compensation mgmt 823
TRANSCRIPT
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Asad Hussain MBA HRM Roll No.508195455
ALLAMA IQBAL OPEN UNIVERSITY
ISLAMABAD
ASSIGNMENT NO.2
ON
Compensation Management (823)Topic:-
Designing a staff budget
program
SUBMITTED BY_ ASAD HUSSAIN
SUBMITTED TO SIR KANWAR M. ANWAR SB.
ROLL NUMBER 508195455.
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MOB. NUMBER 03335174447.
ACKNOWLEDGEMENT
All praises to Almighty Allah, the most Gracious, the most
Beneficent and the most Merciful, who enabled me to complete
this assignment.
There is always a sense of gratitude one expresses to others for
the helpful and needy service they render during all phases of life.
I have completed this assignment with the help of different
personalities. I wish to express my gratitude towards all of them.
It gives me immense pleasure to express my deep regards and
sincere sense of gratitude to Mr. Muhammad Khurshid, Manager
(Payroll) PTCL H/Qs, Islamabad for his support which helped me
throughout my assignment.
I would also like to thank my teacher MR. KANWAR M. ANWAR
SB for steering my confidence and capability for giving me insight
into assignment by giving me exposure to the arena of
competitive and real world.
Lastly I would like to thank my parents and friends for their
constant support during the duration of my training.
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Thank You One and AllASAD HUSSAIN.ROLL NO.
508195455.
MBA (HRM).
EXECUTIVE SUMMARY
This assignment is a research-oriented activity, which represents
both the theoretical and practical implication of the topic. In the
first section of this assignment, I explain the theoretical aspect of
the topic and all major parts has been explained which are
involved in the Designing a Staff Budget Programme. For
empirical study, I select my own organization (PTCL) and analyze
budget process for staff wages and salaries.
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CONTENTS:
TITLE PAGE... 1
ACKNOWLEDGEMENT 2
EXECUTIVE SUMMARY.. 3 CONTENTS..... 4
COMPONENTS OF COMPENSATION SYSTEM 5
TYPES OF COMPENSATION... 6
NEEDS OF COMPENSATION MANAGEMENT..... 6
STRATEGIC COMPENSATION.... 7
DIRECT COMPENSATION 8
INDIRECT COMPENSATION 10
THE BUDGET PROCESS 13
DISTRIBUTING BUDGET WORKSHEETS AND INSTRUCTIONS. 14
CONDUCTING TRAINING SESSION 14
STEPS OF COMPLETE BUDGET PROCESS 15
PRACTICAL STUDY... 17
REVIEW AND APPROVAL REQUIREMENTS. 21
PRINCIPLES.. 21
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Human Resource is the most vital resource for any organization. It
is responsible for each and every decision taken, each and every
work done and each and every result. Employees should be
managed properly and motivated by providing best remuneration
and compensation as per the industry standards. The lucrative
compensation will also serve the need for attracting and retaining
the best employees.
Compensation is the remuneration received by an employee in
return for his/her contribution to the organization. It is an
organized practice that involves balancing the work-employee
relation by providing monetary and non-monetary benefits to
employees.
Compensation is an integral part of human resource management
which helps in motivating the employees and improving
organizational effectiveness.
Components of Compensation System
Compensation systems are designed keeping in minds the
strategic goals and business objectives. Compensation system is
designed on the basis of certain factors after analyzing the job
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work and responsibilities. Components of a compensation system
are as follows:
Types of Compensation
Compensation provided to employees can direct in the form of
monetary benefits and/or indirect in the form of non-monetary
benefits known as perks, time off, etc. Compensation does not
include only salary but it is the sum total of all rewards and
allowances provided to the employees in return for their services.
If the compensation offered is effectively managed, it contributes
to high organizational productivity.
Direct Compensation
Indirect Compensation
Need of Compensation Management
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A good compensation package is important to motivate the
employees to increase the organizational productivity.
Unless compensation is provided no one will come and work
for the organization. Thus, compensation helps in running an
organization effectively and accomplishing its goals.
Salary is just a part of the compensation system, the
employees have other psychological and self-actualization
needs to fulfill. Thus, compensation serves the purpose.
The most competitive compensation will help the
organization to attract and sustain the best talent. The
compensation package should be as per industry standards.
Strategic Compensation
Strategic compensation is determining and providing the
compensation packages to the employees that are aligned with
the business goals and objectives. In todays competitive scenario
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organizations have to take special measures regarding
compensation of the employees so that the organizations retain
the valuable employees. The compensation systems have
changed from traditional ones to strategic compensation systems.
Direct Compensation
Direct compensation refers to monetary benefits offered and
provided to employees in return of the services they provide to
the organization. The monetary benefits include basic salary,
house rent allowance, conveyance, leave travel allowance,medical reimbursements, special allowances, bonus, Pf/Gratuity,
etc. They are given at a regular interval at a definite time.
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Basic Salary
Salary is the amount received by the employee in lieu of the work
done by him/her for a certain period say a day, a week, a month,
etc. It is the money an employee receives from his/her employer
by rendering his/her services.
House Rent Allowance
Organizations either provide accommodations to its employees
who are from different state or country or they provide house rentallowances to its employees. This is done to provide them social
security and motivate them to work.
Conveyance
Organizations provide for cab facilities to their employees. Few
organizations also provide vehicles and petrol allowances to their
employees to motivate them.
Leave Travel Allowance
These allowances are provided to retain the best talent in the
organization. The employees are given allowances to visit any
place they wish with their families. The allowances are scaled as
per the position of employee in the organization.
Medical Reimbursement
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Organizations also look after the health conditions of their
employees. The employees are provided with medi-claims for
them and their family members. These medi-claims include
health-insurances and treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons to
motivate them and provide them the social security. The bonus
amount usually amounts to one months salary of the employee.Special Allowance
Special allowance such as overtime, mobile allowances, meals,
commissions, travel expenses, reduced interest loans; insurance,
club memberships, etc are provided to employees to provide
them social security and motivate them which improve the
organizational productivity.
Indirect Compensation
Indirect compensation refers to non-monetary benefits offered
and provided to employees in lieu of the services provided by
them to the organization. They include Leave Policy, Overtime
Policy, Car policy, Hospitalization, Insurance, Leave travel
Assistance Limits, Retirement Benefits, Holiday Homes.
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Leave Policy
It is the right of employee to get adequate number of leave while
working with the organization. The organizations provide for paid
leaves such as, casual leaves, medical leaves (sick leave), and
maternity leaves, statutory pay, etc.
Overtime Policy
Employees should be provided with the adequate allowances and
facilities during their overtime, if they happened to do so, such as
transport facilities, overtime pay, etc.
Hospitalization
The employees should be provided allowances to get their regular
check-ups, say at an interval of one year. Even their dependents
should be eligible for the medi-claims that provide them
emotional and social security.
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Insurance
Organizations also provide for accidental insurance and life
insurance for employees. This gives them the emotional security
and they feel themselves valued in the organization.
Leave Travel
The employees are provided with leaves and travel allowances to
go for holiday with their families. Some organizations arrange for
a tour for the employees of the organization. This is usually doneto make the employees stress free.
Retirement Benefits
Organizations provide for pension plans and other benefits for
their employees which benefits them after they retire from the
organization at the prescribed age.
Holiday Homes
Organizations provide for holiday homes and guest house for their
employees at different locations. These holiday homes are usually
located in hill station and other most wanted holiday spots. The
organizations make sure that the employees do not face any kind
of difficulties during their stay in the guest house.
Flexible Timings
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Organizations provide for flexible timings to the employees who
cannot come to work during normal shifts due to their personal
problems and valid reasons.
The key provisions in a budget enable the organization to
evaluate itself in terms of progress made to achieve its stated
goals and objectives. Because staff is a prime resource for the
organization, establishing and measuring goals in relationship to
salary and staff size are prudent objectives of the wage and
salary administration programs. It the organization is able tomaintain the proper sized staff and offer an affordable yet
competitive total pay package to each employee it attempts to
attract, retain, and motivate, the organization may win in several
ways: it will have the best staff to help it to accomplish its gals,
and its pay package should be affordable due to the effort and
concern demonstrated throughout the organization to the
development of a sound budget planning program for its staff.
The Budget Process:
Strategy Sessions with Distribute Budget WorksheetsSenior Management and Instructions
Training Sessions
* Department Managers
* Subordinates Staff
Compile Statistical Collect the Budgets Data Follow-UpData and Verify * Advice
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* Progress
* Deadline
Analyze Forecasts
Review andRevise
Submit Final Feedback from Monitor Budgeted VersusBudget Managers Actual Performance
1) The process of budget is consisting above mentioned steps,
among them the strategy sessions is important one which take
first.
In strategy sessions with senior management, we make decisions
regarding the parameters for the next cycles salary increases.
Here we must provide the senior management with results of the
most recent research as a foundation for the pay increase
recommendations presented.
After the strategy has been decided with senior management, set
the process in motion. Begin with disseminating information first,
thorough written budget forms and second, through training
sessions.
2) Distributing Budget Worksheets and Instructions:
Before the training meetings, we should distribute the budget
forms we will be using to supervisors and mangers so that theycan become familiar with them prior to the meeting. When the
budget worksheets are distributed to the participant in advance of
the training sessions the group dynamics at the meeting are
positively affected. Advance distribution leads to greater
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familiarity with the forms more interaction in the meeting, and
more teamwork during the actual budget process. If the forms are
sprung on the participants at the meeting, resistance to the
process may ensure.
3) Conducting Training Sessions: Introduce the process to
manager within the organization by means of brief training
sessions. The key to garnering support among the management
levels is the presence of senior management, either with a senior
management kickoff at invitation only sessions or with a special
announcement stating that the decision has already been madeto go ahead with the budget process. Either in the training
sessions or in the announcement, discuss salary ranges and
market data.
These training sessions may in fact be in two stages if the size of
the organization warrants:
Stage 1: Unit or department mangers
Stage 2: Lower level or subordinate personnel
COMPLETING THE BUDGET:
Regardless of the method of human resource information system
(HRIS), computerized or manual, it is essential that the individuals
actually preparing the budgets have access to accurate and up-
to-date information regarding all the members of their staff.
Follow these seven steps to complete the budget process:
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Step -1) Collect and verify data:
It is extremely important that if the organization commits to a
staff budget process the requisite resources are committed to
verifying the accuracy of the data collected. If errors are allowed
to go undetected, they will surface later at the expense of
credibility to the wage and salary administration function.
Step 2) Compile statistical data:
Once the data has been verified, the data must be compiled so
that analysis can begin. The data must be presented in such a
way that is consistent with the method of HRIS currently in place.For example, on a manual HRIS system preprinted forms with
categories presented in comparable form will permit easy transfer
of figures. Similarly, automated HRIS systems will plan for
formatted budget forms that can provide easy-to-read data entry
capabilities as well as categories/ captions consistent with the
existing programs.
Step 3 ) Analyze forecasts:
Analyze the compiled forecasts to determine whether the
guidelines determined by senior management have been
complied with and to identify those areas that require additional
work and alternation.
Step 4 ) Review and revise:
After reviewing the data, determine which budgets require
additional work or revision. Then meet with those mangers to
work out a solution within the guidelines of the program
established by senior management.
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Step 5 ) Submit final budget:
After the numbers have received final adjustments and revisions,
report the final budget to senior management for its approval.
Step 6 ) Report to managers:
The next step is to report back to unit managers the final results
as approved by senior management. Unit mangers should retina a
copy of the finalized budget for audit and review purposes.
Step 7 ) Monitor budgeted vs. actual figures:
Throughout the year, we are responsible for monitoring the
budget process by reviewing every salary action request. Thismonitoring will ensure that each recommendation has the proper
authorization. We must also report the impact of each action on
the staff budget.
These all the steps which are important ingredient of making
budget, but the one thing is very important in whole process the
motive and the strategy made should be clear which is easily
understandable and also achievable not so hard and not so rough.
So the budget process is more effective and helpful to achieve
companys goals when the managers are sincere to their job and
also making the budget according to their financial boldness.
PRACTICAL STUDY OF THE ORGANIZATION:
As per the instructions of Allama Iqbal Open University I have to
visit one organization of my choice and have to study a topic
allotted to me according to my roll number. As my roll number is
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508195455, my topic number is 5, which is Designing a Staff
Budget Programme. Keeping in view the instructions of AIOU I
selected PTCL .
Introduction
PTCL is the largest telecommunications provider in Pakistan. PTCLalso continues to be the largest CDMA operator in the countrywith 0.8 million V-fone customers.
The company maintains a leading position in Pakistan as aninfrastructure provider to other telecom operators and corporatecustomers of the country. It has the potential to be aninstrumental agent in Pakistans economic growth. PTCL has laidan Optical Fibre Access Network in the major metropolitan centersof Pakistan and local loop services have started to be modernizedand upgraded from copper to an optical network.
On the Long Distance and International infrastructure side, thecapacity of two SEA-ME-WE submarine cable is being expanded tomeet the increasing demand of International traffic.Vision
To be the leading Information and Communication TechnologyService Provider in the region by achieving customer satisfactionand maximizing shareholders' value'.
The future is unfolding around us. In times to come, we will be the
link that allows global communication. We are striving towardsmobilizing the world for the future. By becoming partners ininnovation, we are ready to shape a future that offers telecomservices that bring us closer.
Mission
To achieve our vision by having:
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An organizational environment that fosters professionalism,motivation and quality
An environment that is cost effective and quality conscious
Services that are based on the most optimum technology
"Quality" and "Time" conscious customer service
Sustained growth in earnings and profitability
Core Values
Professional Integrity
Customer Satisfaction
Teamwork
Company Loyalty
Company Profile
PTCL is all set to redefine the established boundaries of thetelecommunication market and is shifting the productivity frontierto new heights. Today, for millions of people, we demand instantaccess to new products and ideas. More importantly we wantthem for their better living standards with increased values in thisever-shrinking globe of ours. We are setting free the spirit of
innovation.PTCL is going to be your first choice in the future as well, just as ithas been over the past six decades.
Broadband Pakistan:
PTCL Broadband is the largest and the fastest growing Broadbandservice in Pakistan. In less than two years of it launch, PTCL hasacquired over 150,000 Broadband customers in over 150 citiesand towns across Pakistan, leading the proliferation andawareness of Broadband services across Pakistan.
With its entry in this market segment, PTCL opened up abroadband culture in Pakistan, where till a couple of years backthere was very little awareness in the country about broadband &high speed internet services. PTCL made the broadbandtechnology affordable by lowering the barriers to entry, by
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geographically bringing the service within the reach of a commonuser across Pakistan and by continuous improvementsin customer care for the service.
Unique offers that makes PTCLs Broadband unmatchable are
special packages for the student segment, FREE modem andinstallation, FREE dial up service for its Broadband customers andFREE access to movies, music, classical Pakistani dramas, cricketmatches, gaming, educational and religious content on PTCLsentertainment portal BUZZ, (made exclusive only to PTCLBroadband subscribers). PTCL also offers multiple FREEpersonalized e-mail accounts exclusively to its broadband users.In addition, PTCL recently doubled its broadband speed for all itsexisting and new customers at the same price, making 1 MB as itsminimum offered speed.For a connection you simply dial 0800 8 0800 or visitwww.ptcl.com.pk
Theoretical Study of the Company w.r.t. the topic allotted
Roles and Responsibilities
Supervisors carry much of the responsibility for staff
compensation administration within the departments and must do
so in accordance with these guidelines. Department
administrators, senior business officers, human resource directors
and managers, home department coordinators and supervisors
are responsible for assuring their departments compliance with
staff posting and classification procedures, including approval and
recordkeeping requirements.
These Staff Wage and Salary Guidelines provide departments with
a framework around which those internal procedures must be
developed and executed. From time to time, the Staff Wage and
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Salary Guidelines may be modified because of special
circumstances that require additional restrictions, changes in
procedure, or levels of approvals.
Failure to comply with the requirements set forth in university and
department policies will be cause for disciplinary action, up to and
including termination.
The Pay Roll Deptt is responsible for the following:
Establishing Company compensation principles, Determining salary and wage guidelines.
Establishing position descriptions in accordance with Company
business practices that comply with Govt of Pakistan laws
Determining the classification of positions,
Conducting job audits,
Ensuring departments utilize job descriptions that most
appropriately match work performed,
Conducting and participating in compensation surveys
Devising departments on various compensation matters based
on both internal and external benchmarking, and
Monitoring departmental compliance with staff posting and
classification procedures.
Review and Approval Requirements
1. One-Level-Up Support
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The employees direct supervisor and the supervisors supervisor
review request and approve submission to next level.
2. Wing/Department Review and Support
The most senior position in the department (e.g. EVP, SEVP, etc.)
reviews request and approves all discretionary bonuses, mid-year
pay increases, overload compensation, merit increases in excess
of 3% for eligible staff for next fiscal year.
3. Review and Approval Modified Staff Wage and SalaryGuidelines
The Executive Vice President reviews request and determines
final approval
for all discretionary bonuses, mid-year pay increases, overload
compensation, merit increases in excess of 3% for eligible staff
Principles
1. Minimum Pay
All departments must comply with Govt of Pakistan law including
minimum pay requirements, minimum wage and salary rates,
time and record
keeping, overtime pay requirements and pay periods
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2. Accountability
The authority, accountability and responsibility for staff
compensation administration lies with supervisors, who are
required to execute employment actions in accordance with the
policies, practices and guidelines established by the university
and additional requirements that may be established by their
departments. Supervisors are required to consult with the person
to whom they report on all employment decisions and
transactions affecting the employees that report directly to them.This requirement for one Staff Wage and Salary Guidelines
level up review and support applies to all employment
decisions including, but not limited to, the determination of, or
changes in, salary and wages rates, bonus compensation,
perquisites, budget allocation, job postings, employment offers,
changes in the terms and conditions of employment, hiring,
promotions, demotions, reorganizations, and terminations.
3. Pay Practices
Supervisors are accountable for and expected to establish and
maintain pay in accordance with these staff wage and salary
guidelines and the additional requirements which are prescribed
by the president, executive vice president and senior vice
president for administration. When determining wage or salary
rates or other compensation, perquisites and non-standard
benefits, factors such as marketplace comparisons, the education
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and experience of the individual, fair and equitable distribution
among employees in the same or similar position classifications,
individual performance, and available funding must be
considered.
4. Pay Comparisons
The compensation staff in Payroll Section is available to assist
departments in reviewing compensation on a case-by-case basis.
The compensation staff will provide departments with salary/wage
averages by position.
Departments should utilize the recommended hiring ranges as a
guide to establishing starting wage and salary rates for newly
hired, rehired or transferred staff.
5. Funding
Funding for staff compensation is allocated during the budget
approval process each fiscal year. Changes to this allocation may
only be made during the annual budget approval process or
through a specific mid-year budget amendment or modification
request, which has been reviewed and approved by the
competent authority.
6. Annual Pay Increases
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Annual staff pay increases must follow the Review and Approval
Requirements and limitations described in these guidelines.
Annual staff pay increases are merit-based and should vary
according to individual performance and the amount of funding
available.
Every employee should be informed, in writing, of his or her
annual merit increase and new rate of pay, if applicable, before
July 1. The reason for the amount of the increase, or lack thereof,
should be described and documentation must be retained in theemployees file.
Performance evaluations should be based on performance
sustained over time and documented in writing. Employees must
be given the opportunity to comment on the evaluation
documentation. Both the evaluation and the employees
comments must be retained in the employees file.
7. Pay for Transfers and Rehires
Employees who transfer or are rehired into posted positions
should receive compensation appropriate to the new position,
their experience and qualifications and available funding as
described in number three above. Employees are not guaranteed
the rate of pay associated with their previous position or
guaranteed any increase because of a move to a new position.