Compensation Package of TNT Express Bangladesh

AMERICAN INTERNATIONAL UNIVERSITY BANGLADESHFaculty of Business Administration

Assignment Cover Sheet

Students must complete all details except the faculty use part.

Declaration and Statement of Authorship:1. I/we hold a copy of this assignment, which can be produced if the original is lost/ damaged.2. This assignment is my/our original work and no part of it has been copied from any other student’s work

or from any other source except where due acknowledgement is made.3. No part of this assignment has been written for me/us by any other person except where such

collaboration has been authorized by the lecturer/teacher concerned and is clearly acknowledged in the assignment.

4. I/we have not previously submitted or currently submitting this work for any other course/unit.5. This work may be reproduced, communicated, compared and archived for the purpose of detecting

plagiarism.6. I/we give permission for a copy of my/our marked work to be retained by the School for review and

comparison, including review by external examiners.

I/we understand that7. Plagiarism is the presentation of the work, idea or creation of another person as though it is your own. It

is a form of cheating and is a very serious academic offence that may lead to expulsion from the University. Plagiarized material can be drawn from, and presented in, written, graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited.

8. Enabling plagiarism is the act of assisting or allowing another person to copy your work.

Assignment Title: Compensation Package of TNT Express BangladeshAssignment Number: 01 Due Date: 27.06.11 Semester: Summer 2011

Subject Code: Subject Name: Human Resource Management Section: A

Course Instructor: Ahmed, Neaj Degree Program: M.B.A

Group Name (if applicable):

Number SignatureAdnan, Md. Fahim 10-93954-2 27.06.11

For faculty use only

Faculty comments___________________________________________________________________________

___________________________________________________________________________________________

___________________________________________________________________________________________

Total Marks: _______ Marks Obtained: _______

Compensation package of TNT Express

Acknowledgement

During the completion of the course Marketing Management, every student in sec: A has to make several

groups to submit a term paper related to the course outline. Our course instructor Hoq, Md. Ziaul permits

us to write a report on “Marketing Plan” related to our course lecture.

Our sincere thanks go to our course instructor Hoq, Md. Ziaul who showed immense interest and

enthusiasm to help us analyze and bring out an outcome of this report. Without his help we could not do

the project properly.

Table of contentChapter Page no.Executive Summary i1.0 TNT Express-at a glance 12.0 Organization chart and number of employees 23.0 HRM functions practiced in TNT Express 34.0 Internal Alignment 65.0 Compensation Package and other benefits: 106.0 Organizational Budget of Administration 137.0 Observation 148.0 Conclusion 159.0 Reference 16

E xecutive Summary

TNT Express is the leading provider of express delivery services based in the Netherlands. They provide

on-demand time-definite and day-certain door to door delivery services for documents, parcels and

freight. TNT Express Bangladesh, a subsidiary of the TNT Worldwide Express is the third air express

industry in Bangladesh. Its main business consisted of carrying and delivering time sensitive documents

and parcels worldwide to and from Bangladesh. TNT Express can be termed as the runner up industry as

the market is already saturated by DHL and FedEx. So it follows a low cost strategy to increase its market

share. TNT Express Bangladesh has 18% market share in the air express industry in Bangladesh. DHL

Bangladesh, FedEx and other competitors are UPS, Aramex and Sky Net. Besides, it has one local

competitor which is known as ABX. TNT Express is conducting a good number of marketing strategies.

They are combined with World Food Program. TNT express is applying Low cost strategy, which is one of

the most significant Key success factors. TNT’s market size and growth potential is increasing day by

day. Over the last decade especially the garments sector has been contributing to Bangladesh’s

economic growth. TNT increased garments exports by 10-15% annually. TNT Express has quality

manpower to deliver personalized service to its clients and thereby to earn good profit and to earn its

goodwill. TNT Express' IT systems are fully geared to support the company's business goals. TNT

Express has already abandoned traditional business methods and shift to e-business technologies and

use of Internet in their business. We recommend TNT Express to follow Best Cost Provider Strategy

which is basically is a combination of both the low cost and differentiation strategy. It has the skills and

capabilities to provide attractive performance and features at a lower cost than rivals. So if they add some

value by providing extra services to customers it will definitely able to attract more customers.

1.0 TNT Express-at a glance

TNT Express is the leading provider of business to business express delivery services based in the

Netherlands. They provide on-demand time-definite and day-certain door to door delivery services for

documents, parcels and freight. Established in 1946 TNT Express is now a global integrator and offers a

range of unique international express delivery services between more than 200 countries. Market leading

national express delivery services is also provided in many of the major countries in Europe, Asia and

Australia. They employ more than 40,000 people and have a fleet of 42 jet freighter aircraft together with

19,000 road vehicles organized by a worldwide network of nearly 857 company owned depots. Our

extensive resources also include numerous state of the art sortation centers and all these efficient

facilities enable TNT Express to provide the fastest and most reliable door to door transit times in the

industry.

Mission

Exceed customers' expectations in the transfer of their goods and documents around the world Deliver value to our customers by providing the most reliable and efficient solutions in distribution

and logistics Lead the industry by instilling pride in our people, creating value for our stakeholders and sharing

responsibility for our world

Vision

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

Standards

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

2.0 Organization chart and number of employees:

Country Manager (01)

Sales Manager (01)

Sales Territory Manager (50)

Sales Co-ordinator

(30)

Indoor Sales Executive (30)

Finance and Admin

Manager (01)

Finance Executive

(05)Cashier (05)

Asst. manager

Admin (05)

Asst. Manager Credit Control

(05)

Credit Control

Executive (10)

Billing Executive

(05)

IT and operation Manager (01)

Operation Supervisor

(15)

POD(12) Drier (12)

HR Manager

(01)

HR Executive

(10)

Customer Care

Manager (01)

Customer Care

Executive (30)

3.0 HRM functions practiced in TNT Express

The Human Resources Management (HRM) function includes a variety of activities. The

activities involved and personnel policies. Usually small businesses have to carry out

these activities themselves because whether to use independent contractors or hire

employees to fill these needs, recruiting and training the best employees, ensuring they

are high performers, dealing with performance issues, and ensuring your personnel and

management practices conform to various regulations. Activities also include managing

your approach to employee benefits and compensation; employee records they can't yet

afford part or full-time help. However, they should always ensure that employees have

and are aware of personnel policies which conform to current regulations. These

policies are often in the form of employee manuals, which all employees have.

TNT Express, one of the leading courier service providers in Bangladesh has successfully operated for

last several years. Previously they did not have any HR department and the HR activities were performed

by Country Manager himself. Later on they realized the importance of HR department and in 2007 they

appointed a HR manager. The HR activities regarding compensation management are as follows:-

Compensation Planning:

To know about the compensation planning first of all we need to know why compensation planning is so

important for the organization. The reasons are as follows-

Recruit and retain qualified employees

Increase or maintain morale / satisfaction

Reward and encourage peak performance

Achieve internal and external equity,

Reduce turnover and encourage company loyalty

The HR manager does compensation planning through different steps

Internal equity ensures that more difficult jobs are paid more.

External equity ensures that jobs are fairly compensated in comparison to similar jobs in the

labor market.

Individual equity ensures equal pay for equal work, that is, each individual's pay is fair in

comparison to that of another person doing the same or a similar job.

In this case TNT Express do compensation planning based on both the internal and external equity.

Under the internal equity they ensure performance and motivation. Similarly they ensure fewer turnovers

by balancing their pay structure with the competitors. If they do not balance their compensation package

with the competitors, employees may quit the job. They are competitors are DHL, FedEx, UPS and

Homebound. In case of managerial post their compensation package is little bit complex because some

are paying higher whereas some are paying less. What should be their salary depended on Country

Manager. And Country Manager selects their salary based on the experience and other individual skill.

Only Country Manager’s compensation management is done by the parent company Netherlands

because he is getting his salary in dollar. Rest of the Employees is getting salary in terms of TAKA.

Sometimes the HR departments do survey to know the satisfaction level of the employees in terms of

compensation. If they find any reasonable dissatisfaction they suggest the CM to increase salary.

Training:

Training, another most important task of a HR. Employees needs training in order to develop their

knowledge and skill. TNT express arranges lots of training programs for their employees. First the HR

departments do the training need analysis, if they find any need of training of a particular employees after

conducting the training need analysis, they arranges training. And all these training part is organized by

HR department. Sometimes they send the employees overseas like UAE, Netherlands and Singapore for

developing their skill.

Resolving Conflicts:

A conflict is very common in any organization. Conflict may occur within or between the organizations. If

conflict occurs among the employees of a particular organization we call it internal conflict. On the other

hand if conflict occurs among the organizations we call it external conflict. Resolving any type of conflict is

the task of HR department. If they get any complain from any employees, first they judge it then take

immediate action.

Motivation:

Another important task of the HR department is motivating employee. Without motivation productivity

cannon maximizes. So in order to increase the employee’s contribution, a HR must motivate employee.

To motivate employees they use several techniques such as creating honorary post that means changing

the designation without changing salary structure, increase salary, give non financial benefits, give

vacation for free with family, giving some authority to make decision etc.

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

task successfully.

4.0 Internal Alignment

Internal alignment is an important policy in the strategic perspective of compensation.

The necessity for organizations to control labor costs, while at the same time increasing productivity and

enhancing quality and customer service has never been more urgent. The present competitive

environment requires new strategies toward employee compensation, new management and employee

practices, and new methods of educating employees to the shifting competitive environment that has

brought about the necessity for these changes. At the same time that companies are examining the

method and basis for compensating employees, there has been a growth in the number of companies

seeking to develop high performance, high commitment work systems. These systems, based upon

expanded roles for employees, require that employees accept more responsibility and accountability.

Other organizational initiatives such as flatter organization structure and more fluid organization design

have driven sweeping changes. Often it has been difficult for compensation systems to keep pace and

support these changes. Additionally, employee compensation is a critical component to financial success.

Careful attention must be placed on the development of reward systems that reflect the financial

capability of the company as well as reinforce the new directions associated with contemporary

organizational strategy.

Compensation administration includes a collection of activities required to sustain the effectiveness of a

compensation strategy. Thus issues ranging from labor market surveying to performance management to

skill certification and peer review come under this umbrella. Involving stakeholders in compensation

administration can reinforce the values and beliefs underlying the compensation philosophy and strategy.

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

1.Employees inputs and Preferences

It includes perceptions of external pay equity, perceptions of internal pay equity, pay delivery beliefs in

forms(cash, gain sharing, benefits) or method (individual, small group, large group), risk tolerance and

trust in management.

2.Business and Operating Inputs

It includes operations strategy, sales development strategy, percentage of compensation costs to total

product/service costs, percentage of compensation costs to controllable

product/service cost, existing markets/products, potential markets/products, anticipated volume,

reinforce/enhance work design, maintain cultural change processes and other operating issues

3.Prevailing Market Practices and Trends

It is concerned with the availability and quality of work force, industry practices, retention of work force,

retention of key contributors, salary levels and movement, salary delivery charges

4. Compensation Philosophy and Objectives

It is concerned with basically two things. These are:-

How much emphasis should be placed on rewards to drive organization.

What issues are to be driven by compensation as opposed to management

practices.

It also includes the targeted position in the market, targeted position in product market, relationship within

total company, relationship to selection and retention, portion of pay guaranteed and at risk, and

percentage of workforce bonus eligible

5. Base Pay Delivery

It includes the method of delivery (Job-based vs. individual-based), number of level, structure of levels,

pricing strategies, adjustment method, weighting of individual performance

6.Organization Performance or Variable Pay

Role in total compensation strategy structure measures target, tolerance for pay at risk, risk - reward

ratios, use of other monetary reward, use of non-monetary rewards, individual performance recognition

7. Fringe Benefits

It is usually determined at corporate level; limited scope at other levels, they tie to business and human

resource objectives, coverage, cost, communications (Purpose - Coverage - Value)

8. Compensation Administration

Stakeholder role in compensation administration, performance management & evaluation, overtime policy

(exempt & non-exempt), shift differentials, attendance policy, role of seniority

Compensation decisions should be fully integrated into the organization’s business and operations

strategy, through its compensation philosophy. The design of compensation systems should be

subsequent to, and not precede, this key analysis and decision point. For the high performance firm, an

appropriate level of employee involvement can further

reinforce the organization’s general beliefs and values.

We all know that there are two ways of determining internal alignment in an organization which are:-

1. Hierarchy based

2. Level based

Hierarchy Based:

Serial No. Position Pay level

1 Country Manager Tk.2,41,500

2 Manager Tk.45,000

3 Sales Territory Manager Tk.15,000

4 Sales Coordinator Tk.11,000

5 Indoor Sales Executives Tk.11,000

6 Assistant Manager Credit Control Tk.20,000

7 Assistant Manager Administration Tk.20,000

8 Billing Executive Tk.15,000

9 Cashier Tk.15,000

10 Finance Executive Tk.15,000

11 Operation Supervisor Tk.12,000

12 POD Tk.6,000

13 Driver Tk.6,000

In the above list, we can see that the difference in pay level between the country manager and the other

managers are too large. Again, the difference between the managers and sales territory manager is also

large. The gap between the country manager and the manager might be reduced by increasing the salary

of the managers or by decreasing the salary of the country manager. But in this case as the country

manager is a foreigner, we want to increase the salary of the managers.

Level Based:

Under the level based internal alignment we consider equality of compensation package between the

same level employees. Here in TNT express there is problem in Level based internal alignment in

managerial post. Though the managers are in same level but they are paying differently. Here if we see

their compensation package we will find that 45000 + (depend on the CM), this indicate that how the

alignment is imbalanced in these post. Here we find that sales and finance manager are getting higher

that other managers like HR, Customer care and IT. When we asked for reason they told us that it’s

because of job description, experience and special skill. But we found one thing that when they hire

employee from competitor organization they pay high. And when they hire new employees they pay less.

So there is an imbalance situation in level based internal alignment.

5.0 Compensation Package and other benefits:

Country Manager:

Tk. 241,500/ $3500 Basic Salary

Other benefits: House rent Tk 30,000; Medical Facilities (with family), Phone Bill Tk10,000; Car

facility for 24 hours (personal Use)

Bonus – 2 (100% of Basic)

Manager (4):

Tk 45,000 Basic salary + (additional amount that CM will know)

Other benefits: Medical facilities; Phone Bill Tk3,500; Car facility for Pick up and Drop;

Bonus – 2 (100% of Basic)

Sales Territory Manager (6):

TK 15,000 Basic Salary

Other benefits: Phone Bill TK 2000; Car pick and drop and sales visit;

Bonus – 2

Sales Coordinator:


Other benefits: Phone Bill TK 1500; Car for pick up and Drop;

Bonus – 2

Indoor Sales Executive (4):


Other benefits: Phone Bill TK 1500; Car for pick up and Drop;

Bonus – 2

Assistant Manager Credit Control:


Other benefits: Phone Bill TK 2000; Car for Pick up and Drop;

Bonus – 2

Assistant Manager Administration:



Bonus – 2

Billing Executive:


Other benefits: Phone Bill TK 1500; Car for Pick up and Drop

Bonus - 2

Cashier:



Bonus - 2

Finance Executive:



Bonus – 2

Operation Supervisor:


Other benefits: Phone Bill TK 1500;

Bonus – 2

POD (Pick up and Delevery):


Other benefits: Phone Bill TK 500; Lunch; overtime

Bonus – 2

Driver:

TK 6,000 Basic Salary, overtime

Other benefits: Lunch

Bonus – 2

6.0 Organizational Budget of Administration:

Since TNT is a service providing organizaion, it is very important to have very effective and efficient

workforce. In doing so, The company is giving a handsome amount to its employess in order to

motivate them to work more effectively so that the customers can have maximum satisfaction. TNT is

doing such kind of business in which it has to make sure that the customers are satisfied with its

service. Therefore, The employees of the company have to work very hard and the effort of the

employees is the biggest concern for them. Hence, it is certain that TNT has to provide good

compensation package to its employees to run its operation successfully. The company has an

estimated Budget of 40% of the Net Operating Expense for Compensation Package. Generally,

service organizations provide huge amount of salary benefits for the employees to run the show

properly because Human Resource is the biggest asset for the service organizations.

7.0 Observation

HR department is comperaively new in TNT Express Bangladesh. Previousely there was no HR

department and the country manager himself lookafter all HR activities. But later in 2007 they create HR

department because the company was growing and they needed separate HR department. The

department is lead by the HR manager and he has 10 HR executives. We found that the department is

small compare to other departments and have very less work to do. They practices HRM in a small scale.

We know many HR functions but TNT Express Bangladesh practices very few of them.

Recruiting

Selection

Training

Motivating

Conflict resolving

Compensation planning

8.0 Conclusion:

TNT Express is a service providing organization that has expanded worlwide. TNT Bangladesh is one of

the branch of the mother company,which is concentrating on customer satisfaction. Thus, the company

requires to provide maximum effort to its compensation package and other benefits.

9.0 Reference

http://www.tnt.com

Direct Interview- A.K.M. Jahangir Alam

Sales Manager

TNT Express Bangladesh

Documents

Compensation Package of TNT Express Bangladesh