hris group 3_compensation management

7/31/2019 HRIS Group 3_Compensation Management

1/23

P G P - 2

9 / 1 5 / 2 0 0 9

Group 3

Submitted to: Prof. Francis Castelino

Group Members:

Barun Nanda u108015

Sumedh Kiran Vijayakar u108056

Pallavi Tewari u108121

Ankur Upadhyay u108067

Vibhav Kumar u108117

Compensation

Management


2/23

Table of Contents

Introduction ............................................................................................................................................ 1

Components of Compensation System ............................................................................................... 1

Need for Compensation Management ............................................................................................... 1

Components of compensation ............................................................................................................ 2

Background ............................................................................................................................................. 5

IT and Education Industry ................................................................................................................ 5

IT and E-Governance......................................................................................................................... 5

Industry Overview............................................................................................................................. 6

Characteristics ................................................................................................................................... 7

KalingaSoft .............................................................................................................................................. 8

General Description ............................................................................................................................ 8

Existing System ....................................................................................................................................... 9

Proposed System .................................................................................................................................. 10

Scope ................................................................................................................................................. 10

Technology ........................................................................................................................................ 10

Cost Benefit Analysis ......................................................................................................................... 11

Costs involved ............................................................................................................................... 11

Benefits obtained .......................................................................................................................... 11

Context Diagram ............................................................................................................................... 11

Data Flow Diagram ............................................................................................................................ 12

Level 1 ........................................................................................................................................... 12

Level 2 ........................................................................................................................................... 13

ER Diagram ........................................................................................................................................ 14

Input-Output Forms .......................................................................................................................... 15

System Output Forms ....................................................................................................................... 19


3/23

1 | P a g e

Introduction

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 analysing the job work and

responsibilities. Components of a compensation system are as follows:

Need for Compensation Management

A good compensation package is important to motivate the employees to increase theorganizational 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 psychologicaland self-actualization needs to fulfil. 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.


4/23

2 | P a g e

Components of compensation

Basic wages/Salaries

These refer to the cash component of the wage structure based on which other elements of

compensation may be structured. It is normally a fixed amount which is subject to changes based on

annual increments or subject to periodical pay hikes. It is structured based on the position of an

individual in the organization and differs from grades to grades.

Dearness allowance

The payment of dearness allowance facilitates employees and workers to face the price increase or

inflation of prices of goods and services consumed by him. The onslaught of price increase has amajor bearing on the living conditions of the labour. The increasing prices reduce the compensation

to nothing and the money's worth is coming down based on the level of inflation.

The payment of dearness allowance, which may be a fixed percentage on the basic wage, enables

the employees to face the increasing prices.

Bonus

The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually

or in proportion to the profitability. The Government also prescribes a minimum statutory bonus for

all employees and workers.

There is also a bonus plan which compensates the Managers and employees based on the sales

revenue or Profit margin achieved. Bonus plans can also be based on piece wages but depends upon

the productivity of labour.

Commissions

Commission to Managers and employees may be based on the sales revenue or profits of the


5/23

3 | P a g e

company. It is always a fixed percentage on the target achieved. For taxation purposes, commission

is again a taxable component of compensation.

The payment of commission as a component of commission is practised heavily on target based

sales. Depending upon the targets achieved, companies may pay a commission on a monthly or

periodical basis.

Mixed plans

Companies may also pay employees and others a combination of pay as well as commissions. This

plan is called combination or mixed plan. Apart from the salaries paid, the employees may be eligible

for a fixed percentage of commission upon achievement of fixed target of sales or profits or

Performance objectives.

Nowadays, most of the corporate sector is following this practice. This is also termed as variable

component of compensation.

Piece rate wages

Piece rate wages are prevalent in the manufacturing wages. The labourers are paid wages for each

of the quantity produced by them. The gross earnings of the labour would be equivalent to number

of goods produced by them.

Piece rate wages improves productivity and is an absolute measurement of productivity to wagestructure. The fairness of compensation is totally based on the productivity and not by other

qualitative factors.

The GANTT productivity planning and Taylor's plan of wages are examples of piece rate wages and

the related consequences.

Sign on Bonuses

The latest trend in the compensation planning is the lump sum bonus for the incoming employee. A

person, who accepts the offer, is paid a lump sum as a bonus.

Even though this practice is not prevalent in most of the industries, Equity research and investment

banking companies are paying this to attract the scarce talent.

Profit sharing payments

Profit sharing is again a novel concept nowadays. This can be paid through payment of cash or

through ESOPS. The structuring of wages may be done in such a way that, it attracts competitiveness

and improved productivity.


6/23

4 | P a g e

Profit sharing can also be in the form of deferred compensation at the time of retirement. At the

time of retirement, the employees may be paid a lump sum or retiral benefits.

Fringe benefits

The provision of fringe benefits does not attract any explanation. These include

a) Company carsb) Paid vacationsc) Membership of social/cultural clubsd) Entertainment tickets/allowancese) Discounted travel ticketsf) Family vacation packages.Reimbursements

Employees, depending upon their gradations in the organization may get reimbursements based on

the Expenses incurred and substantiated. Certain expenses are also paid based on expenses incurred

during the course of business.

In many cases, employers provide advances to the employees for incurring certain expenses that are

incurred during the course of the business.

Some examples are

a) Travel expensesb) Entertainment expensesc) Out of pocket expensesd) Refreshments expenses during office routine outside office premises.

Sickness benefits/pregnancy

The increasing social consciousness of corporate citizens has resulted in the payment of sickness

benefit to the Employees of companies. This also includes payments during pregnancy of women

employees.

The expenses incurred due to injury or illness are compensated or reimbursed to the employees. In

certain companies, the death of an employee is compensated financially.

Companies are also providing supporting financial benefits to the family of the bereaved employees.

However, companies covering these cost through appropriate insurance policies like, Medical and

life insurance.


7/23

5 | P a g e

Background

IT and Education Industry

Education is one of Indias prime industries. While its contribution to nations development has

always been the topic of discussion yet the commercial value is not something that has been fully

explored. On an approximate basis it is estimated to be almost 20,000 crore worth. To explain the

importance of this number the domestic software industry or automobile industry has a turnover of

much less. Along with the huge commercial value attached to it, it is also one of the fastest growing

sectors. So, on a whole it can be regarded as one of the most attractive industry in the country

today.

But with these rapid progresses the issues of increasing complexity also need to be addressed. Today

educational institutions are becoming more and more complex organizations. Instead of limiting

themselves to just imparting quality education they have grown into organizations that have to

manage a wide range of issues starting form marketing of themselves to get better students for

admission and corporate for campus placements to manage internal operations, sophisticated

financial planning and proper co-ordination with regulatory authorities etc. In this age of information

an efficient MIS that facilitates cost reduction, responsive and effective decisions and brand image

enhancement is the call of the time.

Also across sectors most of the organizations today go for intensive automation of work processes

that give significant improvements in terms of cost and accuracy. But educational sector has lagged

behind in this respect till now. With the advent of newer ERP technology and solutions they have

also taken the plunge. The software industry though slowly yet have come to recognize the latent

demands of educational industry.

A few facts that the institutes should keep in mind while going for an ERP package are:

Integrated Software Internet based Product Multi User Decision Support System

IT and E-Governance

Citizens expect their public administration to provide services of quality, adapted to the most recent

developments in the political, economic, social, and technological environments, and at the lowest

cost. It is generally in response to these expectations that methods, techniques, or practices that


8/23

6 | P a g e

appears promising in the private sector, are made use of in the public sector. This is particularly true

in the area of information technology (IT). Given that each sector is confronted with specific

environmental constraints, the transfer of IT practices from the private to the public sector would

not occur automatically. This has been confirmed by prior empirical studies showing differences

between private and public organizations with regard to IT management. These studies indicate,

among other things, that in contrast to private firms that implement IT applications as competitive

weapons and protect their specific IT competencies, public agencies must often share their

applications and competencies with other agencies that have similar activities or functions. Also,

given that resources are allocated by budgetary processes rather than by market mechanisms as in

the private sector, IT planning in the public sector must often bow to political pressure and is thus

mostly oriented in the short term.

E-government has raised operational, functional and strategic issues in regard to the transformation

of public organizations and their implementation of new technologies. On the more specific issue of

Enterprise Resources Planning (ERP) systems, the need to develop a body of knowledge specific to

public organizations is appreciated more and more. In order to provide more efficient government

and better services to citizens, public administrations and agencies have invested in Enterprise

Resource Planning (ERP) systems as their basic technological infrastructure for e-government.

Industry OverviewAccording to a NASSCOM-McKinsey report, annual revenue projections for Indias IT industry in 2008

are US $ 87 billion and market openings are emerging across four broad sectors, IT services, software

products, IT enabled services, and e-businesses thus creating a number of opportunities for Indian

companies. In addition to the export market, all of these segments have a domestic market

component as well.

Other key findings of this report are:

Software & Services will contribute over 7.5 % of the overall GDP growth of India IT Exports will account for 35% of the total exports from India Potential for 2.2 million jobs in IT by 2008 IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion Market capitalization of IT shares will be around U.S. $ 225 billion

Government of India has taken a major step towards promoting the domestic industry and achieving

the full potential of the Indian IT entrepreneurs with the formation of a new ministry for IT. So there


9/23

7 | P a g e

lies enormous opportunity to grow and also because of low barrier to entry, there could be high

competition ahead in this sector.

Characteristics

The marginal cost of each unit of additional unit of software or hardware is insignificant incomparison to the value addition because of this.

Its is a knowledge based industry Efficient use of human resource is very much required for success and growth. Entry barrier is low. The companies in this organization enjoy tax exemption and that helps in growth of the

firms.

The firms have low fixed asset and the majority of the firms asset is intangible (e.g. Humanresource)


10/23

8 | P a g e

KalingaSoft

General Description

Kalinga Software Private Limited (KalingaSoft), an ISO 9001 certified company, has been promoted

by academicians and education experts with a vision to create a sustained competitive edge for its

clients through innovative and need centric solutions to facilitate effective education management.

KalingaSoft is an innovator and thought leader in the area of education management and has

delivered world-class products and services to its customers. KalingaSoft's leadership is built on a

deep understanding of the education sector, extensive experience and ability to deploy the best of

class solutions to solve customer problems individually or through its partners. KalingaSoft has been

identified as an ISV partner by IBM for its institute management system solutions Advanced Level

status.

Since its inception 10 years back KalingaSoft has provided end to end education consulting and

technology implementation support to the entire spectrum of education domain. KalingaSoft has

implemented its best of the breed educational ERP packages "Greycells" and "e-IMS" in more than

75 educational institutes including universities, colleges and schools.

KalingaSoft is focused in building its products and taking them closer to prospective users. In that

sense, KalingaSoft has significant interests in educational technology (espl. education web ERP)

space, corporate solutions, office automation and healthcare.

KalingaSoft has multiple strength areas including education sector, web technology, corporate

solutions, healthcare, office automation, e-governance, network consulting, training (man power

development). It is currently focusing on expanding its operations by offering multiple service

domains including product development, maintenance support, re-engineering, package

implementation and network consulting etc. to meet the end-to-end needs of its clients and develop

as a single-window shop for its customers.

KalingaSoft constantly works towards innovating on technologies profitably used in corporate

sectors and adapting them in manner that enhances the quality and ROI of education delivery and

management. Since 2003, KalingaSoft has introduced a wide range of solutions within the e-Campus

offering, including the popular education ERP - e-IMS.


11/23

9 | P a g e

Existing System

Attendance System is automated: Magnetic Swipe card system has been implemented to easethe attendance process. It is dynamic in nature and can provide all details of employees

presence like in-time, out-time, employee details etc. Spreadsheet based payroll model: Earlier the payroll process was manual in nature and there

was no standardized model. So a spreadsheet based model was implemented with Tax

solutions to reduce time consumption and make the process easier and efficient.

Spreadsheet model for performance management and appraisal. Spreadsheet model to keep a track of monthly cost, revenue, resource allocation and other

management processes.

KalingaSoft is currently comprehending the options of using low cost software solutions to automate

the existing processes. So they are planning to implement HRIS so tackle the issues related to HR.


12/23

10 | P a g e

Proposed System

Scope

Compensation formalizes as a system the relationship between wages and performance. Trends in Compensation

o Task based compensation to Skill Based Appraisalo Individual Job Descriptions to Group Task Descriptionso Individual Job Evaluation Schemes to compensate (pay) for Performance Schemes.

Technology

Considering the requirements of scalability and flexibility, we recommend that the proposed

solution be built on a web based technology, which would enable the user to access the application

on a regular web browser. The 4-tier architecture presents itself as the best alternative to build this

kind of an application.

The browser on Tier4 becomes the thin client, processing only HTML and other scripting languages

(JavaScript etc) to perform user validations and basic processing. The Web server on Tier3 and the

Application server on Tier 2 form the brain of the application, performing all the processing logic

and data access. The Database forms the Tier1, and fulfils the data access requirements of the

application.

The 4 tier architecture presents the best option in management of the client server applications.

With a browser as the standard client, there is never a need to update the client if there are changes

at the server side. Moreover, the application can be made available to the external users too

(outside the companys network). Hence, it will allow employees to access it from their homes, or if

they are travelling.

The company could deploy any of the Web based technologies (ASP.net, VB.net or SharePoint

portal)


13/23

11 | P a g e

Cost Benefit Analysis

Costs involved

High upfront cost: HRIS package generally is expensive and is one of the main reasons whythe companies keep away from using them.

Training costs: The present employees have to be trained as to how to use the system forbetter performance.

The other systems need to be upgraded too so as to work in tandem with the new system.Benefits obtained

Reduced time: With the help of HRIS in evaluation of compensation the total time requiredfor collecting needs from different departments and coming up with the compensation

package is reduced.

Reduces paper work: In line with most IT systems, HRIS reduces the paper work involved incollection of information.

Reduces Employee costs: Reduces human costs involved in collection of data. Increases Efficiency of the process: As possibility of human errors is reduced overall

efficiency of the system is improved.

Context Diagram


14/23

12 | P a g e

Data Flow Diagram

Level 1


15/23

13 | P a g e

Level 2


16/23

14 | P a g e

ER Diagram


17/23

15 | P a g e

Input-Output Forms


18/23

16 | P a g e

Level 1 Manager


19/23

17 | P a g e


20/23

18 | P a g e

Level 2 Manager


21/23

19 | P a g e

System Output Forms

Report for Level 2 Managers


22/23

20 | P a g e

Report for Level 2 Managers


23/23

21 | P

Report for Line Managers

hris group 3_compensation management

Documents