MC_Salary Analysis Project_Transformer Sales

7/29/2019 MC_Salary Analysis Project_Transformer Sales

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MANAGERIAL COMPENSATIONSALARY ANALYSIS- TRANSFORMER SALES

BY:

Anshu Sethia

Anurag Anand

Ayushi Anand

M. Kavita

Rohit Mittal

Shweta Shukla

Sugam Malhotra

Vineet Gijre


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Table of Contents

ENTRY LEVEL ................................................................................................................................................. 3

LARSEN & TOUBRO ................................................................................................................................... 3

SALARY COMPONENTS .......................................................................................................................... 3

INCENTIVES AND ALLOWANCES............................................................................................................ 3

SIEMENS .................................................................................................................................................... 4

SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 4

SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED .................................................................................... 5

SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 5

COMPARATIVE ANALYSIS .......................................................................................................................... 5

MANAGER LEVEL ........................................................................................................................................... 7

SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS ................................................................... 7

COMPARATIVE ANALYSIS .......................................................................................................................... 8

GM LEVEL .................................................................................................................................................... 10

SALARY STRUCTURE OF LARSEN & TOUBRO ........................................................................................... 10

RECOMMENDATIONS ................................................................................................................................. 13

BASIC SALARY .......................................................................................................................................... 13

ALLOWANCES .......................................................................................................................................... 14

VARIABLE PAY ......................................................................................................................................... 14

SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE ............................................................................. 14

SALARY STRUCTURE OF A MANAGER ..................................................................................................... 15

SALARY STRUCTURE OF A GENERAL MANAGER ..................................................................................... 16


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ENTRY LEVEL

LARSEN & TOUBRO

SALARY COMPONENTS

Components of the salary Amount (INR) Percent of CTC

Basic 120000

HRA 60000 50

Conveyance 36000 6.07

Special Allowance 180000 30.35

Team Performance Bonus 75000 12.64

Total Base (A) 471000

INCENTIVES AND ALLOWANCES

Components Amount (INR) Percent of CTC

LTA 20,000 3.37

Telephone 6,000 1.01

Medical 36,000 6.07

CCA 60,000 10.11

Total Incentives (B) 1,22,000

Total (A+B) 5,93,000


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SIEMENS

SALARY, ALLOWANCES AND INCENTIVES COMPONENTS

ComponentsAmount

(INR p.m.)

Amount

(INR p.a.)

Percent

of CTC

(A) Basic Salary 11696 140352

Allowances / Benefits

House Rent Allowance 5,848 70176 50Based on Basic

pay

Conveyance Allowance 1,100 13200 3.3

Based on target

Pay

Medical Allowance 1,250 15000 3.75

Special Allowance 6,048 72576 18.14

Leave Travel Allowance (#) 1,333 15996 3.99

(B) Total Allowances/Benefits 15,579 186948

Base Pay (A+B) 27,276 327300 (C) 81.82

Retiral Benefits (Annual)

Company's Contribution to PF (12%

of Basic Salary)16,843 4.21

Company's Gratuity Provision

(4.81% of Basic Salary)6,751 1.68

Total Retiral Benefits 23,594 (D) 5.89

(E) Total Fixed Pay (TFP) (C+D) 3,50,904

(F)Performance Pay @ 100% p.a. on

Base49,096

(G) Target Pay p.a. (E+F)

4,00,000


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SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED

SALARY, ALLOWANCES AND INCENTIVES COMPONENTS

EARNINGS Amount (INR p.m.) Amount (INR p.a.) Percent of CTC

Basic 14,455 1,73,460

HRA 7,227 86,724 49.99

CONVEYANCE ALLOWANCE 800 9,600 2.59

SPECIAL ALLOWANCE 10,456 1,25,472 33.90

Total Rs. 32,938 3,95,256

DEDUCTIONS

PF 1,735 20,820 5.62

CANTEEN 360 4,320 1.16

Total 2,095 25,140

Net Salary Rs. 30,843 3,70,116

COMPARATIVE ANALYSIS

Schneider Electric Infrastructure Limited, L&T and Siemens are in transformer industry but still their

compensation structure varies.

Particulars L &T Siemens Schneider

HRA 50% 50% 50%

Conveyance 6.07% 3.3% 2.6%

Special allowance 30.35% 18.14% 34%

Medical Allowance 6.07% 3.75 N\A

Leave Travel Allowance 3.37% 4% N\A


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From the above table it can be seen as in HRA all the companies have a standard of 50% of Basic, but

variance is there w.r.t. conveyance and special allowance. Where in L&T conveyance is 6% in Schneider

it is 2.6% only.

Siemens pays a special allowance of only 18.14% as compared to other to companies which pay a

significant amount of 30%-34% of total pay.

Schneider as compared to other two companies does not pay Medical allowance and LTA.


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MANAGER LEVEL

SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS

SNo. Heads of PaymentAmount (INR)

L&T Siemens

(A) Basic Salary p.m. 25,000 29,241

Allowances / Benefits p.m.

House Rent Allowance 10,000 14,621

Conveyance Allowance 15,000 1,100Medical Allowance 3,000 1,250

Special Allowance 25,000 20,645

Telephone 1,000 -

CCA 7,500 -

Education Allowance 1,500 -

Loan 8,333.33 -

Leave Travel Allowance (#) 30,000 1,333

(B) Total Allowances / Benefits p.m. 10,1333.33 38,949

(C) Base Pay p.m. (A+B) 12,6333.33 68,190

(D) Base Pay p.a. (C*12) 15,16000 81,8280

Retirals (Annual)

Company's Contribution to PF (12% of Basic Salary) 36,000 42,107

Company's Gratuity Provision (4.81% of Basic Salary) 14,430 16,878

(E) Total Retirals p.a. 50,430 58,985

(F) Total Fixed Pay (TFP) p.a (D+E) 15,66,430 8,77,265

Ecal & Reptation Pay 10,00,000 -

Performance Bonus 1,50,000 1,22,741

(G) Max Variable Component 11,50,000 1,22,741

(H) Target Pay p.a. (F+G) 27,16,430 10,00,006

(I) Target Pay p.m. 2,26,369.16 83,333.83


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COMPARATIVE ANALYSIS

S.No Heads of Payment

As % Of Basic Salary

(per month)

As % Of Target Pay

(per annum)

As % Of Target Pay

(per month)

L&T Siemens L&T Siemens L&T Siemens

(A) Basic Salary p.m. 11.04 35.09

Allowances / Benefits p.m.

House Rent Allowance 40.00 50.00 4.42 17.55

Conveyance Allowance 6.63 1.32

Medical Allowance 1.33 1.50

Special Allowance 11.04 24.77

Telephone 0.44 0.00

CCA 3.31 0.00

Education Allowance 0.66 0.00

Loan 3.68 0.00

Leave Travel Allowance (#) 13.25 1.60

(B)

Total Allowances / Benefits

p.m. 44.76 46.74

(C) Base Pay p.m. (A+B) 55.81 81.83

(D) Base Pay p.a. (C*12) 55.81 81.83

Retirals Annual

(E) Total Retirals p.a. 1.86 5.90

(F)

Total Fixed Pay (TFP) p.a

(D+E) 57.67 87.73

Ecal & Reptation Pay

Performance Bonus

(G) Max Variable Component 42.33 12.27

(H) Target Pay p.a. (F+G)

(I) Target Pay p.m.

The composition of the salary structure of manager sales in transformer industry varies with the

company they are working in. For example, as illustrated above, the HRA varies between 40% and 50%

in Larsen and Tourbo and Siemens. The ratio of variable to fixed pay also varies from company to

company. Larsen and Tourbo emphasize more on variable pay, which is similar to industry pattern for

sales whereas in Siemens the fixed component is more. The max variable component in LNT is around

43% while in Siemens its only 12%.


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GM LEVEL

SALARY STRUCTURE OF LARSEN & TOUBRO

Components of the salary Amount (INR) Percent of CTC

Basic 6,00,000

HRA 2,40,000 40

Conveyance 2,40,000 5.384

Special Allowance 4,00,000 8.973

Performance Bonus 3,00,000 6.729

Ecal & Reptation Pay 2,00,0000 44.86

Total 37,80,000(A)

Incentives and Allowances Amount (INR) Percent of CTC

Uniform Allowance

LTA 50,000 1.122


Medical 1,00,000 2.243

Food Coupons

TOTAL 1,74,000(B) 3.903

Education Allowance 24,000 0.538

CCA 1,80,000 4.038

Loan 3,00,000 6.729

TOTAL 5,04,000(C)

TOTAL SALARY (A+B+C) 44,58,000


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SALARY STRUCTURE MADE BY THE GROUP

ENTRY LEVEL

Components Amount (In Rs. p.a) % of CTC

Basic 1,62,000 36

HRA 81,000 18

Conveyance 96,00 2.13

Spl. Allowance 47,113 10.46

Variable

Team Performance Bonus

54,000 12

40%

organisational

performance

60% Unit

performance

Allowance Kitty

Food Coupons 48,000 10.66

Medical Allowance 15,000 3.33

LTA 12,000 2.66

Telephone 0

CCA 0

Total Incentives 0

0

PF 13,495 2.99

Gratuity 7,792 1.730

0

0

39,321 4,50,000

Special Allowance

Uniform Allowance 40,000

Entertainment Allowance 5,000

Messing Allowance 2,713

Total 47,713


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Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market leader

and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we decided to

keep ourselves at 112th

percentile of the median.

The team performance bonus is a total of 12% of the total pay. This 12% is further divided into 40%

organizational performance and 60% unit performance. This gives us the internal alignment for the role.

Calculate Tax if you can.

MANAGER LEVEL

Heads of Payments Individual Components Amount (In Rs. p.a) % of CTC

Basic Salary p.m. 400000 25.00

Allowances / Benefits p.m. 0.00

House Rent Allowance 200000 12.50

Conveyance Allowance 9600 0.60

Medical Allowance 15000 0.94

Special Allowance 78160 4.89

Telephone 25000 1.56Food Coupons 48000 3.00

Education Allowance 25000 1.56

Loan 200000 12.50

Leave Travel Allowance (#) 12000 0.75

Total Allowances / Benefits p.a. 612760 38.30

Base Pay p.a. 1012760 63.30

Retirals Annual

Company's Contribution to PF

(12% of Basic Salary) 48000 3.00


(4.81% of Basic Salary) 19240 1.20

Total Retirals p.a. 67240 4.20Total Fixed Pay (TFP) p.a 1080000 67.50

Performance Bonus 520000 32.50

Comment [V1]: Something on these


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Max Variable Component 520000

Target Pay p.a. 1600000

Special Allowance

Uniform Allowance 40000

Fuel 30000

Entertainment

Allowance 5000

Messing Allowance 3160

Total 78160

RECOMMENDATIONS

With the analysis of salary structures, we have come up with the salary structure for an entry

level employee, manager and general manager for a company involved in transformer sales.

The components across the levels are divided into following buckets

Basic salary Allowance kitty Special allowance Variable component Retiral Benefits

The components would vary across the levels.

We have adopted a Flexible compensation plan (Cafeteria plan) for the compensation

structure across levels. This would allow the employee to design his allowance according to his

needs, which would lead to employee satisfaction.

BASIC SALARY

Every employee would be paid a fixed amount of basic salary depending on the level he falls.

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ALLOWANCES

Every employee will be given fixed amounts for

Allowance kitty Special allowance List of allowances for allowance kitty & special allowance

The employee will have the discretion to opt for allowances of his choice in the allowance

kitty and special allowance. Employee may also restructure the amoun t between the

allowances in each bucket. The components in each of the bucket would vary across every level.

VARIABLE PAY

The variable pay across the levels will be disbursed based on the following to factors:

Unit Performance Company performance

Weight age for the Unit performance would be 60 % while that of the companys performance

would be 40 %. This was a common trend observed across organizations involved in transformer

business.

SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE

COMPONENTS Amount (INR) % OF CTC

Basic 1,62,000 36.00

Allowance Kitty

HRA 81,000 18.00

Conveyance 9,600 2.13



LTA 12,000 2.67

Total Allowance kitty 1,65,600 36.8

Special Allowance Special Allowance 47,113 10.47Total Fixed Salary 3,74,713 83.27

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Variable Team Performance Bonus 54,000 12.00

Retiral BenefitsPF 13,495 3.00

Gratuity 7,792 1.73

CTC 4,50,000

Special Allowance Amount (INR)




Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market

leader and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we

decided to keep ourselves at 112th percentile of the median.

The team performance bonus is a total of 12% of the total pay. This 12% is further divided into

40% organizational performance and 60% unit performance. This gives us the internal alignment

for the role.

SALARY STRUCTURE OF A MANAGER

COMPONENTS INR % OF NET SALARY

Basic Salary p.m. 4,00,000 25.00

Allowance Kitty

House Rent Allowance 2,00,000 12.50

Conveyance Allowance 9,600 0.60





Loan 2,00,000 12.50

Leave Travel Allowance (#) 12,000 0.75

Total Allowance Kitty 5,34,600 33.41

Special Allowance Special Allowance 78,160 4.89

FIXED SALARY 10,12,760 63.30

Variable Salary Performance Bonus 5,20,000 32.50

Comment [V2]: Something on these


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Retirals Annual

Company's Contribution to PF

(12% of Basic Salary) 48,000 3.00


(4.81% of Basic Salary)19,240 1.20

Total Retirals p.a. 67,240 4.20

CTC 16,00,000



Fuel 30,000



SALARY STRUCTURE OF A GENERAL MANAGER

Heads of Payments Individual Components

Amount (In Rs.

p.a)

% of

CTC

Basic Salary 4,80,000 15

Allowances Kitty

House Rent Allowance 2,40,000 7.5

Conveyance Allowance 9,600 0.3





Loan 4,00,000 12.5

Leave Travel Allowance (#) 12,000 0.38

Total Allowances Kitty 149600 24.68

Special Allowance Special Allowance 4,09,712 12.8

Retirals Annual

0

Company's Contribution

to PF

57,600 1.8(12% of Basic Salary)

Company's Gratuity

Provision23,088 0.72(4.81% of Basic Salary)

Total Retirals p.a. 80,688 2.52

Performance Bonus 14,40,000 45


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CTC 32,00,000



Fuel 50,000


International travel allowance 2,00,000

Driver Allowance 1,14,712

Total 4,09,712

Documents

MC_Salary Analysis Project_Transformer Sales