efficiency. This method does not distinguish between efficient and inefficient workers.Since the wages are not related to the output there is relatively low production.As the workers are not following the targeted production so they work slowly and waste the time.As the wages are not related to the output, so it becomes difficult for the employee to determine the labour cost per unit.Due to non incentive measures, great supervision is required to get more work done by the workers.Dissatisfaction level increases among the efficient employees are the management does not differentiate between the efficient and inefficient employees.

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Piece Wage System

Under this system of payment, wages are based on output and not on time. There is no consideration for time taken in completing a task. A fixed rate is paid for each unit produced, job completed or an operation performed. The workers are not guaranteed minimum wages under this system.

Wages are calculated as: -

Earnings = Output * Piece Rate

Example: - in a factory Rs. 2 per piece produced is fixed and there are two employee’s A & B producing 200 & 225 pieces respectively. Hence the earnings will be as follows: -

A’s (earnings) = 200* Rs. 2= Rs. 400

B’s (earnings) = 225* Rs. 2= Rs. 450

An equitable piece rate should be fixed for giving incentives to workers for producing more. Under this method different piece rates will be defined for separate jobs. The piece rate should be reviewed from time to time.

Factors to be considered for determining the piece rate are: Efforts involvedRisk involvedConditions under which work is to be performed

There are 3 types of Piece Rate Systems:Straight Piece Rate: - In this method one piece rate is fixed and whole production is paid on this basis. For example: - If a piece rate of Rs. 5 per unit is fixed then the wages will be calculated by multiplying output by the rate fixed. A worker producing 100 units will get money are mentioned below:

Wage = Rs. 5*100= Rs. 500

If the production is raised to 120 units then the wage will be:Wage = Rs. 5*120

= Rs. 600Under this method the worker will have to increase his/her output in order to get higher wages. The rate of payment remains same irrespective of level of output.

Increasing Piece Rate: - In this method different rates are fixed for different levels of production. Higher rate are given when production increases beyond a certain level. For example: - a piece rate

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of Rs. 1 per unit may be fixed for production up to 100 units, Rs. 1.25 per unit for output between 101-150 units and Rs. 1.50 per unit for a production beyond 150 units and so on. There is incentive to get the higher rate for raising production beyond a certain level. Decreasing Piece Rate: - In this method the rate per unit decreases with increase in output. Rs. 1 per unit maybe allowed up to production of 100 units, Rs. 0.90 per unit for production between 101-150 units, Rs. 0.85 per unit for an output beyond 150 units and so on. This method discourages workers from raising their output because better efforts are rewarded at lower piece. This method also ensures the quality of the units being produced.

Piece Wage method is suitable for the situations as mentioned below: -Where work is of repetitive nature.When work is standardised and flow of output is continuous.When production of workers can be separately measured.When strict supervision is not possible.Where production is closely related to human efforts.

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Benefits of Piece Wage System: -

The wages are linked to the efforts, higher the output higher are the wages.There is increase in the production as the wages are paid according to output of the person.There is better utilisation of the available equipments as they are utilised to the full extent.Less supervision is required as the payment is on the basis of output, hence workers will not waste any of their time.There is distinction between efficient and inefficient workers. There will be sufficient encouragement to efficient workers for showing better results.There is effective cost control as the increase in output will result in reduction of overhead cost per unit.

Drawbacks of Piece Wage System: -

There is no guarantee of minimum wages as there is direct relationship between wage and output.There are chances that the quality of the products will be poor as the workers are more concerned with the quantity they produce rather than the quality of the product being produced by them.This payment method is not suitable for the beginners as they will not be able to produce more goods due to lack of experience.There ca be deterioration in health, as workers may try to work more than their capacity.It can lead to dissatisfaction among the workers as there is difference among earning and the workers who get low wages feels jealous of one’s who earn more.This system of wage payment is opposed by the trade union as there is an unhealthy competition among workers for increasing their wages.

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Balance or Debt Method

It is a combination of time and piece wage system. The worker is guaranteed a time rate with an alternative piece rate. If the wages calculated at piece rate exceed time rate then the worker gets credit.On the other hand if time wages exceeds piece wage then the worker is paid time wage and the deficit is carried forward as debt to be recon served in future.

Example: - Suppose the time rate is Rs. 500 per week and the piece rate is Rs. 4 per unit. The wages of the workers who produce 150, 100 & 125 units in 3 weeks will be calculated as follows: -

Weeks Piece Wage

Time Wage

Credit Debit Balance

1 (150*4) = 600

500 100 ______ 100

2 (100*4) = 400

500 ______ 100 Nil

3 (125*4) = 500

500 ______ ______ Nil

This method provides sense of security to the employees. At the same time, an efficient worker has an opportunity to increase his wage. The worker of ordinary ability are given a sufficient incentive to attain the same standard of living by getting guaranteed time wage, even though the excess paid to them is later deducted from the future credit balance.This method is used in the industry where flow of work is at minimum.

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CONCEPTS IN WAGES

While evolving wage policy three concepts of wages are generally considered. These are broadly based on the needs of the workers, capacity of the employer to pay and the general economic conditions prevailing in a country. These concepts are as follows: -

MINIMUM WAGE: - Minimum wage is that wage which must be paid whether the company earns any profit or not. The wage provides not merely for bare sustenance of life, but also for the preservation of the efficiency of the workers. Minimum wage maybe fixed by an agreement between management and the workers but is usually determined through legislation. The minimum salary fixed by government for the year 2006-07 is Rupee 2525.

FAIR WAGE: - Fair wage is that wage which is above the minimum wage but below the living wage. It can be fixed only by comparison with an accepted standard wage. Such a standard can be determined with reference to those industries where labour is well organised and has been able to bargain well with the employer. Following factors should be considered for determining the fair wage: -Productivity of labour.The prevailing rates of wages in the same or similar occupations in the same region or neighbouring regions.The level of national income and its distribution.The place of industry in the economy of the country.The employer’s capacity to pay.

LIVING WAGE: - Living wage is a dynamic concept, which grows in line with the growth of the national income. The living wage is highest among these three types of wages. The living wage must provide: -Basic amenities of life.Efficiency of workers.Satisfies social needs of workers such as medical, education, retirement etc.

Living wage is a dynamic concept as, if the national income of the country grows then the living wage also increases. It varies from country to country.

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BASIC COMPONENTS OF WAGE / SALARY

Following are the various components of wage / salary: -

BASIC PAY: - Basic Pay is the fundamental component of pay. Basic pay is received by all and is the main component of an individual's salary. An individual's grade and years of service determines the amount of basic pay received. It can also increase according to the new rules and amendments by the government. All other allowances are calculated on the basic pay.

DEARNESS ALLOWANCE (D.A.): - In India, Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as a percent of the basic salary. This amount is then added to the basic salary along with house rent allowance to get the total salary. Rates vary as per rural / urban areas etc. It is sometimes also called as Interim Relief. It is given to compensate the price rise in the economy of the commodities so that the people are not adversely affected by the hike in prices and increase in the cost living.

HOUSE RENT ALLOWANCE (H.R.A): - Employee’s are entitled to house rent allowance if they or their dependants (if any) cannot find suitable accommodation. This clause does not apply to a member who has a suitable own home in the same location. House rent is deductible expense from the income tax point of view only if the employee provides the rent slip to the tax authorities at the time of filing the tax papers. For the persons who do not furnish the rent slip for the calculation of the taxes is a taxable source of income.

MEDICAL ALLOWANCE: - It is the allowance given to an employee to meet up his/her medical expenses. If a fixed allowance is received by an employee for the discharge of medical expenses, it is a taxable perquisite. Hence, an employee should avoid the receipt of an allowance for medical expenses but should rather take medical reimbursement, so that it is tax-free. An employee is allowed to get reimbursement for the medical expenses incurred by him at a hospital maintained by the employer or a Government approved hospital, the entire amount of reimbursement is tax-free and is not treated as a taxable perquisite.

COMPENSATORY ALLOWANCE (C.A): - Compensatory allowance means an allowance granted to meet personal expenditure necessitated by the special circumstances in which duty is performed, but it does not include dearness allowance, sumptuary allowance, or any other allowance which is regulated by separate rules made from time to time under the All India Services Act, 1951 (LXI of 1951) .

Example: - Rent free accommodation shall be treated as compensatory allowance. Extra money received by an employee for performing duties in the far flung rural areas.

CITY COMPENSATORY ALLOWANCE (C.C.A): - City compensatory allowance means an allowance to compensate the employees according to the living standard in the city. Different cities have different prices for the various commodities and essentials required to perform day to day routines.

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For example: - Living in Mumbai is more costlier than living in Delhi, so to maintain the equilibrium the employees in the different cities are paid city compensation allowance.

BASIC DEDUCTIONS FROM WAGE/SALARY

Following are the various deductions from wage / salary: -

General Provident Fund (G.P.F) / Employee Provident Fund (E.P.F): - It is applicable to all those industries/organizations that are employing more than 20 persons. It covers staff as well as workers also. A minimum of 6% of basic pay is deducted as a contribution. The scheme provides a pension after retirement or for a nominee upon death of the employee. The money in your account, under either scheme, accrues interest as determined by the Govt. of India (9.5% per annum - Sept. 2006 rates). Partial withdrawal is permitted up to 75% of the amount, or up to 90% of the total if within 1 year of retirement or after the completion of 7 years services and also it can be claimed only thrice during the period of services with the industry/organization. If an employee has worked for 20 years then he/she gets 2 years bonus.

Group Insurance Scheme (G.I.S): - Group (term) Insurance Scheme is meant to provide life insurance protection to groups of people. Administration of the scheme is on group basis and cost is low. Under Group (Term) Insurance Scheme, life insurance cover is allowed to all the members of a group subject to some simple insurability conditions without insisting upon any medical evidence. Scheme offers covers only on death and there is no maturity value at the end of the term.

Income Tax: - It is the amount paid to the government on the income earned by an employee. There are various tax slabs according to which the income tax is calculated. The net taxable income is calculated after deducting the non taxable expenses made by the person under various sections of the tax rebates granted by the government.

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INCENTIVE PLANS & FRINGE BENEFITS

INCENTIVES:

Financial incentives refer to performance linked compensation paid to improve motivation and productivity of employees. We can also state that the incentives are the payments by results.

A good incentive plan should encourage workers to put their best to the job they are assigned.

CHARACTERISTICS OF INCENTIVE PLANS

The characteristics of incentive plans are as follows: -

Minimum wages are guaranteed to all workers.

An incentive plan may consist of both monetary and non monetary elements.

For a successful incentive plan, the essentials are timing, accuracy and frequency of incentives.

The incentive plan requires that it should be properly communicated to the workers to encourage individual performance, provide feedback and encourage redirection.

BENEFITS OF INCENTIVE COMPENSATION

Incentive compensation also called ‘payments by result’ is essentially a managerial device for increasing workers productivity. Simultaneously, it is a method of sharing gains in productivity with workers by rewarding them financially for their increased productivity. The advantages of incentive plans are as under:

The worker study which is done before introducing a wage incentive plan brings about improvements in methods, work-flow, and man-machine relationship and so on.

Employees promptly share all such problems with management which retard their earnings. Management becomes more alert in areas such as flow of process materials, adequate spares, maintenance of equipment, etc.

Employees are encouraged to become innovative in the sense that they are induced to find new methods to increase their productivity.

Employees need lesser supervision as they are disciplined and responsible.

There are good human relations in the firm as the workers are satisfied with higher earnings and management with increased productivity.

There develops a feeling of cooperation between the workers and the management. The morale of the workers is increased.

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FRINGE BENEFITS

Fringe benefits are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance. These are the add-on’s provided by an organisation to facilitate and lure the employees so that they stick back to the company and feel motivated and satisfied.

The main features of fringe benefits are as follows: -

Fringe benefits are supplementary to regular wages or salaries.

These benefits are paid to all the employees based on this membership in the organisation.

These benefits are indirect compensation because they are usually extended as a condition of employment and are directly related to performance.

Fringe benefits involve a labour cost for the employer and are not meant directly to improve efficiency.

Fringe benefits raise the living standard of the employees.

Fringe benefits refer to items for which a direct monetary value to the employee can be ascertained e.g. provident fund, pension, etc. On the other hand, services refers to the items like medical facilities, recreation etc.

These benefits may be statutory or voluntary. Provident Fund in a statutory benefits whereas housing is a voluntary benefit.

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OBJECTIVES OF FRINGE BENEFITS

Fringe benefits are given to achieve the following benefits:-

To recruit and retain the best employee.

To protect employees against certain hazards e.g. life insurance, old age pension etc.

To improve motivation and morale of the employee by satisfying some unsatisfied needs.

To improve work environment and industrial relation.

To ensure health, safety and welfare of employees.

To develop a sense of belongingness and loyalty among workers.

To meet statutory requirements.

To satisfy the demands of trade unions.

To improve the public image of the organisation.

KINDS OF FRINGE BENEFITS

The benefits and services to be included under the title ‘fringe benefits’ are numerous. Following can be some of the fringe benefits: -

Statutory payments such as old age pension, retirement benefits, unemployment insurance, group insurance etc.

Rest or leave with pay.

Payment for time not worked.

Other benefits such as profit sharing, suggestions reward, reimbursement of tuition fees, festival allowance etc.

Health benefits.

Maternity Benefit

Disablement Benefit

Dependent’s Benefit

Medical Benefit

Welfare and recreational activities.

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EXECUTIVE REMUNERATION

For the higher management, salaries are influenced by the size of a company, performance of the company, by the specific industry and in part by the contribution of the executive to the process of decision making. The sudden spurt in the executive remuneration is a result of liberalisation and globalisation of the economies.

SPECIAL FEATURES OF EXECUTIVE REMUNERATION:

Executive remuneration cannot be compared with wage and salary schemes meant for other employees in the organisation. Simple comparisons and ratings may not be possible in these jobs as factors and variable involved are numerous.

Executives are denied the privileges of having unions. It is the workers who resort to strikes, slogan, shouting etc. and if they succeed in their efforts, executives too benefit.

Secrecy is maintained in respect of executive remuneration. Secrecy is maintained because no executives in the private sector, in the same grade, receive the same pay. Remuneration depends upon such factors as competence, length of service and loyalty to founders.

Executive pay is not supposed to be based on individual performance measure but rather on unit or organisational performance. This is because an executive’s own performance is assumed to be rather directly reflected in measures of unit or corporate performance.

Executive remuneration is subject to statutory ceilings. These ceilings, however do not apply to private limited companies.

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COMPONENTS OF EXECUTIVE REMUNERATION

Following are the various components of the executive remuneration: -

SALARY: - Salary is the first component of executive remuneration. Salary is supposed to be determined through job evaluation and serves as the basis of other type of benefits. The amount of salary managers are paid generally depends on the value of the person’s work to the organisation and how well the person is discharging his responsibilities. The basic trend today is to reduce the importance of base salary and to boost the importance of incentives.

BONUS: - Most firms are annual bonus plans aimed at motivating the short term performance of their managers and executives. Unlike salaries which rarely decline with reduced performance, short term bonuses can easily result in plus or minus adjustments of 25% or more in total pay.

LONG TERM INCENTIVES: - Long term incentives aim to motivate and reward managers for the firm’s long term growth and prosperity and to inject a long term perspective into the executive’s decisions. Long term incentives can also be used to encourage executives to stay with the company by giving them the opportunity to accumulate capital (e.g. company stock) that can be cashed in after a number of years. Long term incentives or capital accumulation programs are most often reserved for senior general and functional area executives.

PERQUISITES: - Perquisites constitute a major source of income for executives. In addition to the normally allowed perks like provident fund, gratuity and the like executives enjoy the following benefits also:

Medical care.

Legal, tax and Financial Counselling.

Facilities for entertaining customers and for dining out.

Company recreational area

The cost pf education and training of executives, scholarships for their children and allowances magazines and books.

Free well furnished accommodation, conveyance and servants.

Vacation travels.

Membership in clubs.

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WHY EXECUTIVES ARE PAID MORE?

A number of justifications are given for paying high remuneration to the executive’s:

Executives have high intrinsic worth and they make the organisations successful. Therefore, they deserve high salaries and premium.

Highly qualified and trained executives are in short supply. As against the short supply, the demand for executives is ever-growing. Organisations have to compete among themselves to attract talented and competent individuals.

After attracting the executive, the next problem is to retain them. Their remuneration must be reviewed annually and frequent salary hikes should be made. Otherwise, there will be a flight of people to organisation who are always willing to hijack them.

After succeeding in retaining the executives, the next step problem is to motivate them for better performance. There may be several theories on motivation, but money is and always has been the main motivator.

Expectations of the people have gone up. All executives will need hefty remuneration to lead a life which fits his status and job.

For an executive, financial reward is a symbol of social prestige and social position. It is also a symbol of power, dignity and role of the executive.

Another compelling reason to pay more to the executive is to eliminate or at least minimize corruption. The best way of satisfying human greed is to pay well.

MNC’s pay attractive remuneration to their executive’s weather in home country or host country. Globalisation of trade, technology and managerial practices has globalised the executive remuneration also. To compete with the MNC’s the Indian companies have to pay more remuneration.

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MANAGEMENT STAFF

STRUCTURE OF EMPLOYEES\WORKERS AT GODREJ

WORKMEN

STRUCTURE OF EMPLOYEES AT GODREJ & BOYCE Mfg. Co. Ltd. – APPLIANCE DIVISION

The employees at Godrej & Boyce Mfg. Co. Ltd. are divided into two categories as mentioned below: -

Management Staff

Workmen

MANAGEMENT STAFF:

Management Staff people are structured on the basis of the bands. The various bands used in Godrej & Boyce Mfg. Co. Ltd. Are as mentioned below: -

S – Band

E – Band (E1, E2)

T – Band (T1, T2,T3)

P – Band (P1, P2,P3)

O – Band (O1, O2, O3)

A – Band (A1, A2, A3)

K – Band (K1, K2, K3)

Each band has certain levels within, such as T-Band has three levels as T1, T2 and T3.

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DESIGNATIONS WITHIN EACH BAND AT GODREJ & BOYCE Mfg. Co. Ltd.

BAND DESIGNATION LEVEL

S Vice President

E Senior General Manager E2

General Manager E1

T Deputy General Manager T3

Additional General Manager T2

Senior Manager T1

P Manager P3

Associate Manger P2

Deputy Manager P1

0 Assistant Manager O3

Senior Executive O2

Executive O1

A Junior Executive A3

Senior Officer A2

Officer A1

K Junior Officer K3

Senior Technical Staff Associate K2

Technical Staff Associate K1

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COMPONENTS OF SALARY FOR MANAGEMENT STAFF

FIXED COMPONENTS OF SALARY:

Following are the fixed components of an employee salary.

COMPOSITE BASIC PAY: - It is the fundamental component of pay given to the management staff. It also included Dearness Allowance. All other allowances are calculated on this composite basic pay.

HRA1: - The house rent allowance is given to the management staff people according to their basic pay and at the level they are in the management hierarchy.

HRA2: - The increments that are given to the individual after the year or because of their improved performance are given as HRA2.

HRA3: - The special increments if any given to the management staff employee comes under the HRA3.

MEDICAL ALLOWANCE: - This allowance is given to the management staff so as to compensate them for the expenditure on the medicines and other health related issues. The amount given is fixed according to the designation and the level of the employee in the management hierarchy.

EDUCATION ALLOWANCE: - This allowance is given for the education of the employees or for their children so that they can get more and better education to excel in their carrier.

CONVEYANCE ALLOWANCE: - To compensate the expenditure on the transportation facilities the employees are given this allowance. The fixed amount is given according to the level of an employee in the management hierarchy.

VARIABLE COMPONENTS OF SALARY:

Following are the variable components of an employee salary.

EVA: - It stands for Employee Value Added. It is given according to the profits of the organization. The top management decides how much bonus has to be shared with the employees at different levels in the organizational hierarchy. EVA is given annually to the management staff.

PERFORMANCE PAY (P.P.): - The performance of the management staff is accessed quarterly and accordingly the performance pay is given. The performance is assessed on 4 parameters i.e. BE (Below Expectations), CDB (Can do Better), ME (Meet Expectation), SE (Surpassed Expectations). The performance pay is calculated on the basic pay. The employees who gets BE rating does not get any performance pay, the employees who get CDB get 5-10% performance pay, the employees who get ME gets 10-15% performance pay and the employees who gets the SE rating gets up to 30% performance pay.

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COST TO THE COMPANY:

Following are the costs incurred by the company for the employees.

PROVIDENT FUND: - The 12% employee provident fund is deducted of the total basic pay of the staff which is useful in the retirement pension scheme being provided to the management staff. Also 12% of basic pay is contributed by the Godrej & Boyce in form of 8.33% as fixed pension scheme and remaining 3.67% as the employee provident fund. Interest payable on the provident fund contribution is 9.5%.

GRATUITY: - An employee is entitled for gratuity after completing the five year of service with the organization. One can get the gratuity amount in three cases as mentioned below: -

Superannuation

Resignation

Disablement

REIMBURSEMENTS TO THE MANAGEMENT STAFF:

Following are the reimbursements made by the company to its management staff.

TELEPHONE BILLS: - The official telephone bills are reimbursed and the fixed amount is paid for the official calls made depending upon the grade and the level the person is in the management hierarchy. This provision is kept to compensate the expenditure on the calls made for the official purpose.

OUT STATION TRAVEL EXPENDITURES: - If an employee goes out of station for the official purpose then the total expenditure made by the employee during his/her stay in the other city is reimbursed depending upon the grade and level the employee is in the management hierarchy. In some grade full expenditure amount is reimbursed and in some cases fixed amount is paid on the bills furnished.

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PERMANENT WORKERS

TEMPORARY WORKERS

CONTRACTUAL WORKERS

WORKMEN

WORKMEN AT GODREJ & BOYCE Mfg. Co. Ltd.

These are the labour work forces that are actually responsible for the production process being carried out at the Godrej & Boyce Mfg. Co. Ltd. Appliance Division (Mohali) in both the plants i.e. refrigerator as well as compressor. The workmen are divided in to three categories as mentioned below: -

PERMANENT WORKERS: - These workers are the permanent members of the organisation and enjoy the fringe benefits as well. These workers are given prior information and notice if their services are to be terminated and are give chance to justify them. These employees/workers also enjoy other benefits such as pension schemes, gratuity, loans etc. There are 113 permanent workers working at Godrej & Boyce Mfg. Co. Ltd. – Appliance Division (Mohali). These include the ITI’s, Diploma Holders along with the semi-skilled and skilled labour.

Process of selecting the permanent worker at Godrej & Boyce Mfg. Co. Ltd. - Appliance Division (Mohali): -

When the vacancy arises, the candidates apply for the post by filling the employment form and feed all the necessary information required by the company.

Then the employment form is checked and the certificates attached are verified, after that decision is taken weather to hire the candidate or not.

The selection test is then conducted and the appropriate candidates are selected.

Then the appointment letter is given to the permanent vacancy workers.

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TEMPORARY WORKERS: - These workers are provided employment on temporary basis and their period of stay with an organisation is mentioned in the appointment letter given to them after the selection. The date mentioned in the letter is taken as the termination of the services and no prior notice is given to them that their stay with the organisation is coming to an end.

In Godrej & Boyce Mfg. Co. Ltd. - Appliance Division (Mohali) the temporary workers are hired for a period of 6 months.

Process of selecting the temporary worker at Godrej & Boyce Mfg. Co. Ltd. - Appliance Division

When the vacancy arises, the candidates apply for the post by filling the employment form and feed all the necessary information required by the company.

Then the employment form is checked and the certificates attached are verified, after that decision is taken weather to hire the candidate or not.

The selection test is then conducted and the appropriate candidates are selected.

Then the appointment letter is given to the temporary vacancy workers.

CONTRACTUAL WORKERS: - These workers are employed on the contract basis from the contractor. The contractor provides the required type and number of workers required by the principle employer. The wages of the contractual workers are given to the contractor and then the contractor distributes the wages to the workers under the supervision of a supervisor of the principle employer. There are 4 contractors supplying labour force to the Godrej & Boyce Mfg. Co. Ltd. – Appliance Division (Mohali). These are as follows:-

Asla

Nagra

Pradeep

Max India

The minimum rate of wages for the skilled labour force is Rs. 3140 and for the unskilled labour force is Rs. 2525 and for ITI labour force is Rs. 3901. The overtime worked by the workers is calculated accordingly with the help of the basic rate of wage and the overtime is given double the hourly wage of the workers.

The contractor takes the 10% commission of the total amount of the wages paid to the contractor for the contractual labour by the principle employer.

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COMPONENTS OF THE WAGE FOR PERMANENT WORKERS

FIXED COMPONENTS OF WAGE:

Following are the fixed components of the workers wage.

BASIC WAGE: - It is the base compensation given to the worker for the services rendered by them.

HOUSE RENT ALLOWANCE: - It is given to compensate the workers who do not have their permanent house in the city so that they can afford the rent of the house they are living in.

OVERTIME HOURS WORKED: - The hours of the work apart from the regular working hours by the workers is compensated by paying extra money which is calculated on the basic wage according to the number of the extra working hours. The overtime money is given double the hourly wage of the workers.

VARIABLE COMPONENTS OF WAGE:

Following are the variable components of the workers wage.

PRODUCTION ALLOWANCE: - It is given to the workers according to the number of pieces being produced by them during the period of work. This way the workers are motivated to perform better and produce more units to increase their wages.

ATTENDANCE ALLOWANCE: - It is given according to the attendance of the worker more is the attendance more will be the attendance allowance. Regular worker gain from the attendance allowance. The benefit to the organisation is that the worker that comes regularly will work and the production process will not be halted due to absenteeism of the workers.

Then the gross wage of the permanent workers is calculated after adding the fixed wage components and the incentives / allowance given, which is then paid to the workers at the end of a month. Also the variable pay is given to them after the year end in form of EVA (Employee Value Added).

COST TO THE COMPANY:

Following are the costs incurred by the company for the employees.

PROVIDENT FUND: - The 12% employee provident fund is deducted of the total basic pay of the staff which is useful in the retirement pension scheme being provided to the management staff. Also 12% of basic pay is contributed by the Godrej & Boyce in form of 8.33% as fixed pension scheme and remaining 3.67% as the employee provident fund. Interest payable on the provident fund contribution is 9.5%.

GRATUITY: - An employee is entitled for gratuity after completing the five year of service with the organization. One can get the gratuity amount in three cases as mentioned below: -

Superannuation

Resignation

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Disablement

COMPONENTS OF THE WAGE FOR TEMPORARY WORKERS

FIXED COMPONENTS OF WAGE:

Following are the fixed components of the workers wage.

BASIC WAGE: - It is the base compensation given to the worker for the services rendered by them.

HOUSE RENT ALLOWANCE: - It is given to compensate the workers who do not have their permanent house in the city so that they can afford the rent of the house they are living in.


VARIABLE COMPONENTS OF WAGE:

Following are the variable components of the workers wage.

PRODUCTION ALLOWANCE: - It is given to the workers according to the number of pieces being produced by them during the period of work. This way the workers are motivated to perform better and produce more units to increase their wages.

ATTENDANCE ALLOWANCE: - It is given according to the attendance of the worker more is the attendance more will be the attendance allowance. Regular worker gain from the attendance allowance. The benefit to the organisation is that the worker that comes regularly will work and the production process will not be halted due to absenteeism of the workers.

Then the gross wage of the temporary workers is calculated after adding the fixed components of wage with the variable components of wage given to them. The total calculated amount is then paid to the workers at the end of a month.

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COMPONENTS OF THE WAGE FOR CONTRACTUAL WORKERS

Following are the various components of the contractual workers monthly wage.

BASIC WAGE: - It is the minimum assured wage to the contractual workers by the principle employer according to the guidelines of the government for example: - the minimum wage rate for the unskilled labour is Rs. 2525/- fixed by the government.

HOUSE RENT ALLOWANCE: - This allowance is given to compensate the workers for the expenditure on the living accommodations being rented by them. It is calculated on the percentage of the basic wage.

CONVEYANCE ALLOWANCE: - This allowance is given for the worker to meet their conveyance expenditure. It is fixed for all the labour force working at the unit.


EMPLOYEE PROVIDENT FUND: - The 12% employee provident fund is deducted by the contractor of the total wage of the worker which is useful in the retirement pension scheme being provided to the workers.

Reimbursement to the Contractual Workers by Godrej & Boyce Mfg. Co. Ltd. – Appliance Division (Mohali):

Provident Fund is reimbursed at 13.61%

ESI is reimbursed at 4.75%

Labour Welfare Fund is reimbursed at Rs. 2 per person per month.

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OBJECTIVES OF RESEARCH

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OBJECTIVES OF THE RESEARCH

The main objectives of the research are:

To find the level of satisfaction among the employees regarding the compensation paid to them.To study the salary structure of the employees.To study the frequency of salary reviews and the method followed for salary reviews.To study the basis for payment of compensation to the employees.To check the awareness level of employees as regards the laws monitoring compensation.

SOURCES OF INFORMATION:

Human Resource / Personnel Department.

Executives and related persons.

Personnel Manual.

Godrej Intranet

Internet

Management Books

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. The research methodology included the various methods and techniques for conducting a research. “Research is a systematic design, collection, analysis, and reporting of data and finding relevant solution to a specific marketing situation or problem.” Sciences define research as “ the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in practice of an art.”

Research is thus, an original contribution to the existing stock of knowledge making for its advancement, the purpose of research is to discover answers to the questions through the application of scientific procedure.

My research project has a specified framework for collecting the data in an effective manner. Such framework is called “Research Design”. The research process which was followed by me consisted following steps.

Defining the problem & Research Objectives

It is said, “A problem well defined is half solved”. The step is to define the project under study and deciding the research objective. The definition of problem includes compensation management.

Developing the Research Plan:

The second stage of research calls for developing the efficient plan for gathering the needed information. Designing a research plan calls for decision on the data sources, research approach, research instruments, sampling plan and contacts method.

The development of Research plan has the following Steps:

Data Sources

Two types of data were taken into consideration i.e. Secondary data and Primary data. My major emphasis was on gathering the primary data. The secondary data has been used to make things more clear.

Primary Data: Direct collection of data from the source of information, technology information, including personal interviewing, survey etc.

Secondary Data: Indirect collection of data from sources containing past or recent information such as books of record.

Research Approach

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Surveys are best suited for Descriptive Research. Surveys are undertaken to learn about people’s knowledge, beliefs, preferences, satisfactions and so on and to measure these magnitudes in the general public. Therefore I have done this Survey for the Descriptive Research Process.

Research instrument

A close friend questionnaire was constructed for my survey. A Questionnaire consisting of a set of statements was presented to respondents for their answers. Personal interaction was carried out for my survey.

Sampling Plan

The sampling plan calls for three decisions.

Sampling unit: Who is to be surveyed?

The target population must be defined that has to be sampled. It is necessary so as to develop a sampling frame so that everyone in the target population has an equal chance of being sampled. The sampling plan for this was different employees of different departments at Godrej and Boyce Mfg. Co. Ltd. – Appliance Division)

Sample Size: How many people have to be surveyed?

Generally large sample gives more reliable results than small samples. The sample of 100 respondents was taken but due to the lack of interest of the respondents only 83 responses were drawn. The sample was drawn from people having different educational qualifications, occupations and age group. The selection of the respondents was done on the basis of simple random sampling. The sample was drawn from people having different educational qualifications, occupation and age groups.

Contact Methods

Once the sampling plan has been determined, the question is how the subject should be contracted i.e. by telephone, mail or personal interview. Here in this survey, I have contacted the respondents through personal interviews.

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Collecting the information

The collection of data is a tedious task. For conducting any sort of research. Data was needed. So for my research, there was plenty of primary data. I have collected the information from the respondents with the help of personal interview and the questionnaire filled by them.

Collection of Primary Data: Primary Data is the data collected from the original source. Personal interview and questionnaire was the main instruments, which was used for collecting primary data.

Collection of Secondary Data: Secondary Data is the one which has already been collected by someone else and some other person is using that information. The source of secondary data was, the records maintained about the various components of salary/wage being paid to different employees/worker.

Analyze the Information

The next step is to extract the pertinent findings from the collected data that has been collected while personal interaction with the employees.

Presentation of findings

This is the last and important step in the research process. The findings are presented in the form of graphs, pie charts, conclusions, suggestions and recommendations after data analysis.

LIMITATIONS OF THE RESEARCH

Due to non availability and lack of interest of respondents everybody could not be contacted.

As all the decisions are taken care by the corporate HR at Vikroli (Mumbai) so it takes more time to implement any suggestions.

There was lack of time to conduct through survey in such a big organization.

The busy schedule of the employees hundered in the interaction with them.

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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

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HOW OFTEN IS THE SALARY STRUCTURE REVIEWED

CRITERIA NUMBER OF RESPONSES

MONTHLY 0

QUARTELY 30

HALF YEARLY 5

YEARLY 52

(CHART 1)

30 respondents says salary is reviewed quarterly, 5 says it is reviewed after six months and 52 says it is reviewed yearly out of the total 87 respondents.

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DO YOUR COMPANY GIVE A GENERAL INCREASE IN SALARY AND WAGES


YES 69

NO 18

(CHART4. 2)

69 respondents agree and 18 disagree that company gives general increase in salary / wages out of the total 87 respondents.

50

DOES YOUR COMPANY GIVE A COST OF LIVING INCREASE


YES 52

NO 35

(CHART4. 3)

52 respondents agree and 35 disagree that company gives a cost of living increase out of the total 87 respondents.

51

DOES YOUR COMPANY HAVE A BONUS OR INCENTIVE PLAN


YES 87

NO 0

(CHART4. 4)

87 respondents agree, 0 disagree that company has a bonus or incentive plans out of the total 87 respondents.

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WHAT TYPE OF BONUS IS GIVEN


ANNUAL / YEAR END BONUS 36

INCENTIVE BONUS 26

PERFORMANCE BONUS 35

FESTIVAL BONUS 0

(CHART4. 5)

36 respondents says bonus is given annually, 26 says incentive bonus is given and 35 says performance bonus is given out of the total 87 respondents.

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DOES YOUR COMPANY HAVE AN EFFECTIVE FORMAL EMPLOYEE MERIT REVIEW PROCESS


YES 47

NO 29

CAN NOT SAY 11

(CHART4. 6)

47 respondents agree, 29 disagree and 11 can not say anything that company have an effective formal employee merit review process out of the total 87 respondents.

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HOW OFTEN EMPLOYEES ARE REVIEWED


MONTHLY 0

QUARTELY 87

HALF YEARLY 0

YEARLY 0

(CHART4. 7)

The employees are reviewed quarterly to check their performance.

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IS SALARY GIVEN ACCORDING TO NATURE OF WORK AND EFFORTS MADE


YES 32

NO 48

CAN NOT SAY 7

(CHART4. 8)

32 respondents agree, 48 disagree and 7 can not say anything that salary is given according to the efforts made and the nature of work performed by them out of the total 87 respondents.

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ARE THE STATUTORY BENEFITS WELL STRUCTURE AND EFFECTIVE


YES 35

NO 28

CAN NOT SAY 14

(CHART4. 9)

35 respondents agree, 28 disagree and 14 can not say anything that statutory benefits are well structured and effective out of the total 87 respondents.

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IS SALARY GIVEN ACCORDING TO THE LAW


YES 27

NO 37

CAN NOT SAY 23

(CHART4. 10)

27 respondents agree, 37 disagree and 23 can not say anything that salary is given according to law out of the total 87 respondents.

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FINDINGS

It is revealed from most of the respondents that the salary structure is reviewed annually.

Most of the respondents agree that there is general increase in salary / wages.

There is a mix response regarding a cost of living increase in the salary.

Every respondent agree on the fact that company has an incentive and bonus plans.

The bonus is given according to the nature of the job according to the company policies.

There is an effective formal employee merit review process in the organization but some employees are not aware of it.

The employees are reviewed quarterly to check their performance.

Most of the respondents are not satisfied with the salary given to them as it does not match the job performed by them.

There is mix response regarding the effectiveness of the statutory benefits provided to them.

Most of the respondents disagree on the fact that salary is given according to law.

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RECOMMENDATIONS

Salary structure should be reviewed in order to match the job profile and the competitive market rates.

More of authority should be given to the Divisional HR Heads to take timely actions.

Employee turn over rate should be analysed periodically so as to check the effectiveness and the efficiency of the compensation paid.

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CHAPTER 5

CONCLUSION

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So the conclusion of entire project comes out to be that the management staff employees are satisfied with the compensation being paid to them as it matched the amount of work being done by them. The management staff employees are also given the variable pay in form of performance pay and the EVA (Employee Value Added). But on other hand TST’s and TSA’s are dissatisfied with the amount of compensation paid to them as it does not match the work they perform, their qualification and the number of hours they work.

The salaries paid to the upper management staff are quite healthy and matches the job profile and which completely satisfies them. Also the variable components of the salary that is given quarterly and yearly

The workmen gave mix response regarding the compensation paid to them as they also get fewer wages for the amount of work done by them and also the time spent in the plants.

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BIBLIOGRAPHY

Sr. No

Title Author Publication

1 Human Resource Management T.N. Chhabra Dhanpat Rai & Co.

2 Human Resource Management Shashi K. Gupta & Rosy Joshi

Kalyani Publishers

3 Human Resource Management Dessler Prantice Hall Publication

4 Human Resource Management (Concept & Issues)

C.B. Mamoria & S.V. Gankar

Himalaya Publishing House

Websites:-

www.wikipedia.management.com

www.about.data.management.compensation.com

http://www.gnbintranet.godrej.com

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http://www.gnbintranet.godrej.com/

http://www.about.data.management.compensation.com/

http://www.wikipedia.management.com/

ANNEXURE

QUESTIONNAIRE

P.S.: - Please tick the relevant options

How often is the salary structure reviewed?

[ ] Monthly [ ] Quarterly

[ ] Half-Yearly [ ] Yearly

Does your company give a general increase in salary and wages?

[ ] Yes [ ] No

Does your company give a cost of living increase?

[ ] Yes [ ] No

Does your company have a bonus or incentive plan?

[ ] Yes [ ] No

What type of bonus is given?

[ ] Annual/Year End Bonus [ ] Incentive Bonus

[ ] Performance Bonus [ ] Festival Bonus

Does your company have a formal employee merit review process?

[ ] Yes [ ] No [ ] Can Not Say

How often are employees reviewed?

[ ] Monthly [ ] Quarterly

[ ] Half-yearly [ ] Yearly

Is Salary given according to the efforts made and nature of work?


Are the statutory benefits well structured and effective?


Is salary given according to the law?


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