PROJECT REPORT ON

WAGES AND SALARY ADMINISTRATION

SUBMITTED BY

MS. ASHLEEN ANAND

ADMISSION NO. :- DPGD/JL09/1063

SPECIALIZATION : - HUMAN RESOURCE

WELINGKARS INSTITUTE OF MANAGEMENT & RESEARCHMUMBAI.

JUNE 2011

ACKNOWLEDGEMENT

A project can never attain its final destination without the support, encouragement and

motivation of the individuals who are related to the one who undertakes the project

work.

I take this opportunity to express my sincere thanks and gratitude to MR. UTTAM

RATHOD, General Manager Personnel and Personnel Manager MR. ANIL

DAITHANKAR, for giving me this opportunity to work in this project and guiding me

through this project duration.

I would like also to thank the entire respondent for giving me there precious time and

relevant information and experience I required, without which this project would have

been a different story.

Ashleen Anand

i

INDEX

Sr. No Topic Page No.

1 EXECUTIVE SUMMERY 1

2 COMPANY PROFILE 6

3 OBJECTIVES OF THE STUDY 13

4 INTRODUCTION TO TOPIC 14

5 RESEARCH METHODOLOGY 38

6 DATA ANALYSIS 41

7 FINDINGS OF THE STUDY 49

8 SUGGESTIONS AND CONCLUSION 51

9 LIMITATIONS 54

10 BIBLOGRAPHY 55

CHAPTER 1: EXECUTIVE SUMMERY

The project was carried out at EPCOS India Pvt. Ltd, Mumbai. The title of this project

is The Study of Salary and Wage Administration. The objective of the study is to

analyze the Salary Administration in EPCOS India Pvt. Ltd.

The study was conducted to know the structure and salary provided by the Company

to its employees. In this project, I studied about the present salary compensation of

EPCOS along with the evaluation of the incentives, bonus, and allowances given to

the employees.

I also studied the execution of Provident Fund, Gratuity, and Encashment of leave for

the final payment of the employee when he/ she leave the company. During the course

of project, I got the clear idea about the salary structure and about the overall

functioning of the organization.

1

Introduction:   

         

The payment of wages and salary is an inbuilt system with human force for their

activity performed. To what extent the payment of wages & salary is reasonable and

adequate in consonance to the nature of the work performed, is a question mark.

The reason attributed, is the existence of very large labour force and availability of

abundant work force whether it is a farm sector of industrial sector. The supply of

labour is more then the demand and with the result there is exploitation of cheap

labour policy. Later the advent of trade unionism helped to improve the working

conditions of labour. Until the Second World War, event the Government adopted a

“LAISSEZ – FAIRE” policy in this regard. It was as late as in 1947, that the

industrial unrest become so uncontrollable that a tripartite conference was convened

of (1) Central and State Govt. (2) Employers, and (3) Employees, which resulted in

the industrial trade resolution. It was realized that increase in production was not

possible without the fullest cooperation between management and labour. This led

to appointment of the fair wages committee and profit sharing bonus committee.

Thus, the lot of the worker began to improve of the living.

Wages Vs Salary:            

Payment made to labour is generally referred to as wages. Money paid periodically

to persons whose output cannot to be easily measured, such as clerical staff as well

as supervisory and managerial staff, is referred to as salaries. Salaries are thus paid

generally on a monthly basis and at the times the elements of incentive is introduced

in the form of commission, for e.g. paid to salesmen in addition to their salaries.

2

However, it is in area of labour that there are several types of methods of wage

payment.   Systems of Wage Payment:            

In case of worker, the wages are depend generally on the rates of wages which may

be barely rate or time rate or leased on a piece rate, that is, dependent on worker’s

output. There are also various combinations of not only time & piece rate systems,

but also several premium plans adopted with a view to incorporate the incentive

element and motivate the worker. In addition, there are collective wage payments

also.

  Time of wage Payment:           

Under this system, the work is paid a certain sum for a fixed period of time that is

so much per hour or per day or month. The main advantages under this system are

the followings:           

I. It is simple in calculation         

II. The worker does not rush the job and spoil the quality through a temptation

of earning more  

The following are however the drawbacks of the system:   

I. The worker being assured of a fixed payment for the time spend is not

tempted to work harder or more productivity as he is not rewarded for the

extra effort.         

II. The superior worker often tries to protect his slower colleagues by the

slacking off himself.      

  

III. The superior worker is discouraged as, although he is more productive, he

is paid the same amount. He therefore slackens’ off over a period time.  

3

The system is satisfactory from the viewpoint of providing incentive to

work harder and more productivity

The piece wage system:       

      In this system, the worker is paid a fixed rate per unit produced or job completed.

The rate is normally developed on the basis of analysis of previous performance and

establishment of average performance of a particular standard of workmanship.

            The following are the advantages of The Piece Wage System:        

I. As the worker is paid more when he produces more, he is inclined to put

forth his best efforts. This results in increased productivity, which benefits

both the employer and employee.         

II.    The employee helps management in avoiding delays through breakdown.        

III.    The superior worker is induced to work hard as at the end of the period he

finds that his pay is large than that of lazy of worker.      

IV.    In his effort to produce more, the worker may disregard the spoiling of his

tools and machinery used by him for the production.       

V. It is paid merely on the basis of the number of items produced without regard

to quality. The quality of the production is likely to decline. There is thus a

tendency to sacrifice quality in favour of quantity.      

VI.    This system may result in excessive fatigue as the employee tries to work his

hardest and his maximum speed to earn as much as he can.  

4

Premium Bonus Method:       

    

  As in the piece wage system, the employee is not guaranteed any minimum wage

in case the supply of labour is abundant, the piece-wage rate could be so lowered

as to lead to sweating and other evils. Because of this, trade unions began to object

the piece-wage system. They pressed for a guarantee of a fair minimum wage in

connection with certain trends. As a result, of this, a number of systems of wage

payments emerged technically known as progressive wage systems.     

5

CHAPTER 2: COMPANY PROFILE

Name of the Company EPCOS India Pvt. Ltd

Year of Acquisition 1996

Factory Office Plot No. E 22-25, MIDC, Andheri

Mumbai- 400059/ Maharashtra.

Annual Turnover 250 crores

Products Manufacturing of film capacitors

Plants of Manufacturing 5 All over the World

Total No. of Plants in India 1

Plant Head Mr. B. Mitra (President)

Managing Director Mr. H. S. Banerjee

Personnel Manager Mr. Anil Daithankar

Total No. of Employee 1036

Whit Collar 235

Blue Collar 254

6

HISTORY:

EPCOS develops, manufactures and markets electronic components modules and

systems, focusing on fast-growing leading-edge technology markets: in IT and

telecommunications, but also in automotive, industrial and consumer electronics. A

uniquely broad product portfolio and truly global presence have made EPCOS a global

market leader in products that account for 60 percent of our sales. A further 30 percent

is generated by products in which we are the number one in Europe.

EPCOS was floated simultaneously on the Frankfurt and New York Stock Exchanges

on October 15, 1999. The listed company emerged from Siemens Matsushita

Components, a joint venture founded in 1989 by Siemens and Matsushita. Because of

the low trading volume, EPCOS has decided to delist and to deregister from the New

York Stock Exchange in November 2007. Since March 2003, EPCOS has been one of

the largest companies in the TecDAX index of German technology stocks.

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EPCOS

ELECTRONIC PARTS AND COMPONENTS

CORPORATE CHARTER

1. Vision : The aim of EPCOS India Pvt. Ltd is to make the name EPCOS

synonymous with excellence in electronic components to customers, employees and

investors alike.

2. Business : EPCOS develops, manufactures and markets electronic components

and modules. These products process electronic signals, control power supplies and

protect electronic circuitry.

3. Goals : The Company wants to generate lasting profits and constantly increase

shareholder value. It wants to be a leader in every market that we serve. Their success

is based on strict customer orientation, comprehensive and outstanding innovative

strength.

4. Customer Orientation : Providing products and services that make their

customers more competitive is their top priority. The personal commitment of every

EPCOS employee makes a vital contribution to customer satisfaction.

8

5. Cost and Process Competence : They are continuously improving their work

processes and working hard to keep cutting our cost while increasing their speed and

reliability.

6. Innovative Strength : They create innovative products that provide new solutions

for their customers and help to strengthen existing or establish new business

relationship. Innovation is the lifeblood of their company.

7. Investor Orientation : EPCOS shareholders provide the capital for and are the

owners of their company. They do their utmost to maintain and increase shareholder

value.

8. Employee : Their employees are their most precious assets. Their resourcefulness,

competence, motivation and drive are essential to their company’s success. They are

committed to a corporate culture that promotes creativity, teamwork and enterprise.

9

EPCOS: A company that opens up new prospects to customers, investors and

employees.

QUALITY POLICY

It is their endeavour to make the name EPCOS synonymous with world leadership in

passive components by opening up new prospects to customers, investors and

employees through customer orientation, innovation cost consciousness and continual

improvement in all their business processes.

QUALITY OBJECTIVES

Customer Orientation: Knowing their customers’ needs, requirements and

expectations and giving them outstanding prospects and services.

Innovation: Shaping constantly their innovations for the benefits of their customers by

giving their employees the freedom to unfold their creativity.

Cost Consciousness: Opening to new approaches and constantly cutting their cost.

Continual improvement: Institutionalize the approach in all functions by updating

their quality management system.

Above objectives are quantified by individual functions and measured and reviewed to

align with quality policy.

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PRODUCT PORTFOLIO:

EPCOS is mainly engaged with manufacturing of film capacitors.

Following types of film capacitors are manufactured in Nashik Plant:-

DC Capacitors

AC Capacitors

Power Factor Corrections Capacitors (PFC Gas Failed) MKK.

Power Factor Correction Resign Filed (PFC).

MARKET POSION

In the field of electronic components and modules EPCOS regard itself as number 2

world wide and number 1 in Europe.

EPCOS INDIA PVT LTD

EPCOS has two manufacturing facilities in India-

1) Mumbai (Maharashtra) founded in 1996

2) Kalyani (Kolkata W.B.)

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ORGANIZATIONAL CHART

PERSONNEL

MANAGEMENT DIRECTOR

12

GENERAL MANAGER

MANAGER

SENIOREXECUTIVE

MANAGEMENT SECRETARY

EXECUTIVE OFFICERS ASSISTANT OFFICER

CHAPTER 3: OBJECTIVES OF THE STUDY

1. To study the Compensation Structure and administration in EPCOS.

2. To know the satisfaction level of the executives and the workers regarding the

facilities and allowances given by the EPCOS.

3. To know the satisfaction level of the salary distribution process carried out in

EPCOS.

13

CHAPTER 4: INTRODUCTION TO THE TOPIC

DEFINITION OF COMPENSATION

According to Rynes {1987}, compensation is particularly important as a recruitment

tool because

1. It is vehicle for satisfying a wide array of human needs,

2. Salary offers are expressed in clear and comparable terms

3. Stating salaries have for future salary progressive, and,

4. Pay system communicate so much about an organization’s philosophy, values,

and practices.

OBJECTIVES OF COMPENSATION:

The objectives of any payment systems are numerous and might include the

following:

1. To enable the employees to earn a good and reasonable salary or wage;

2. To pay equitable sums to different individuals, avoiding anomalies;

3. To reward and encourage high quality work and output;

4. To encourage employees to develop better methods of working and their

acceptance;

5. To discourage wastage of materials or equipment;

6. To encourage employees to use their initiative and discretion;

7. To discourage overtime working unless it is very essential;

8. To raise morale and increases efficiency of the staff and finally keeping

them contended.

14

TYPES OF COMPENSATION:

Compensation provided to employees can direct in the form of monetary benefits

and/or indirect in the form of non-monetary benefits known as perks, time off, etc.

Compensation does not include only salary but it is the sum total of all rewards and

allowances provided to the employees in return for their services. If the

compensation offered is effectively managed, it contributes to high organizational

productivity.

1. Direct Compensation   

2. Indirect Compensation

15

COMPENSATION MANAGEMENT

DIRECT COMPENSATION INDIRECT COMPENSATION

16

Salary Basic

House Rent Allowance

Medical Reimbursement

Conveyance

Leave Travel Allowance

Bonus

Special Allowance

Overtime Wage

Retirals Benefits

Leave Policy

Hospitalization

Insurance

Flexible Timings

IMPORTANCE OF COMPENSATION:

Compensation and Reward system plays vital role in a business organization. Since,

among four Ms, i.e. Men, Material, Machine and Money, Men has been most

important factor, it is impossible to imagine a business process without Men. Every

factor contributes to the process of production/business. It expects return from the

business process such as rent is the return expected by the landlord, capitalist

expects interest and organizer i.e. entrepreneur expects profits. Similarly the labour

expects wages from the process.

Labour plays vital role in bringing about the process of production/business in

motion. The other factors being human, has expectations, emotions, ambitions and

egos.

Labour therefore expects to have fair share in the business/production process.

Therefore a fair compensation system is a must for every business organization. The

fair compensation system will help in the following:

An ideal compensation system will have positive impact on the efficiency and

results produced by employees. It will encourage the employees to perform better

and achieve the standards fixed.

It will enhance the process of job evaluation. It will also help in setting up an ideal

job evaluation and the set standards would be more realistic and achievable.

Such a system should be well defined and uniform. It will be apply to all the

levels of the organization as a general system.

The system should be simple and flexible so that every employee would be able to

compute his own compensation receivable.

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It should be easy to implement, should not result in exploitation of workers.

It will raise the morale, efficiency and cooperation among the workers. It, being

just and fair would provide satisfaction to the workers.

Such system would help management in complying with the various labour acts.

Such system should also solve disputes between the employee union and

management.

The system should follow the management principle of equal pay.

It should motivate and encouragement those who perform better and should

provide opportunities for those who wish to excel.

Sound Compensation/Reward System brings peace in the relationship of employer

and employees.

It aims at creating a healthy competition among them and encourages employees

to work hard and efficiently.

The system provides growth and advancement opportunities to the deserving

employees.

The perfect compensation system provides platform for happy and satisfied

workforce. This minimizes the labour turnover. The organization enjoys the

stability.

The organization is able to retain the best talent by providing them adequate

compensation thereby stopping them from switching over to another job.

The business organization can think of expansion and growth if it has the support

of skillful, talented and happy workforce.

The sound compensation system is hallmark of organization’s success and

prosperity. The success and stability of organization is measured with pay-package

it provides to its employees.

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INTRODUCTION TO SALARY ADMINISTRATION

What is Salary?

The Roman word salarium linked employment, salt and soldiers, accepting

salt from a person was synonymous with drawing sustenance, taking pay, or being

in that person's service. Soldiers were known to have been paid, and maintain

instead that the salarium was an allowance for the purchase of salt, at that time salt

19

production was strictly controlled by the monarchy or ruling elite. Today, the idea

of a salary continues to evolve as part of a system of all the combined rewards that

employers offer to employees. Salary (also now known as fixed pay) is coming to

be seen as part of a "total rewards" system which includes variable pay (such as

bonuses? incentive pay, and commissions), benefits and perquisites (or perks), and

various other tools which help employers link rewards to an employee's measured

performance. A salary is a form of periodic payment from an employer to an

employee, which is specified in an employment contract.

From the point of view of running a business, salary can also be viewed as the cost

of acquiring human resources for running operations, and is then termed personnel

expense or salary expense. In accounting, salaries are recorded in payroll accounts.

Salary is compensation to an employee for services rendered on a weekly, monthly

or annual basis. Salary is usually associated with office employees, supervisors,

managers and professional and technical staff. In any organization, salaries and

wages constitute a significant portion of the cost of operation of the business.

Difference between Salary, Wage and Compensation:

Salary refers to the monetary payment on a monthly or annual basis.

Wages are the remuneration paid by the employer for the service of a worker who is

engaged by the hour, days, week or fortnight. Wages are payments to hourly-rated

production and maintenance employee.

Compensation refers to all forms of financial returns, tangible services and benefits

20

employees receive as a part of an employment relationship. Compensation may be

received directly in the form of cash (wage, bonus, incentives) or indirectly through

services and benefits (pensions, health insurance, vacations).

What is Salary Administration?

Salary administration refers to the establishment and implementation of sound

policies and practices of employees’ compensation. Salaries represent a significant

portion of the total costs in most of the organizations and so it requires sound

administration. The control of salary level is of paramount importance even though

the amount of control which can be exerted may vary among organizations and

within an organization.

21

Pay can influence employees’ work behaviours and attitudes. It becomes crucial for

managers to ensure that pay systems are designed and administered in fair and

equitable manner. The salary administration is thus concerned with the monetary or

financial aspects of needs, motivation rewards. The

responsibility for salary administration usually lies with the top management.

Objectives of Salary Administration

1. Control of cost

2. Establishment of fair and equitable structure of remuneration

3. Utilization of wages and salaries as an incentive to greater employee

productivity

22

4. Maintenance of a satisfactory public image

5. Determination of the system of job description and job evaluation

6. Decision of what and how people will be paid

7. Checking all activities of the salary administration group

8. To recommend changes in the salary policy and specific raises for executives

at various levels

9. To review salary scheme

10. To attract and encourage staff to make full use of their abilities and develop

their potential.

SALARY AND WAGE ADMINISTRATION PROCESS IN EPCOS

2.1 Introduction: -

Salary is a form of Periodic Payment from an employer to an employee which is

specified in an employment contract. It refers to the employee compensation policy.

2.2 Objective:-

23

To define the procedure for Gross Pay and deduction calculation

To ensure the correctness of salary calculation and create General Ledger.

2.3 PROCESS :-

2.3.1 Employee Master Data Entry in PAMS :-

Personnel Officer enters Employee Master Data in PAMS. The Reference

Documents are Appointment Letter and PER/01 form which the employee fills

when he joins the organisation. The Relevant Fields for PAMS entry are as follows:

Personal Details

Booking Details

Job Details

Salary Details

Accommodation Details

Family Details

Qualification Details

Other Details

2.3.2 Activity Inputs:

Personnel Executive passes initial appointment Activity for new entrants. This

activity is essential to regularise the employees’ details in the system. This will ensure

to give salary effect from the date of joining of the new employee. The Path to enter

this activity is:-

24

PAMS Master Maintenance EmployeeActivity Input Other Activity

Input (select from the drop down list available)

The reference document for above activity is appointment letter and PER/01. This

ensures that the employee is in payroll system.

Systems Support Facility is available in PAMS to maintain Allowances and Tables

various grade Structures.

2.3.3 Uploading of Transactions:

The Transactions which are uploaded are as follows:

Details of Absenteeism, particularly unpaid leaves are counted.

Overtime Details

Saturday Working. Saturday working allowance is 50% of Basic +VDA + Adhoc

Basic)

25

Attendance Bonus Details

Production Incentive Details

Reversals to deduct the paid for payment on absence

Miscellaneous Recoveries: - Union Recovery, Mediclaim payment Recovery,

Death Relief fund and other deductions.

Activity inputs: - This includes Probation activity, confirmation activity;

separation activity to be entered in system as per monthly transaction data.

2.3.4 Verification :

Personnel Executive verifies all input data before salary processing.

2.3.5 Salary Processing: -

Personnel Executive processes the salary. During salary processing PAMS

calculates standard and non standard salary of active employees based on payment

deduction Tables in system support facility and variable inputs entered. After

verification further corrections are made, if necessary.

2.3.6 Check List:-

After salary processing is over for all the employees, Personnel Executive checks

the processed data thru salary query screen as per inputs given. In case of

correction, Personnel Executive restores the specific employee details and does

necessary corrections and reprocesses the same.

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2.3.7 Creation of General Ledger and Salary Summary : -

Personnel Executive processes GL and then after prepares the salary summary and

General Ledger Report. Personnel Executive verifies the General Ledger. Previous

months and current months’ salary is compared to ensure correctness. The debit and

credit amounts shown at the end of GL report is checked and ensured that the debit

and credit amounts are same and there is no variance in General report.

2.3.8 Gross Pay and Deduction Calculation: -

In salary summary, Payment and deduction details with Net Salary must be

checked. Also ensure that the Bank Salary, Cash Salary and cheque Payments are

considered while calculating the salary summary.

2.3.9 Generation of Bank Advise:-

Personnel Executive prepares Bank Advise. He then sends this Bank advise to

Accounts Department to release the salary Cheques. The Personnel Executive

checks and verifies the bank advise and salary summary before sending it to the

Accounts Department.

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2.3.10 Generation of Cash Note : -

Personnel Officer prepares Cash Salary Statement. Cash salary details are then sent

to Accounts Department for necessary Cash Provisions. The Cash Salary is

disbursed by the Personnel Department.

After receiving cheques from accounts department, personnel department prepares

Forwarding Letter and deposits cheques, bank List to respective bank to credit the

salary of every employee as per the list provided by the Personnel Officer.

2.3.11 Authorisation of Salary Payment Advise:-

The authorisation of salary payment Advise is done by the Personnel Manager.

2.3.12 Transfer of GL File to F & A Department:-

The General Ledger prepared by the Personnel Executive, is then transferred to

finance and accounts Department.

2.3.13 Uploading General Ledger File in SAP: -

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Personnel Officer generates the SAP compatible General Ledger Report and sends

to accounts Department for necessary Posting in SAP.

2.3.14 Salary Distribution :-

Accounts Department verifies and sends the cheques to the respective Bank of the

Employee, which is then distributed to their respective accounts. This is salary

distribution through Bank. If the employee does not hold any bank account, then his

salary is encashed by Personnel Officer and distributes to them.

SALARY AND WAGES ADMINISTRATION STRUCTURE IN EPCOS

Salary and wages administration structure of the EPCOS India Pvt. Ltd. mainly

depends upon,

1. Category

2. Grades

29

1. CATEGORY:

Category is mainly divided into four types,

Management

Staff

Workmen

Trainees

I. Management:

Management people are the professionals engaged for supervisory work and

commercial executives work of the company. These are basically Officers,

Executives, Deputy Manager, Senior Manager, President and Managing Director.

This Management Category is classified on the basis of Grades, starting from MC1

to MC9.

II. Staff:

The Staff people are the clerical personnel working in commercial functions, stores.

These include Assistance, senior assistant etc. this category is classified into two

Grades:-

OE1

OE2

30

III. Workmen:

Average age of the workmen is 32 years. These are the operating hands on working

on shop floor for manufacturing activities of the company. Workmen are covered

under labour laws. There are254 workers, the qualifications of these workers are ITI

(Industrial Training Institute) and NCTVT (National Council for Technical

Vocational Training). All the engaged workmen are recruited after completing one

year training with the Company.

Workers are members of Nashik Workers Union, registered under the Trade Union

Act 1926 and is representing the permanent monthly rated workmen in Grade S, S0

and S1, in the factory of the company. A settlement dated 26 th October 2007 was in

existence between the parties, i.e. Nashik Workers Union and EPCOS India Pvt.

Ltd.

It is agreed that the total amount of Rs. 3100/- (Rupees Three Thousand One

Hundred only) over the operative period of this settlement as follows:

Period

Rise

Given per

Month

Therein

Basic/

Adhoc

Basic per

Month

Therein

Allowances

per Month

Total per

Month

1.4.2007 to 31.3.2008 Rs.2400/- Rs.1200/- Rs1200/- Rs.2400/-

1.4.2008 to 31.3.2009 Rs.350/- Rs.175/- Rs.175/- Rs.350/-

1.4.2009 to 31.3.2010 Rs.350/- Rs.175/- Rs.175/- Rs.350/-

31

It is agreed between the parties that the quantum of benefits to be distributed over

various heads for a period of three years commencing from 1st April 2007 and

ending on 31st March 2010.

IV. Trainee:

Trainee is the fresher student coming with the technical stroke commercial

background. These people are engaged to gain hands of working experience. The

company has full fledged training scheme for all these people. The company

offers systematic training plan for all these trainees. The Company recruits

different types of trainees like Technical Trainees, Graduate Commercial

Trainees, Management Trainees, Graduate Engineer Trainees, Diploma Engineer

Trainees, etc. The company offers training to these fresh graduates for the

duration of one year. The company offers stipend and learning allowances to all

engaged trainees. To meet with the needs of educational material and facilities, the

company also offers statutory benefits like Provident Fund and ESIC to the

trainees. After all successful training period, the company offers employment

opportunities are depend on all available vacancies.

3. GRADES:

Grades are distributed to each employee on the basis of category.

Management

Staff

Worker

32

Trainees

I. MANAGEMENT :

Grade MC1, MC2 and MC3 - Officers and Executive, Senior Executives.

Grade MC4, MC5 and MC6 - Deputy Manager, Manager to Senior Manager

Grade MC7, MC8 and MC9 - Gm, Senior Gm, President

Grade DR – Managing Director

II. STAFF :

Grade OE1 - Assistant

Grade OE2 – Senior Assistant

III. WORKER :

Grade S – Semiskilled Workers

Grade S0 – Skilled Workers

Grade S1 – Senior operator or Junior Engineer

IV. TRAINEES :

33

Technical Trainees – ITI

Graduate Commercial Trainees – Any Graduates

Management Trainees – MBA, MPM

Graduate Engineers Trainees – BE

Diploma Engineers Trainees – Diploma Engineers

SALARY ALLOWANCES GIVEN TO THE EMPLOYEES

I. MANAGEMENT AND STAFF:

A. PER MONTH:

Basic

House Rent Allowance

Medical Reimbursement

Supplementary allowance

B. ANNUAL:

Leave Travel Allowance (LTA) – Annual Payment as per Grade

Bonus – Only for eligible employees, those having basic + DA less than Rs.

10,000

II. WORKMEN:

34

A. PER MONTH:

Basic

Variable Dearness Allowance (VDA)

House Rent Allowance (HRA)

Conveyance Allowance

News Paper Allowance

Washing Allowance

Education Allowance

Adhoc Basic

B. ANNUAL:

Bonus

Exgratia

III. TRAINEES:

A) ANNUAL:

Stipend

Learning Allowance

FACILITIES PROVIDED TO THE EMPLOYEE:

35

1. Mediclaim facility for spouse and parents (For Staff, Management, Workmen)

2. Get-together – twice in a year

Get together with Family

Get together without family

3. Shoes, Aprons

4. Sweets distribution for each employee on Dasara and Diwali

5. Death relief scheme

6. Superannuation Scheme – Only for Management.

36

STATUTARY REQUIREMENT

No employer is allowed to pay any employee ‘the compensation’, which is less than the

prevailing rate prescribed under the ‘Minimum Wages Act 1948’. Compensation to the

Directors of Public Ltd. Companies should be paid according to the provisions of the

Companies Act 1956. Apart from the legislations, following important legal enactment’s

determines the amount of compensations:

The Minimum Wages Act, 1948

The Employee State Insurance Act, 1948

The Payment of Gratuity Act, 1972

The Employee Provident Fund And Miscellaneous Provisions Act, 1952

The Payment Of Wages Act,1936

The Factories Act, 1948

The Payment Of Bonus Act, 1965

The Factories Act, 1948 stipulates the amount of compensation to be paid in respect of

overtime work.

37

CHAPTER 5: RESEARCH METHODOLOGY

Introduction:

Research is an art of scientific investigation through search of new facts in any branch

of knowledge. It is movement from unknown to known. The study of research

methodology gives the student the necessary training in gathering materials required,

and also training in technique for the collection of data appropriate to particular

problem. It helps in the use of statistics, questionnaire and controlled experimentation

and in recording evidences, sorting it out and interpreting it. Knowledge of research

methodology is helpful in various fields. Research methodology plays key role in

project work. It consists of series of actions or steps necessary to effectively carry out

research and the desired sequencing of these steps.

Basic features of a research process are:

Research always starts with a question or a problem.

Its purpose is to find answers to questions through the application of scientific

method.

It is a systematic and intensive study directed towards a more complete

knowledge of the subject studied.

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Methods of Data Collection

Data collection is an elaborate process in which the researcher makes a planned search

for all relevant data and is the foundation of all researches. It is the raw material with

which a researcher functions. The task of data collection begins after a research

problem has been defined and research plan is chalked out. While deciding about the

method of data collection to be used for the study the researcher should keep in mind

two types of data viz., primary data and secondary data.

Sources of Data

A. Secondary data:

Secondary data is the data already collected by others for purposes other than solution

of the problem at hand. In case of Secondary data the nature of data collection work is

merely that of compilation. Secondary data has several supplementary uses.

1. Internal sources:

Company Records.

Service Reports.

Annual Report.

Company Brochure.

Company Library.

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2. External sources

Web pages of organizations and journals.

Reference Books.

Magazines.

Newspapers.

B. Primary data:

The data that is being collected for the first time or to particularly fulfil the objectives

of the project are known as primary data. In my study work, stratified simple random

sampling was the method of Data Collection.

Data Evaluation

All the data and information collected from the secondary sources and company

officials was filtered & only relevant data is introduced in the report which helped in

achieving objective of the project. This relevant data is finally evaluated to make the

final report and to draw the conclusion

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CHAPTER 6: DATA ANALYSIS

The data used for analysis is secondary data through internal sources.

A survey was carried out within the executives and workers of the company itself to

analyse the data.

Sample sizes of 30 for each were taken to carry out the survey and following

questionnaire were provided for the survey.

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FOR EXECUTIVES

Sr. No.

Questionsasked

Not Satisfied

Not Much Satisfied

To Some Extent Satisfied

Quite Satisfied

Fully Satisfied

1 Whether the executives were satisfied with the salary distribution process adopted by EPCOS?

- - - -

2 Whether the executives were satisfied with the allowances given by EPCOS?

- - - -

3 Whether the executives were satisfied with the facilities given by EPCOS?

- - - -

FOR WORKERS

4 Whether the workers were satisfied with the salary distribution process adopted by EPCOS?

- - - -

5 Whether the workers were satisfied with the allowances given by EPCOS?

- - - -

6 Whether the workers were satisfied with the facilities given by EPCOS?

- - - -

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I. Whether the executives were satisfied with the salary distribution process

adopted in EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 6 15 6 30

Percentage 0 10 20 50 20 100

Interpretation: - Most of the executives were quite satisfied with the salary

distribution process adopted by EPCOS.

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II. Whether the workers were satisfied with the salary distribution process

adopted in EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 15 6 6 30

Percentage 0 10 50 20 20 100

Interpretation: - Most of the workers were satisfied to some extent with the

salary distribution process adopted by EPCOS.

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III. Whether the executives were satisfied with the allowances given by

EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 12 9 6 30

Percentage 0 10 40 30 20 100

Interpretation: - Most of the executives were satisfied to some extent with

the allowances given by EPCOS.

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IV. Whether the workers were satisfied with the allowances given by EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 18 9 0 30

Percentage 0 10 40 30 0 100

Interpretation: - Most of the workers were satisfied to some extent with the

allowances given by EPCOS.

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V. Whether the executives were satisfied with the facilities given by EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 9 18 0 30

Percentage 0 10 30 60 0 100

Interpretation: - Most of the executives were quite satisfied with the

facilities given by EPCOS.

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VI. Whether the workers were satisfied with the facilities given by EPCOS?

a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite

satisfied e) Fully satisfied

Options a b c d e Total

Response 0 3 18 9 0 30

Percentage 0 10 60 30 0 100

Interpretation: - To the some extent workers are satisfied with facilities given by

EPCOS.

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CHAPTER 7: FINDINGS OF STUDY

According to this survey, I could conclude following: -

1. Compensation has major impact coming out of age and experience i.e. more age,

more experience, more CTC. Therefore, more the length if the service, higher the

wages.

2. As the industry goes number of settlements, it reaches to saturation point, then the

increase in the direct wages is minimum.

3. As it matures to saturation point, more benefits come out of facilities and benefits

rather than rise in direct wages.

4. Any entrepreneur business organization is run to earn profits and ultimately to make

money. In a typical manufacturing set up the buyer i.e. customer decides the product

price. A product consists of following cost put on it.

Raw material cost

Labour cost

Overheads

Scheduled profit out of that product

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In the above cost, the end customer has always expectation of lowering it or to

maintain at same level. However, out of above item, raw material cost and labour

cast will have always incremental effect. So to have better profit out of

manufacturing, you need to have control over overheads as well as labour cost.

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CHAPTER 8: SUGGESTIONS & CONCLUSION

SUGGESTIONS: -

Take care of changes in IT rules

Company does compensation restructuring based on change in income tax rules.

According to survey, to maintain the morale of the employees, management should keep

their compensation plan competitive with similar industry.

Transport Facility:-

The company may provide transport facility rather than giving Conveyance allowance.

On giving an informal talk with employee of the company, it was found that the

employees are more interest in having pick- up and drop facility.

Festival Advance:-

Company may provide a festival advance facility which will prove more beneficial for

the employees and which will help them in fulfilling their needs arising during the course

of any festive occasion.

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Salary Survey:-

Company should conduct salary survey to find out and study recent patterns in similar

industry. Based on the finding of such surveys they should restructure the compensation.

Flexible To Suit Added Liabilities:-

As employees grow in the organization, simultaneously his family liabilities also grow.

To accommodate such liabilities like children education, dependent family members’

marriage, and medical expenses this should be considered in deriving compensation

package.

Continuous Training And Rewards:-

In the competitive era, to keep feet one need to continuously upgrade him by way of

knowledge base and develop things which may utilize for organizational development.

Thus, there has to be proper consideration for rewarding such things.

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CONCLUSION: -

From this project report, I could conclude that compensation management plays integral

role in obtaining organizational goals.

1. Any compensation program must have the strong linkage to the profitability at the

production level and business level.

2. The program should ensure that it establishes accountability, ownership and

service orientation at all level.

3. The key to motive employees is compensation package i.e. direct wages are low

but other benefits are more which are based on productivity. They vary according

to productivity.

4. Compensation helps to retain competent employees in the organization.

5. Attractive compensation package also enhance the competitiveness of the

company.

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CHAPTER 9: LIMITATIONS

1. The study was restricted to main branch of EPCOS India Pvt. Ltd.

2. Due to company’s norms and regulations some of the official and financial data

which was important for my project could not be available.

3. Many times the officials were so busy that they could not answer the queries

related to the topic.

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CHAPTER 10: BIBLOGRAPHY

BOOKS:

P. Subba Rao (2007); Essentials of Human Resource Management & Industrial

Relations; Himalaya Publication House; Mumbai; pp 400-405.

C. B. Mamoria, S. V. Gankar (2007) Personnel Management; Himalaya Publishing

House; New Delhi; pp 432-458

INTERNET SITES:

<http://payroll.naukarihub.com/compensation/direct-compensation.html> assessed on

Monday 9th June 2008

<http://payroll.naukarihub.com/compensation/indirect-compensation.html> assessed on

Wednesday 11th June 2008

<http://payroll.naukarihub.com/compensation/importance-of-compensation.html>

assessed on Tuesday 17th June 2008

<http://www.epcos.com/web/generator/web/sections/components/page,locale=en.html>

assessed on Tuesday 29th July 2008

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