1. HRM-370 Compensation System of DBL & UCBL 05 December, 2010 Mr. Monzoor Morshed Lecturer School of Business Independent University, Bangladesh Subject: Letter of transmittal Sir, It is great pleasure to submit a report on Compensation System of an Organization Operating in Bangladesh" as the fulfillment of the partial requirement of BBA program. This report is done to find how compensation system operating in Bangladesh. We are working on bank we find how employee get compensation. This report has helped me to find those employees are happy with their compensation. We sincerely hope that you will enjoy reading this report as much as we enjoyed it writing. If you need any further clarification interpreting our analysis please feel free to ask. Sincerely Md. Ahsanul Hoque Ms. Nargis Saba Rani Ms. Rounak Ashrafi Ms. Alimoon Ara Mr. Md.Fazle Sobhan Chowdhury Ms. Jannatul Ferdous Ms. Shameema Akter Sathi ID#0820023 ID#0710210 ID#0820533 ID#0720302 ID#0620326 ID#0820519 ID#0820693 ____________________ ____________________ ____________________ ____________________ ____________________ ____________________ ____________________ 1 2. HRM-370 Compensation System of DBL & UCBL Acknowledgement We would like to thank Mr. Monzoor Morshed our faculty who has supported us, assisted us and guided us through the preparation of this report. He has been patient and understanding of all our queries and problems, and we are very grateful to him for his help. We would also like to thank all the employees of Dhaka Bank Limited and United Commercial Bank Ltd. They have been very helpful throughout the preparation of the report & responding to all our queries. 2 3. HRM-370 Compensation System of DBL & UCBL Executive Summary Since Dhaka Bank Limited and United Commercial Bank Ltd are the leading Banks in the bank business and are efficiently broadening their horizon, we thought it would be interesting to know about their practices and their strategies which they apply in their day to day activities in controlling the compensation system and human resource and also planning policies to reach the goals in time. Dhaka Bank Limited and United Commercial Bank Ltd follows stable compensation system, for this reason Dhaka Bank Limited and United Commercial Bank Ltd goes for long term planning, also the strategies Dhaka Bank Limited and United Commercial Bank Ltd followed in their Human Resource Planning is flexibility. We know in compensation system Human Resource planning organization go for reactive HRP. As we know Dhaka Bank Limited and United Commercial Bank Ltd is in now Growth stages. To estimate future demand and supply of employees Dhaka Bank Limited and United Commercial Bank Ltd use Managerial Judgment. To forecasting the internal supply of employees they used their own software which is HRIS. For external supply how employees they take fresh University Graduates. Banks maintains 100% privacy to their employees personal information. Dhaka Bank Limited and United Commercial Bank Ltd is now growth stage Company. So, their business has expended dramatically. For that reasons they never face the situation like employees surplus. Dhaka Bank Limited and United Commercial Bank Ltd sometimes faces labor shortage problem. In that situation the company go for hire temporary employees and employees are given overtimes. In the case of compensation system they follow all the process like at first they make a plan then develop a strategy after that they go for searching and screening at last the evaluate the whole compensation system process. For this analysis we, focused on the compensation system practiced by two private banks of Bangladesh. 3 4. HRM-370 Compensation System of DBL & UCBL Table of Contents 1. INTRODUCTION ................................................................... ...................................................................... 6 1.1 Background of the Study .......................................................................... .......................................... 6 1.2 Objectives of the Study .......................................................................... ............................................. 6 1.2.1 to discover the Practice of Compensation System in the selected organization ........................................ 6 1.2.2 to relate classroom study with that of real life situation ...................................................................... .... 7 1.3 Scope of the Study .......................................................................... ..................................................... 7 1.4 Methodology .................................................................... ................................................................... 8 1.5 Limitations .................................................................... ...................................................................... 9 2. Brief Discussion ..................................................................... ................................................................ 10 2.1 AN OVERVIEW OF BANKING SECTOR IN BANGLADESH .................................................... 11 2.1.1 Bangladesh Bank............................................................................ ..................................................... 11 2.1.2 Specialized Banks ................................................................................ ............................................... 11 2.1.3 Nationalized Banks .......................................................................... ................................................... 12 2.1.4 Private Commercial Banks .......................................................................... ........................................ 13 2.1.5 Foreign Commercial Banks .......................................................................... ....................................... 13 3. THE SEGMENTS OF PAY COMPONENTS ..................................................................... ......................... 14 3.1 MONTHLY GUARANTEED CASH ........................................................................... ........................... 14 3.2 ANNUAL GUARANTEED CASH ........................................................................... ............................... 15 3.3 ANNUAL VARIABLE CASH ........................................................................... ...................................... 15 3.4 TERMINAL BENEFITS ....................................................................... .................................................. 16 3.5 MONTHLY COST OF BENEFITS........................................................................ ................................. 16 3.6 Fringe Benefits ....................................................................... .................................................................. 18 RETIREMENT RELATED ........................................................................ ......................................................... 18 INSURANCE RELATED ........................................................................ ........................................................... 18 PAYMENT FOR TIME NOT WORKED ......................................................................... ................................... 18 OTHERS.......................................................................... ................................................................................ ... 18 4. Dhaka Bank 5. Limited ........................................................................ ....................................................... 19 4.1 Background of Dhaka Bank Limited (DBL) .......................................................................... ................. 19 4.2 Mission & Vision ......................................................................... ............................................................. 19 4.2.1 Goals of the Bank ........................................................................... ..................................................... 20 4.2.2 Values.......................................................................... ....................................................................... 20 4.3 Management Committee ...................................................................... .................................................... 20 4.4 Total Compensation and Benefits Package of DBL............................................................................. .... 23 4.4.1 Objectives ..................................................................... ...................................................................... 23 4.4.2 Salary Structure....................................................................... ............................................................ 23 4.4.3 Revision of Pay Elements ....................................................................... ............................................. 23 4.4.4 Employee Compensation Records ........................................................................ ................................ 23 4.5 Basic Employee Benefits for Permanent Employees ...................................................................... ......... 24 4.5.1 Provident Fund ........................................................................... ......................................................... 24 4.5.2 Group Term Life Insurance ...................................................................... ........................................... 24 4.6 Bonuses......................................................................... ............................................................................ 25 4.7 Meal Facilities ..................................................................... ..................................................................... 25 4.7.1 Branches ....................................................................... ...................................................................... 25 4.7.2 Head Office:......................................................................... ............................................................... 26 Executives: .................................................................... ................................................................................ ..... 26 4.8 Accommodation .................................................................. ..................................................................... 26 4.9 Utilities Allowances ..................................................................... ............................................................. 26 Executives between grades J to M4:............................................................................. ..................................... 26 Executives of grades M5 and above: ......................................................................... ........................................ 26 4.10 Medical Benefits ....................................................................... .............................................................. 27 4.10.1 Medical Benefits for the Executive Staff .......................................................................... .................. 27 4.11 Transportation Facilities and Car Purchase Scheme ......................................................................... 6. ... 28 4.11.1 Transportation Facilities for the Executives ..................................................................... ................... 28 DBL Branches: ...................................................................... ............................................................................ 28 Head Office:......................................................................... .............................................................................. 28 Top Executives...................................................................... ............................................................................. 32 4.12 Leave Entitlements.................................................................... ............................................................. 32 4 7. HRM-370 Compensation System of DBL & UCBL 4.12.1 Basic Leave Types .......................................................................... .................................................. 32 4.12.2 Definitions of Basic Leave Entitlements.................................................................... ......................... 33 4.13 Other Leave Options ........................................................................ ...................................................... 34 4.13.1 Maternity Leave ................................................................................ ................................................ 35 4.13.2 Study Leave .......................................................................... ............................................................ 35 4.13.3 Hajj Leave .......................................................................... ............................................................... 35 4.13.4 Special Leave .......................................................................... .......................................................... 35 4.13.5 Leave Encashment...................................................................... ....................................................... 36 4.13.6 Maintenance of Leave Records ........................................................................ .................................. 36 4.14 Financial Assistance Schemes ........................................................................ ........................................ 36 4.14.1 Objectives ..................................................................... .................................................................... 36 4.14.2 Priorities for Loan against Provident Fund (PF) or Salary Advance .................................................... 36 4.14.3 Loan against Provident Fund (PF) or Salary Advance Eligibility and Limits ....................................... 37 4.14.4 Repayment of Loan or Salary Advance ........................................................................ ...................... 38 4.14.5 Procedures to Apply and Processing of a Loan or Salary Advance Request ......................................... 39 5. United Commercial Bank Ltd............................................................................. ..................................... 40 5.1 Background of United Commercial Bank Ltd (UCBL) ......................................................................... . 40 5.2 Mission Statement ...................................................................... .............................................................. 40 5.3 Management...................................................................... ....................................................................... 40 SENIOR MANAGEMENT ..................................................................... ...................................................... 40 5.4 Total Compensation and Benefits Package of UCBL ........................................................................... ... 42 5.4.1 Objectives ..................................................................... ...................................................................... 42 5.4.2 Salary Structure....................................................................... ............................................................ 42 5.4.3 Revision of Pay Elements ....................................................................... ............................................. 42 5.4.4 Employee Compensation Records ........................................................................ ................................ 42 5.5 Basic Employee Benefits for Permanent 8. Employees ...................................................................... ......... 43 5.5.1 Provident Fund............................................................................ ........................................................ 43 5.5.2 Bonuses ........................................................................ ...................................................................... 43 5.5.3 Accommodation .................................................................. ................................................................ 43 5.6 Utilities Allowances ..................................................................... ............................................................. 44 5.7 Mobile Telephone ...................................................................... ............................................................... 44 5.8 Medical Benefits........................................................................ ............................................................... 45 5.9 Car Purchase Scheme ......................................................................... ..................................................... 45 5.10 Leave Entitlements.................................................................... ............................................................. 45 5.10.1 Basic Leave Types .......................................................................... .................................................. 45 5.10.2 Definitions of Basic Leave Entitlements.................................................................... ......................... 46 6. CONCLUSION ..................................................................... ...................................................................... 48 7. Appendix ....................................................................... .............................................................................. 49 8. REFERENCES ..................................................................... ....................................................................... 53 5 9. HRM-370 Compensation System of DBL & UCBL 1. 1.1 INTRODUCTION Background of the Study During the late nineties the banking sector of Bangladesh saw a sudden shift of expansion as the government approved operation of a good number of new Private and Foreign Commercial Banks. This expansion irresistibly brought in greater benefits to the consumers because of the highly competitive market condition. The period has seen emergence of some dynamic and high-tech banking services of which our consumers were deprived of. This new era of banking services include: One Stop Utility Service Automated Teller Machine Phone Banking Credit Card On- line Banking Syndicated loan But these advancements in banking technology didnt solely benefit the customers. It brought greater challenge in parts of the employees or bankers who were designated with high profile jobs with tougher goals to meet, a dynamic career with attractive remuneration, greater benefits and stunning status. This report will take an attempt to study the career private commercial banks of our country through the evaluation of the employee maintenance functions as practiced in this sector. 1.2 Objectives of the Study 1.2.1 to discover the Practice of Compensation System in the selected organization In contrast to theories, many business firms of Bangladesh have the least or even no exposure to one of the crucial areas of business - Human Resource Management. But since every organization is made up of people, compensating them, acquiring their services, developing their skills, motivating them to high levels of performance, and ensuring that they continue to 6 10. HRM-370 Compensation System of DBL & UCBL maintain their commitment to the organization are essential to achieving organizational objectives. We will find out how management in the selected organizations is dealing with compensation system mainly. 1.2.2 to relate classroom study with that of real life situation Real life business is far more different from our classroom studies. Sometimes the books we read are the oversimplification of facts and most of the time actual practices dont match with the theories written in books. So our objective is to relate our classroom studies with real life scenario and get a clear view of what actually is happening in the area of Human Resource Management of the selected banks. 1.3 Scope of the Study Although we hear people saying that they do not care for money but they do care for the feeling of belongingness to their organization it goes without saying that money is a major motivator. It is through compensation by which a relatively effective and satisfied working force is sustained. The maintenance of employee co-operation is largely dependent upon the answers of following questions: Whether the companys compensation rates are better than those of the segment market? What indirect plans of compensation are commonly used in the organization? What specific plans are available from which to choose? What benefits, incentives and rewards are provided? Whether these policies are transparent to the employees and practiced without any distortion? We have basically judged the organizations on the basis of the above criteria. The report will first focus on the overall banking sector of our country trying to describe, note and list the banks currently operating in our country. As it is beyond our scope to focus on each and every bank, we have chosen two PCBs (Private Commercial Banks) - one from the first generation and the other from the second generation. Because of the request of the authority for anonymity we will describe the two banks as Dhaka Bank Limited and United Commercial Bank Ltd. respectively. 7 11. HRM-370 Compensation System of DBL & UCBL In this report, we have covered the different aspects of human resource maintenance functions. Since the reward system of an organization is the primary maintenance tool in human resource management area, we have specifically focused our discussion on this area. Definitely there is a difference between the maintenance functions of Foreign and Local commercial banks. We will try to find out if there is any such difference and if any, what are these differences. The reward system includes both intrinsic and extrinsic rewards. But intrinsic rewards are completely qualitative and very hard to measure. It requires a lot of research work. So we have excluded intrinsic rewards from our discussion. Our discussion will be about the extrinsic rewards both monetary and non-monetary. We will discuss about the base salary, incentives and benefits under the monetary rewards. We will also try to find out what non-monetary rewards are given in the selected organizations. The report will thus gather information, classify them and eventually lead to the comparison between the two strongest banking sectors of Bangladesh. 1.4 Methodology In order to supplement our theoretical knowledge in Human Resource Management with practical exposure, we contacted different organizations and collected data regarding real life scenario. The content of this report is thought to be quite confidential with the organizations. So, we had to spend a long time to convince the human resource managers of our selected organizations to help us. We had to convince them about the fact that this report is totally for internal purpose to supplement our theoretical knowledge. However, the method of collecting information was basically an interview type. Since the data regarding salaries are considered confidential we did not have access to any written material. We arranged appointments with the human resource personnel and employees in our selected organizations and interviewed them. We asked them about their compensation system, salary ranges and the basis of allocating incentive. Thus we gathered our required information. To find out the compensation system of an organization we select two companies (BANK) one is Dhaka Bank Limited and another one is United Commercial Bank. The office held on Dhaka and so many places. Data used in this study were collected from the following source 8 12. HRM-370 Compensation System of DBL & UCBL Primary source face to face interview survey using questionnaires personal observation while visiting the company Data collection Employee were interviewed through structured questionnaire in different outlets Designing questionnaire Structured questionnaires have been used for this study in with multiple choice and open ended question. Secondary data annual report internet newspaper 1.5 Limitations The limitations are: Since maintenance function entails a vast area it was beyond our scope to describe and investigate each and every topic though we tried to cover all the important aspects to make our report a comprehensive one. The management of our selected organizations was somewhat reluctant to reveal all the information about their policies. They did not particularly provide the amount of salaries or the policies to give incentives. The hierarchies of the selected banks are so different that it is very difficult to find out the same level positions and compare their salary ranges. Moreover, there are some qualitative aspects such as job security, work environment, peer relationships, relationship with the supervisors, reputation of the company, which play important role in maintaining the productivity of employees. These pictures are not painted in this report as it relates to the utilization phase of personnel management and therefore beyond scope of this report. 9 13. HRM-370 Compensation System of DBL & UCBL 2. Brief Discussion Compensation is a systematic approach to provide monetary value to employees in exchange of work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. Compensation may be used to: 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. Modify (through negotiations) practices of unions. Compensation will be perceived by employees as fair if the approach is based on systematic components. Various compensation systems have developed to determine the value of positions. These systems utilize many similar components including job descriptions, salary ranges/structures, and written procedures. 10 14. HRM-370 Compensation System of DBL & UCBL 2.1 AN OVERVIEW OF BANKING SECTOR IN BANGLADESH The Banking Industry in Bangladesh is a complex and competitive one. The sector can be diagramed as follows: The sector can be diagramed as follows: Bangladesh Bank Specialized Banks Commercial Banks Non-Banking Financial Institutions Nationalized Banks Private Commercial Banks Foreign Banks A brief description of each of the groups is noted here: 2.1.1 Bangladesh Bank Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system consists of four nationalized commercial Banks, around forty private commercial banks, nine foreign multinational banks and some specialized banks. The ministry of Finance in association with Bangladesh bank regulates the banking sector through monetary and fiscal policies whereas banks are operating under guidelines set by Bangladesh Bank. 2.1.2 Specialized Banks These banks basically are specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh. 11 15. HRM-370 Compensation System of DBL & UCBL The Nobel-prize winning Grameen Bank is a specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh. Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are: Grameen Bank Bangladesh Krishi Bank Bangladesh Shilpa Bank Rajshahi Krishi Unnayan Bank Bangladesh Shilpa Rin Sangstha Basic Bank Ltd (Bank of Small Industries and Commerce) Bangladesh Somobay Bank Limited(Cooperative Bank) The Dhaka Mercantile Co-operative Bank Limited (DMCBL) 2.1.3 Nationalized Banks The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks, which together controlled more than 50%-55% of deposits. The nationalized commercial banks are: Sonali Bank Janata Bank Agrani Bank Rupali Bank 12 16. HRM-370 Compensation System of DBL & UCBL 2.1.4 Private Commercial Banks Private Banks are the highest growth sector due to the dismal performances of government banks (above). They tend to offer better service and products. AB Bank Limited BRAC Bank Limited Dutch Bangla Bank Limited Dhaka Bank Limited Islami Bank Bangladesh Ltd IFIC Bank Limited United Commercial Bank Limited NCC Bank Limited Prime Bank Limited Exim Bank Limited Bank Asia Limited Trust Bank Limited and many more 2.1.5 Foreign Commercial Banks Citigroup HSBC Standard Chartered Bank Commercial Bank of Ceylon State Bank of India National Bank of Pakistan and many more 13 17. HRM-370 Compensation System of DBL & UCBL 3. THE SEGMENTS OF PAY COMPONENTS To evaluate the various components of the total compensation package, the values of non-cash perquisites and benefits have been monetized at current market rates. While computing Annual Guaranteed Cash, items like Performance Bonus, which is variable, and Terminal Payments have not been taken into account though these have been considered for the purpose of Annual Cost to the Company. The compensation package has been divided into five segments: Monthly Guaranteed Cash Annual Guaranteed Cash. Annual Variable Cash Terminal Payments Monthly Cost of Benefits 3.1 MONTHLY GUARANTEED CASH ~ Basic Salary Actual average basic salary of the benchmarks has been taken. No employer agrees to provide actual individual salary for the benchmark jobs as this is confidential between the employer and the employee. Where a job is held by one person, the individuals actual salary has been shown. Where 2/3 benchmark jobs fall under one grade, actual average of that grade has been taken. Where actual average has not been available, the meaningful point of the salary range, applicable to the job grades of the benchmark has been taken. ~ taken. ~ ~ ~ Domestic Aids Wage Utilities / Maintenance Transport Allowance Specific amounts paid in cash for each matched job have been taken. Specific amounts paid as cash allowance have been taken. House Rent Allowance Specific amounts or percentage of basic salary paid in cash for each matched job have been 14 18. HRM-370 Compensation System of DBL & UCBL Specific amounts paid in cash for each matched job have been taken. ~ ~ Medical Allowance Personal / Special / Other Allowance A specific amount paid in cash has been used. Specific amounts paid in cash as allowances have been utilized. Quite a few costs are lumped into this and paid in cash. With reduction of personal tax slabs, employers are opting for a more transparent pay system conforming to the tax regulations. ~ ~ Meal Allowance Children Education Allowance Specific amounts paid in cash as allowance have been used. Specific amount paid in cash has been used. 3.2 ANNUAL GUARANTEED CASH ~ used. ~ ~ Festival Bonus Leave Fare Assistance Actual amount paid under this head has been used. Actual amounts paid to the employees have been taken. Annual Bonus This is a deferred wage not linked to profitability. Actual amount paid under this head has been 3.3 ANNUAL VARIABLE CASH ~ ~ ~ Performance Bonus Employees performance only Combined performance of the group, business unit and the employee Company performance Profit Bonus Incentive Bonus Actual amounts paid have been taken. This is paid by the employers in different forms based on: Actual amounts paid, based on company profitability, have been taken. 15 19. HRM-370 Compensation System of DBL & UCBL SMC pays an incentive bonus to its all its employees. The incentive amount is a fixed sum for each grade. 3.4 TERMINAL BENEFITS ~ ~ ~ Provident Fund Gratuity Pension Fund Actual payments made by the employers to the Fund have been used. Actual amounts provided by the employers in the Books of Accounts have been used. Actual payments made by the employers to the Fund have been used. 3.5 MONTHLY COST OF BENEFITS ~ ~ Company Leased Accommodation Household Effects (Depreciation) Actual cost has been taken. This reflects the cost of depreciation on account of hard and soft furnishing and electrical appliances provided by the comparators. ~ ~ ~ Utilities / Maintenance Telephone Company Car (Depreciation) Costs under this head have been taken at actual. Actual cost has been taken. Where company cars are provided for both functional and personal purposes, the figures mentioned represent the cost of depreciation. ~ ~ Running and Maintenance Cost Drivers Wages Actual amounts spent for fuel and car maintenance have been used. Where drivers are Company employees, their actual cost has been taken. Where Private Drivers wages are paid for, actual amounts paid to the employees have been taken. ~ Registration / Insurance / Tax Costs of registration, insurance, tax, etc. have been taken, at actual. 16 20. HRM-370 Compensation System of DBL & UCBL ~ ~ ~ ~ ~ ~ ~ ~ actual. ~ taken. Pickup-Drop / Transportation Cost Entertainment Allowance Canteen Subsidy Company Products Club Membership Group Life Insurance Medical Expense Hospitalization Scheme Actual cost to the company for pickup-drop facility has been taken. Specific costs reimbursed have been utilized. Specific costs on account of company provided subsidized meals have been taken. Specific costs on account of company products have been taken. The actual amounts paid for by the employers have been utilized. Actual premium paid by the employers has been used. The average cost to the employer on account of medical reimbursement has been used, at actual. Premium paid by the comparators under the Hospitalization Insurance Policies has been taken at Loan Amount of interests absorbed by the comparator for utilization of various loan policies has been 17 21. HRM-370 Compensation System of DBL & UCBL 3.6 Fringe Benefits Employee benefits, sometimes called fringe benefits, are those rewards that employees receive for being members of the organization and for their position in the organization unlike wage, salaries and incentives, benefits are usually not related to employee performance. The term fringe benefits was coined over 40 years ago by the war labor Board, Reasoning that employer provided benefits such as paid vacation, holidays and pensions were on the fringe of wages , are agency exempted them from pay controls. It has been argued that this action, more that any single event, led to the dramatic expansion of employee benefits that has since occurred. However, because of the significance of benefits to total compensation, many employers have dropped the word fringe for fear that it has a minimizing effect. Following is the list showing the types of benefits that employees can receive from the company: RETIREMENT RELATED Pension fund Annuity plan Early retirement Disability retirement Retirement gratuity INSURANCE RELATED Medical insurance Accident insurance Life insurance Disability insurance Dental insurance Survivor benefits PAYMENT FOR TIME NOT WORKED Vacation Holidays Sick leave Military leave Paid rest periods Lunch periods Travel time Company discounts Meals furnished by company Moving expenses Severance pay Tuition refunds Credit union Company car Legal service Financial counseling Recreation facilities OTHERS 18 22. HRM-370 Compensation System of DBL & UCBL 4. Dhaka Bank Limited 4.1 Background of Dhaka Bank Limited (DBL) Dhaka Bank Limited (DBL) was incorporated as a Public Limited Company on April 06, 1995 under the Company Act 1994 and started its Commercial Operation on June 05, 1995 as Private Commercial Bank. The Bank started its journey with an Authorized Capital of Tk.1000.00 Million and Paid up Capital of Tk.100.00 Million. Today it is one of the most renowned Private Commercial Banks having multiple branches in the major cities of the Country. Dhaka Bank Limited (DBL) has started its Business with all the features of a Corporate Bank and the Products of both Corporate and Retail Banking System; to facilitate the daily clientele requirements. DBL is always trying to improve their Customer Services in every sector, but in todays Competitive Business World, Banks need to offer additional concentration to the Clients requirements in order to stay at the top. Therefore, besides dealing with the general attributes of Different Products, they have been trying to put more emphasis on the Customer Benefits and other Customer related Facilities. 4.2 Mission & Vision The Mission of the Dhaka Bank Limited (DBL) is to be the Premier Financial Institution in the country providing High Quality Products and Services backed by Latest Technology and a Team of Highly Motivated Personnel to deliver Excellence in Banking. The stars in the seven skies sparkle in brilliance and twinkle in blissful beauty. We wonder at them in profound admiration and speculation. At Dhaka Bank we draw our inspiration from the distant stars. Our team is committed to assure a standard that makes every banking transaction a pleasurable experience. Our people, products and processes are aligned to meet the demand of our discerning customer. Our goal is to achieve a distinction like the luminaries in the skies. Our prime objective is to deliver a quality that demonstrates a true reflection of our vision - Excellence in Banking. 19 23. HRM-370 Compensation System of DBL & UCBL 4.2.1 Goals of the Bank Long-term Goal: To be the Market Leader both in terms of Deposits and good advances among Private Commercial Banks in Bangladesh by the year 2009. Short-term Goal: To increase Current Market Shares. Financial Goal: To reduce the existing Cost of Fund 4.2.2 Values Customer Focus Integrity Team Work Respect for Individual Quality Responsible Citizenship 4.3 Management Committee Mr. Khondker Fazle Rashid Managing Director Mr. Tanweer Rahim Deputy Managing Director Mr. Kaiser Tamiz Amin Deputy Managing Director 20 24. HRM-370 Compensation System of DBL & UCBL Mr. Neaz Mohammad Khan Deputy Managing Director Mr. M.M. Haikal Hashmi Senior Executive Vice President Head of Credit Compliance & Administration Mr. Arham Masudul Huq Senior Executive Vice President Company Secretary Mrs Shamshad Begum Principal, Dhaka Bank Training Institute & Head of Human Resources Division Mr. S.A.F.A. Musabbir Executive Vice President Legal & Recovery Mr. Fakhrul Islam Senior Vice President Head of Operations Mr. Shah Azizul Islam Senior Vice President In-charge, Retail Banking Mr. Md Shahadat Hossain Senior Vice President In-charge- Credit Operations Mr. Darashiko Khasru Vice President Head of Finance & Accounts Division 21 25. HRM-370 Compensation System of DBL & UCBL Mr. J.Q.M. Habibullah Vice President Board Secretariat & Share Division Mr. Imran Ahmed Vice President In-charge-RMU & Head BASEL-II Imp Cell Mr. Syed Faisal Omar Vice President In-charge, Global Transaction Services Mr. Md. Shaukat Ali Khan Vice President In-charge, SME Unit Mr. Faruk Ahmed Senior Assistant Vice President In-charge, CPC-Trade Operations Mr. A K M Ahsan Kabir Senior Assistant Vice President In-charge Internal Control & Compliance Mr. Saiful Momin Senior Assistant Vice President In-charge, Information Technology Division Mr. Mesbah Uddin Ahmed Senior Assistant Vice President In-charge, Syndication & Structured Finance Mr. Shaikh Altaf Mahmud Senior Assistant Vice President In-charge, Monitoring 22 26. HRM-370 Compensation System of DBL & UCBL Mr. Kamrul Aziz Nippon First Assistant Vice President In-charge, Capital Market Services Mr. K. M. Faisal Faruqui Assistant Vice President In-charge Treasury Division Mr. Ibrahim Khalil Senior Principal Officer Head of Public Relations & Brand Communication 4.4 Total Compensation and Benefits Package of DBL 4.4.1 Objectives This chapter outlines the rules relating to compensation structure and the benefit package of the Bank and gives detailed procedures for exercising them in order to promote fair treatment and consistency within the organisation. 4.4.2 Salary Structure Refer to the Salary & Remuneration Package Structure for Supervisors and Executive Staff of DBL for details regarding the structure of salary and allowances for different units under DBL. 4.4.3 Revision of Pay Elements The compensation structure may be revised, if necessary, with the approval of the Director, Admin/HR, Head of the Dept., Finance and the Chief Executive. 4.4.4 Employee Compensation Records Employee Pay Records are maintained by the Personnel & Admin Department for Workers and Supervisors and by the Human Resource Department for the Executives. These departments maintain personal file of all employees where all records in regards to the employee are kept in addition to any soft copy (in computer database) 23 27. HRM-370 Compensation System of DBL & UCBL maintained by the departments. These records are confidential and should not be accessible to any unauthorised persons (authorisation defined by HR or Personnel & Admin dept. head). 4.5 Basic Employee Benefits for Permanent Employees 4.5.1 Provident Fund The Bank's Provident Fund is a funded scheme. All confirmed and permanent employees are entitled to be members of the Provident Fund. The employee contribution, equal to 10% of the basic salary, is deducted each month through the payroll. The Bank contributes an equal amount and both the employees' and the organization's contributions are paid to the Fund each month. In the Provident Fund Ledger, both the employee's and the Bank's contributions are credited to the individual employee's account. The membership of the Trustees of the Provident Fund must include at a minimum: a) Representation from the HR Department b) Representation from Finance & Accounts Department c) Two representatives from the Workers 4.5.2 Group Term Life Insurance The Bank provides coverage of life insurance to all Permanent employees after their joining with the organization effective on the date of joining. To participate in the Group Term Life Insurance policy, all employees are required to fill up "Group Term Life Insurance Registration Form", and submit to HR/Personnel & Admin dept for processing. To change the beneficiary at any time, the employee must complete the Beneficiary Change Form, and submit to the Human Resource Department or to the Personnel & Admin dept for making the changes. 24 28. HRM-370 Compensation System of DBL & UCBL In the event of the death of an employee while in the banks service, other than: 1) death by suicide, 2) death by criminal prosecution, or 3) death by taking part in any activities subversive of the state, the bank depending on the classification of employees shall pay benefits on normal death and accidental death from insurance bank as follows: Employee classification Executives Normal death benefit 36 month salary last Accidental benefit death basic 72 month last basic salary Detail of compensation other than death (partial disability) will be determined as per calculation within the purview of insurance coverage policy. No recovery or adjustments of loans or salary advances etc. shall be made from the insurance claim benefits. In addition to this coverage of insurance benefits compensation will also be made as per "Workman's Compensation Act 1923" in the case of death/disability of employees. 4.6 Bonuses All confirmed Permanent employees of Dhaka Bank Limited are entitled to one Annual Bonus each equivalent to Basic Salary under the following conditions: Attendance in the Calendar Bonus Entitlement Year 213 days + 107 days + 100% of the Bonus 50% of the Bonus 4.7 Meal Facilities The following facilities are provided in each of the organisation under Dhaka Bank Limited: 4.7.1 Branches Executives: Meals are provided at a subsidised rate. 25 29. HRM-370 Compensation System of DBL & UCBL 4.7.2 Head Office: Executives: No meals are provided. 4.8 Accommodation The Bank on the basis of requirements and availability provides accommodation to DBLs Top Executives at their own established facilities in Dhaka city. Outside the Dhaka city, the Bank provides expenses of the 4.9 Utilities Allowances Executives between grades J to M4: No utility allowance is paid. Executives of grades M5 and above: Telephone Water Electricity Gas (Local & (Limit/Mont NWD) Designation (Limit/Month) (Limit/Month) h) (Limit/Month) Taka Taka Taka Taka Manager / Sr. 2,500 Manager EVP and At Actual above At Actual At Actual At Actual At Actual At Actual At Actual To get reimbursed for utilities bills, complete Expense Reimbursement Form, and submit to the Accounts Department. The Accounts Department will make reimbursement payment to the employee within 45 days from the date of submission. Telephone bill has to be forwarded to the IT department, so payments can be made by the company, if it is in the name of the Bank. 26 30. HRM-370 Compensation System of DBL & UCBL 4.10 Medical Benefits 4.10.1 Medical Benefits for the Executive Staff The bank will reimburse the cost of authorised medical treatments in Bangladesh including hospitalisation, surgical and childbirth subject to the conditions mentioned hereunder. In case of any overseas treatment prior approval from the Chief Executive is required. The following are the basic guidelines in regards to medical benefits provided to the Executives: (i) Treatment to be carried out by a registered Medical Practitioner. The Bank reserves the right to approve the Medical Practitioner consulted. (ii) Dental treatment included as preventative measures, the Bank will reimburse for Upper and Lower dental cleaning twice a year. (iii) Reimbursement of the cost will be restricted to the treatment of the executive, spouse and children. (iv) Relevant details including names and dates of birth of spouse and the eligible children should be sent to HRD for record. (v) Children attaining 21 years of age or getting married, whichever is earlier, will not be entitled to reimbursement of the cost of medical treatment. (vi) Expenditure on medical treatment of Executives is reimbursed by the company as per following entitlements: (vii) Expenses Cannot not be claimed: The Bank will not reimburse the following expenses: The supply of dentures and false caps. Any cosmetic dental work. The supply of spectacle frames. Special diets except in hospitals under medical advice Treatments not covered under paragraphs (i) and (ii) 27 31. HRM-370 Compensation System of DBL & UCBL 4.11 Transportation Facilities and Car Purchase Scheme 4.11.1 Transportation Facilities for the Executives 4.11.1.1 Executives DBL Branches: There are no transportation facilities provided for the Executives between grade J to M4 Head Office: There are no transportation facilities provided for the Executives between grades J to M4. For business purpose travel, Pool Car can be provided based on availability. 4.11.1.2 Car Purchase Scheme: Senior Executives: Employees in this grade, which is Managers, Senior Managers, and Vice President, are eligible to apply for a Car Purchase Scheme upon the expiry of one month after the date of joining in the Bank. To initiate the request for participating in this Car Purchase Scheme, the employee is required to write a note to the HR Department. The Human Resource Department then gets necessary approvals and then forwards the request to the Head Office Admin department. The objective of the scheme is to provide financial assistance to bank executives for the purchase of cars and thus to provide executives with transport necessary for carrying out their duties. An employee who has acquired a car under this scheme will not be eligible to apply again for a period of five (5) years. The following are the approved specification of the transport and benefit given to the employee: 28 32. HRM-370 Compensation System of DBL & UCBL Description of the 1300/1500 cc new or reconditioned. Four door Sedan. car : Car Price : Purchase Contributions : Fuel Allowance Tk 900,000/= (maximum Tk 1,000,000) Employee 50%; Bank 50% Allowance of 350 litters per month to be paid by the Bank for worker based at Head Office and also worker who are working at the branches. Based on manufacturers year model, for up to 6 year old car, the Bank will pay a maintenance allowance of Tk 3,000/= per month. For 8 years or older cars, the Bank will pay a maintenance allowance of Tk 4,000/= per month. For 10 years or older cars, the Bank will pay a maintenance allowance of Tk 5,000/= per month. The money will be accumulated in the employees account in the accounts department and will be utilised for repairs and maintenance when they arise. The accounts department will be responsible to pay the money immediately upon submission of paid in receipt from the Workshops. Driver : To be employed by the employee concerned. An allowance of Tk 4,100 per month will be paid by the Bank to cover the drivers salary. Maintenance: Major Accidental Any vehicle under this scheme will maintain a 1st Repairs Party insurance. The Admin. Department will ensure filing of all insurance claims considering the amount of money required to repair and the amount of deductible. The amount of deductible and/or the amount of repairs will be split 50:50 between the employer and the employee if the balance of the maintenance fund is not adequate to cover the expenses. The employer initially will make the full payment to the insurance company and/or to the repair shop, then the portion of the employee will be deducted from the salary in equivalent 12 instalments, if not covered by the insurance. The Admin. Department (and the employee if willing to) will supervise all repair work and do the administrative tasks, then forward a bill of the employees portion, signed by the employee, to the Accounts Department for repayment. 29 33. HRM-370 Compensation System of DBL & UCBL Purchase of re-conditioned cars will be subject to inspection on behalf of the Bank, by the Transport department or by a workshop designated for this purpose by them. The car will be checked for engine and body condition, suspension and safety features. The Automobile Inspection Report will be completed and signed by the Administration Department for processing the request of car purchase. The company, bank or a leasing company may finance the purchase of the car. The car will be initially registered as follows: By the company Through a bank loan Through a leasing contract - in the name of the company - as stipulated by the bank - in the name of the leasing company The employees 50% contribution towards the cost of the car will be paid by him to the Bank in equal monthly instalments over a period of three years if the car is financed by the Bank, or over a period equal to the currency of the loan or leasing contract, as the case may be. If the car is acquired through a leasing contract or a bank loan, the employee will be required to contribute 50% of the lease payments or loan instalments every month until the expiry of the lease period. If the price of the car exceeds Tk 1,000,000 the employee will pay the amount in excess of Tk 1,000,000 to the company in cash. The Banks 50% contribution to the cost of the car will be amortised over a period of five years. After the expiry of this period, or the expiry of the leasing contract if the car has been leased, or the repayment of the bank loan if the car has been acquired through a bank loan, and subject to prior receipt of the final instalment of his contribution, the ownership of the car will be transferred to the employee. Costs incurred in connection with the transfer will be payable by the employees. In the event that the employee leaves the Bank before the expiry of five years, he shall have the option to purchase the car from the Bank at the written down value in the books of the Bank, plus the total of the unpaid instalments towards, his own contribution. This option to purchase will only be available to an employee who has 30 34. HRM-370 Compensation System of DBL & UCBL been with the company for a minimum period of two years. In case he does not choose to exercise the purchase option, the Bank will reimburse the employee 75% of the amount contributed by him/her towards the cost of the car, and the car will then remain in or be transferred to the ownership of the Bank. The employee will be expected to use the car for the Banks business as well as for fulfilling his private transport needs, including the transport of children to school, etc. Employees who have availed for this scheme are expected to meet all their transportation needs with the vehicle provided under scheme. No other transport will be provided to an employee who has availed of this scheme. However, if the employee is asked to travel outside Dhaka on Banks business, he will be reimbursed at Tk. 6/- per km, subject to prior permission from his department head, plus an allowance of Tk. 100/- per day for the driver. Tolls and other expenses will be paid at actual. Repairs and maintenance of the vehicle will be the responsibility of the employee. A maintenance allowance will be paid as explained earlier in this section. All taxes, fees, duties, registration costs, and insurance will be paid by the Bank. The employee must inform the Admin Department one month prior to the due date for Fitness/Insurance and the Admin Department will take full responsibilities to complete the said tasks. The Banks approval to participate into this scheme will be based on the nature of the employees job and on the availability of funds with the Bank, at the time when the application to join the scheme is made. The employee may choose to select a car that is presently in the name of the Bank and if made available to the employee for purchase. The administrative department will be responsible to identify the market value of the car, get approval from the HR Department, and make an offer to the employee. For the purchase of the company car, the employee shall be liable to pay 50% of the market value of the vehicle, in equal monthly instalments to the Bank over a period of three (3) years. All other terms and conditions shall remain the same. The Management reserves the right to change, modify, amend, cancel or waive any or all of the provisions of this scheme at its absolute discretion and without any prior 31 35. HRM-370 Compensation System of DBL & UCBL notice and also to withhold or reject any application to join the scheme, without assigning any reason whatsoever. Top Executives Top Executives of grade M6 and above, i.e. Sr. Vice President and above are entitled to 24 hours company paid transportation. The company also pays for the fuel at cost, Drivers salary, and for all necessary maintenance/repair and administrative cost of the vehicle. 4.12 Leave Entitlements 4.12.1 Basic Leave Types All Permanent Executives of the Bank are entitled to various types of Leaves that are calculated based on calendar year and prorated from the date of joining the Bank's service for the first year. Leave entitlements of expatriate (Contract) employees shall be governed by their respective terms of employment with the company specified in the Appointment Letter. For Employees the leave entitlements are calculated in accordance with "The Shops and Establishment Act 1965", Factories Act 1965 and the Factory Rules 1979. These entitlements are as follows: Types of Leave Casual Leave (with full wages) Sick Leave (on average wages) Earned Leave (1 for every 22 days actual work with wages) Public Holidays Days Per Year 10 14 12 10 (minimum) 32 36. HRM-370 Compensation System of DBL & UCBL The following are the Basic Leave entitlements for the Executives at Head Office: Types of Leave Weekends (with full wages) Casual Leave (with full wages) Sick Leave (with full wages) Earned Leave Public Holidays Days Per Year As per Section 5.5 15 10 15 As per list of holidays declared by the Govt. The following are the Basic Leave entitlements for the Executives at Branches: Types of Leave Weekends (with full wages) Casual Leave (with full wages) Sick Leave (with full wages) Earned Leave Public Holidays Days Per Year As per Section 5.5 15 10 15 10 (minimum) Public Holidays for Head Office worker are governed by the policy of the Board of Directors of the Bank and is based on the list of holidays declared by Govt. For Branch employees, the Management determines the Public Holidays (minimum 10 days) and it is announced at the beginning of the year. 4.12.2 Definitions of Basic Leave Entitlements The following are some definitions of Basic Leaves entitlements: 4.12.2.1 Casual Leave Entitlement to casual leave for the Executive at Head- Office and Branch Site, it is 15 days based on each calendar year. The employee is entitled to exercise Casual Leave from the very next day of joining; though the Casual Leave is pro-rated for the balance period of the year counting from the joining date. 33 37. HRM-370 Compensation System of DBL & UCBL Casual leave cannot be availed for more than three days at a time. Also, it cannot be carried forward to the following year or cashed. Casual Leave can be taken with Weekends, Public Holidays, Earned Leaves, etc. but be limited to only 3 days. 4.12.2.2 Sick Leave Entitlement to Sick Leave for the Executives at Head-Office and Branch Site it is 15 days on the basis of each calendar year. The employee is eligible to exercise the Sick Leave benefit from the date of his/her joining. The above entitlements represent the maximum number of days Sick Leave that an employee can avail in a year. Normally, medical certificates are not required but if the sick leave exceeds three days at a time or if it is being taken as an extension of Earned Leave, then a Medical Certificate is required. Where this is not the case an application for Sick Leave is considered enough. Sick leave cannot be carried forward to the succeeding year and cannot be cashed. If an employee is sick on Weekend or on a Public Holiday, that day will not be counted as a sick day and the number of Sick Leave taken out of his/her allocated days will be excluding those days. 4.12.2.3 Earned Leave Entitlement to Earned Leave for the Executives at Head- Office and Branch Site is 15 days on the basis of each completed year of service. A maximum of thirty (30) days can be accumulated. Any accumulation beyond this will automatically lapse on the following 1st of January each year. The entitlement to Earned Leave is exclusive of Weekends and Public Holidays i.e., Weekends and Public Holidays falling during the annual leave taken will be considered additional to the entitlement. Though Earned Leave is counted from the date of joining but it cannot be taken until the employee passes the probationary period receiving confirmation. 4.13 Other Leave Options The following sections explain some additional leave options that an employee may exercise depending on the need. 34 38. HRM-370 Compensation System of DBL & UCBL 4.13.1 Maternity Leave Married woman employees are entitled to Maternity Leave benefit as per "The Maternity Benefit Act, 1939". The period of Maternity Leave shall be 84 actual days of absence which shall include the Public Holidays and Weekends (non- working days) and including the day of delivery. The entitlement to maternity leave is to be availed as follows: Six weeks or 42 days immediately preceding and including the day of delivery. Six weeks or 42 days immediately following the day of delivery. A woman shall not be entitled to maternity leave unless she has been employed by the Bank for a period of not less than nine months immediately preceding the date of delivery. 4.13.2 Study Leave An Executive may be granted Study Leave, with or without pay, entirely at the banks discretion, once s/he has been in the bank for at least one year. Study leave is normally granted if the course of study which the employee intends to pursue is likely to benefit the Banks operations. Study Leave can be given for up to a maximum period of two years. 4.13.3 Hajj Leave A Permanent Executives who intends to perform Hajj at his own expenses, upon completion of one year of service, may be allowed for a 45 days Hajj Leave with pay at the sole discretion of the management. This leave can only be availed once in the entire period of service. Similar leave may be granted for employees other than Muslims, if the occasion is a once in a life time holy event significant to the believers. 4.13.4 Special Leave Special leave may be granted to the Permanent or Contract employees with or without pay and allowances at the sole discretion of the management. Application for special 35 39. HRM-370 Compensation System of DBL & UCBL leave should be forwarded to HR/Personnel department, through the relevant departmental head, along with appropriate reasons and recommendations for necessary action. Some examples of such leave request may be for marriage, death in the family, etc. 4.13.5 Leave Encashment Executives before leaving the Bank due to resignation, retirement or termination are allowed to cash the Earned and Compensatory Leave due to them up to a maximum of 30 days, while for workers it is 20 days plus the prorated entitlement for the current year. The amount paid on encashment includes only the employee's last drawn basic salary for the period. Allowances are not included in this amount. 4.13.6 Maintenance of Leave Records Approved leave applications received from departments are entered in a Leave Register and the lower portion of the leave application showing the balance of leave is sent to the employee. Leave records for all Executives and Head Office Staffs are maintained by HR Department. 4.14 Financial Assistance Schemes 4.14.1 Objectives To meet various emergency and incidental expenses, the Bank provides financial assistance in the form of advance payment of salary and loan against provident fund to its employees. The following sections give detailed procedures for salary advances and loan sanctions under Financial Assistance Schemes. 4.14.2 Priorities for Loan against Provident Fund (PF) or Salary Advance The following priorities will be maintained for PF loan or salary advance request processing: 36 40. HRM-370 Compensation System of DBL & UCBL 1. Medical emergencies for spouse or children 2. Death of Spouse or children 3. Medical emergencies for other dependent 4. Death of other dependent 5. Rental advance 6. Own marriage 7. Other emergencies 8. Marriage of siblings 9. Education 10. Other requirements 4.14.3 Loan against Provident Fund (PF) or Salary Advance Eligibility and Limits 4.14.3.1 Loan against Provident Fund 1. All Permanent employees who have contributed to atleast18 instalments in the Contributory Provident Fund of Dhaka Bank Limited and have been in the Bank for less than 3 years, are eligible to take loan against the provident fund equal and up to 75% of the employees own contribution. 2. All Permanent employees who are members of the Contributory Provident Fund and have been in the Bank for more than 3 years but less than 4 years, are eligible to take loan against the provident fund equal and up to 100% of the employees own contribution. 3. All Permanent employees who are members of the Contributory Provident Fund and have been in the Bank for more than 4 years but less than 5 years, are eligible to take loan against the provident fund equal and up to 70% of the total contribution (employees own contribution + Banks contribution). 37 41. HRM-370 Compensation System of DBL & UCBL 4. All Permanent employees who are members of the Contributory Provident Fund and have been in the Bank for more than 5 years are eligible to take loan against the provident fund equal and up to 75% of the total contribution (employees own contribution + Banks contribution). 4.14.3.2 Salary Advance Salary Advance is given only in those situations where the Permanent employee does not have enough contribution to the Provident Fund but the urgency is very high. Usually one months average gross salary is given as advance but based on the emergency; a maximum of two months salary can be given as advance. 4.14.4 Repayment of Loan or Salary Advance One months grace period is given to the employee before the repayment starts. The employee, through automatic deductions by the Accounts Dept. from his/her Paycheck, makes the payment. The following are some guidelines for repayments: 1. If financial situation permits, the employee is asked to pay the money back with 6 equal monthly payments. 2. If the financial situation does not permit, the employee is given the opportunity to pay back with 12 equal monthly instalments. 3. If the amount of loan is large and the repayment imposes hardship on the employee, it may be considered to extend the repayment schedule to a maximum of 24 equal instalments. In such cases, the Department Head of the employee must recommend the accounts department to do so. 4. If the loan or advance is related to medical payments and the employee is eligible for medical benefit, the advance/loan will be applied towards the eligible benefit once the treatment is received. Upon receipt of all medical vouchers, the employee is required to submit Medical Bills Reimbursement Form, as per guidelines provided in Section 6.12.2 and apply the advance/loan towards the refund. Any excess amount taken as advance/loan must be paid back immediately after the treatment is over. 38 42. HRM-370 Compensation System of DBL & UCBL 4.14.5 Procedures to Apply and Processing of a Loan or Salary Advance Request The employee completes a Loan Application Form, and upon receiving an approval from the Department Head, submits to the Accounts Department. The Accounts Dept. personnel review the application, discuss with the employee if necessary, and let the employee know about the outcome. At the time of processing the loan/advance request, the Accounts Dept. identifies the repayment agreement discussing with the employee. The following are guidelines for loan/advance approving: Loan Amount (Tk) < or = 5,000.00 >5,000.00 20,000.00 > 20,000.00 < or = Approval Authority Section Head Loan/Advance responsible for by Second level authorisation Manager or above. Department Head 39 43. HRM-370 Compensation System of DBL & UCBL 5. United Commercial Bank Ltd. 5.1 Background of United Commercial Bank Ltd (UCBL) Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the Government, UCB started its operation in mid 1983 and has since been able to establish one of the largest networks of 102 branches among the first generation banks in the private sector. With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of Private Sector Banking through personalised service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role in the economic activities of the country, is firmly engaged in the development of trade, commerce and industry thorough a creative credit policy. 5.2 Mission Statement To be the bank of 1 st choice through maximizing value for our clients, shareholder and employees and contribution to the society. 5.3 Management The Bank has in its Management a combination of highly skilled and eminent bankers of the country of varied experience and expertise successfully led by Mr. M. Shahjahan Bhuiyan, a dynamic banker, as its Managing Director and well educated young, energetic and dedicated officers working with missionary zeal for the growth and progress of the institution. SENIOR MANAGEMENT Managing Director Mr. M. Shahjahan Bhuiyan Additional Managing Director (Operation) Mr. Shafiqul Alam 40 44. HRM-370 Compensation System of DBL & UCBL Deputy Managing Director (Corporate Banking Division) Mr. M. Shahidul Islam Deputy Managing Director (International Division) Mr. Mamun-Ur-Rashid Deputy Managing Director Mr. Mirza Mahmud Rafiqur Rahman Deputy Managing Director Mr. Md. Shahed Jalal Chowdhury Senior Executive Vice President Mr. Nurul Alam Mr. Mohammad Shawkat Jamil Mr. Md. Tariqul Azam Mr. Md. Zahirul Alam Mr. Barun Kanti Saha Mr. Md. Sohrab Mustafa Executive Vice President Mr. Golam Awlia Mr. Muhammad H. Kafi Mr. Abu Saleh Md. Abdul Mazed Senior Vice President Mr. Md. Quamrul Hassan Mr. Chandan Sen Gupta Mr. Md. Yunus Mr. Badiul Alam Mr. Abu Sadeque Miah Mr. Mahmudul Bashar Khan Mr. Md. Ekram Ullah Mr. Md. Delwar Hossain Mazumder 41 45. HRM-370 Compensation System of DBL & UCBL Mr. Abul Alam Ferdous Mr. Md. Ahaduzzaman Mr. Md. Jasim Uddin Mr. Md. Habibur Rahman Mr. Md. Habibur Morsalin Mr. Md. Shahadat Hossain Shohag Mr. Mian Quamrul Hasan Chowdhury Mr. Md. Ehsanul Kabir Mr. Abu Nur Md. Parvez Sajjad Mr. Mizanur Rahman Mr. Kazi Muzibul Islam 5.4 Total Compensation and Benefits Package of UCBL 5.4.1 Objectives This chapter outlines the rules relating to compensation structure and the benefit package of the Bank and gives detailed procedures for exercising them in order to promote fair treatment and consistency within the organisation. 5.4.2 Salary Structure Refer to the Salary & Remuneration Package Structure for Supervisors and Executive Staff of UCBL for details regarding the structure of salary and allowances for different units under UCBL 5.4.3 Revision of Pay Elements The compensation structure may be revised, if necessary, with the approval of the Director, Admin/HR, and Head of the Dept., Finance and the Chief Executive. 5.4.4 Employee Compensation Records Employee Pay Records are maintained by the Personnel & Admin Department for Workers and Supervisors and by the Human Resource Department for the Executives. These departments maintain personal file of all employees where all records in regards to the employee are kept in addition to any soft copy (in computer database) 42 46. HRM-370 Compensation System of DBL & UCBL maintained by the departments. These records are confidential and should not be accessible to any unauthorised persons (authorisation defined by HR or Personnel & Admin dept. head). 5.5 Basic Employee Benefits for Permanent Employees 5.5.1 Provident Fund The Company's Provident Fund is a funded scheme. All confirmed and permanent employees are entitled to be members of the Provident Fund. The employee contribution, equal to 10% of the basic salary, is deducted each month through the payroll. The Company's Provident Fund is a funded scheme. All long- established and enduring employees are at liberty to be members of the Provident Fund. In the Provident Fund Ledger, both the employee's and the Company's contributions are accredited to the individual employee's account. 5.5.2 Bonuses All confirmed Permanent employees of United Commercial Bank Limited are entitled to one Annual Bonus each equivalent to Basic Salary under the following conditions: Attendance in the Calendar Bonus Entitlement Year 200 days + 90 days + 100% of the Bonus 50% of the Bonus 5.5.3 Accommodation The Bank on the basis of requirements and availability provides accommodation to UCBLs Top Executives at their own established facilities in Dhaka city. Outside the Dhaka city, the Bank provides expenses for the accommodation. 43 47. HRM-370 Compensation System of DBL & UCBL 5.6 Utilities Allowances Telephone Electricity Designatio n (Limit/Mont h) Taka Gas (Limit/Mont h) Taka Water (Local & (Limit/Mon NWD) th) Taka (Limit/Mont h) Taka Manager / Sr. 2,500 Manager EVP and At Actual above Other 1500 employees At Actual At Actual At Actual At Actual 450 At Actual 1000 At Actual No The Accounts Department will make compensation payment to the employee within 30 days from the date of submission. Telephone bill has to be forwarded to the HR department, and then they forwarded that bill to IT department, so payments can be made by the company, if it is in the name of the Bank. 5.7 Mobile Telephone Based on the UCBLs business need, a mobile telephone provided to a permanent or contract employee. To receive this benefit, a written application should be forwarded to the Department Head, IT upon approvals of the employees Department Head and In charge of the site/factory if applicable. The mobile phone is to be used first and foremost for business purpose, though can be utilised for being in contact with the family members, if necessary with logical discretion due to the high cost of mobile phone usage. 44 48. HRM-370 Compensation System of DBL & UCBL 5.8 Medical Benefits Medical Benefits for the Executive Staff The bank will compensate the cost of authorised medical treatments in Bangladesh including hospitalisation, surgical and childbirth subject to the conditions mentioned here. The Bank reserves the right to approve the Medical Practitioner consulted. Dental treatment included as defensive measures, the Bank will reimburse for Upper and Lower dental cleaning twice a year. Reimbursement of the cost will be restricted to the treatment of the executive, spouse and children. Expenditure on medical treatment of Executives is reimbursed by the company. Every employees are not get the medical benefits. 5.9 Car Purchase Scheme Board of directors are entitled to 24 hours company paid transportation. The company also pays for the fuel at cost, Drivers salary, and for all necessary maintenance/repair and administrative cost of the vehicle. Car purchase scheme has to be changed into(for the top management, middle management get allowance for driver and fuel cost but need to buy the car with own expense where loan facility is available from the bank/interest redemption) LOAN SCHEME All employees are eligible to any purpose loan provided they have served the organization for 2 years 5.10 Leave Entitlements 5.10.1 Basic Leave Types All Permanent Executives of the Bank are entitled to various types of Leaves that are calculated based on calendar year and prorated from the date of joining the Bank's service for the first year. Leave entitlements of expatriate (Contract) employees shall be governed by their respective terms of employment with the company specified in the Appointment Letter. 45 49. HRM-370 Compensation System of DBL & UCBL The following are the Basic Leave entitlements for the Executives at Head Office: Types of Leave Weekends (with full wages) Casual Leave (with full wages) Sick Leave (with full wages) Earned Leave Public Holidays Days Per Year As per Section 5.5 15 10 15 As per list of holidays declared by the Govt. The following are the Basic Leave entitlements for the Executives at Branches: Types of Leave Weekends (with full wages) Casual Leave (with full wages) Sick Leave (with full wages) Earned Leave Public Holidays Days Per Year As per Section 5.5 15 10 15 10 (minimum) 5.10.2 Definitions of Basic Leave Entitlements 5.10.2.1 Casual Leave Entitlement to casual leave for the Executive at Head- Office and Branch Site, it is 15 days based on each calendar year. The employee is entitled to exercise Casual Leave from the very next day of joining; though the Casual Leave is pro-rated for the balance period of the year counting from the joining date. Casual Leave can be taken with Weekends, Public Holidays, Earned Leaves, etc. but be limited to only 3 days. 5.10.2.2 Sick Leave Entitlement to Sick Leave for the Executives at Head-Office and Branch Site it is 15 days on the basis of each calendar year. The employee is eligible to exercise the Sick Leave benefit from the date of his/her joining. The above entitlements represent the maximum number of days Sick 46 50. HRM-370 Compensation System of DBL & UCBL Leave that an employee can avail in a year. If an employee is sick on Weekend or on a Public Holiday, that day will not be counted as a sick day and the number of Sick Leave taken out of his/her allocated days will be excluding those days. 5.10.2.3 Earned Leave Entitlement to Earned Leave for the Executives at Head- Office and Branch Site is 15 days on the basis of each completed year of service. The entitlement to Earned Leave is exclusive of Weekends and Public Holidays i.e., Weekends and Public Holidays falling during the annual leave taken will be considered additional to the entitlement. Though Earned Leave is counted from the date of joining but it cannot be taken until the employee passes the probationary period receiving confirmation. 5.10.2.4 Maternity Leave The period of Maternity Leave shall be 84 actual days of absence which shall include the Public Holidays and Weekends (non-working days) and including the day of delivery. 5.10.2.5 Study Leave Study leave is normally granted if the course of study which the employee intends to pursue is likely to benefit the Banks operations. 5.10.2.6 Hajj Leave Special leave may be granted to the Permanent or Contract employees with or without pay and allowances at the sole discretion of the management. 5.10.2.7 Special Leave Extraordinary leave may be decided to the enduring or Contract employees with or without pay and allowances at the sole discretion of the management. Application for special leave should be forwarded to HR/Personnel department, through the relevant departmental head, along with appropriate reasons and recommendations for necessary action. Some examples of such leave request may be for marriage, death in the family, etc. 47 51. HRM-370 Compensation System of DBL & UCBL 6. CONCLUSION This study research has been focused on the compensation system, practiced by two private banks of Bangladesh. There are some components that are taken into consideration during pay in our country, but it varies significantly among banks regarding pay. It could have been better, if we might have worked with all types of banks. Here in our study we have worked with only one type of bank. In our study we have tried to focus on the pay differences, possible reasons of using different pay components used by the banks in our country. Finally, we came up with some recommendations, which can be used for both of the banks so that they can perform better. 48 52. HRM-370 Compensation System of DBL & UCBL 7. Appendix 49 53. HRM-370 Compensation System of DBL & UCBL INDEPENDENT UNIVERSITY, BANGLADESH Topic: Compensation & Benefits Survey Questionnaire 50 54. HRM-370 Compensation System of DBL & UCBL Please put the tick mark into your choices and write your opinions where necessary 1. State how long you have been working in your organization? Less than one year: 1- 3years: 3- 5 years: 5- 9 years: More than 10 years: 2. What is your job description including designation & department? 3. Do you believe that your job profile is benchmarked with the same jobs in the industry and market place? 4. How many hours do you work per day? 5-6 hours 6-7 hours 8-9 hours more 5. How the company gives promotion to their employees? Based on time Performance Other 6. Does your company utilize a traditional salary grade system? Yes No If yes, please answer the following questions. What was your starting salary? 15-25 25-35 35-45 more than 45 Does your company offer salary increment? Yes No How often is the salary structure reviewed? ____________________ When was the last time it was adjusted? ____________________ By what percentage? ______________% Does your company give a general increase? Yes No Does your company give a cost of living increase? Yes No 51 55. HRM-370 Compensation System of DBL & UCBL 7. Does your company have a formal employee merit review process? Yes No 8. Does your company have a bonus or incentive plan? Yes No If yes, please answer the following questions. What type of bonus? Annual Bonus Incentive Bonus Other What is was the average bonus paid last year? Tk._____________________________ What is this years projected average bonus? _____________________________% 9. What criteria does your human resource department use to arrive at giving allowances and benefits to employees? ____________________________________________________________ 10. Please mark the benefit plans offered by the organization: Benefits Pension Plan Retirement Profit Sharing Medical Short Term Disability Long Term Disability Life Insurance Vacation Holidays Personal Days Sick Time Offer Not-offer 11. What is the waiting period before benefits are paid? _______weeks 12. Do you get any reimbursement for training or professional development? Yes No 13. When is reimbursement made? Starting period At completion of the course/semester Middle period Other 14. What is the maximum reimbursement amount an employee can receive per year? Tk.________ 15. Are you permitted time off from work to attend classes? Yes, with pay Yes, without pay Only in special cases No THANX A LOT FOR YOUR KIND ASSISTANCE 52 56. HRM-370 Compensation System of DBL & UCBL 8. ~ ~ REFERENCES Richard I. Henderson, Compensation Management in a Knowledge Based World, 10 th Edition, Pearson. Websites of both DHAKA BANK LIMITED & United Commercial Bank Ltd. 53