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MANAGERIAL COMPENSATIONSALARY ANALYSIS- TRANSFORMER SALES
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BY:
Anshu Sethia
Anurag Anand
Ayushi Anand
M. Kavita
Rohit Mittal
Shweta Shukla
Sugam Malhotra
Vineet Gijre
Table of ContentsENTRY LEVEL................................................................................................................................................2
LARSEN & TOUBRO..................................................................................................................................2
SALARY COMPONENTS........................................................................................................................2
INCENTIVES AND ALLOWANCES..........................................................................................................2
SIEMENS..................................................................................................................................................3
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS....................................................................3
SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED...................................................................................4
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS....................................................................4
COMPARATIVE ANALYSIS.........................................................................................................................4
MANAGER LEVEL.........................................................................................................................................6
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS...................................................................6
COMPARATIVE ANALYSIS.........................................................................................................................7
GM LEVEL....................................................................................................................................................9
SALARY STRUCTURE OF LARSEN & TOUBRO............................................................................................9
RECOMMENDATIONS................................................................................................................................10
BASIC SALARY........................................................................................................................................10
ALLOWANCES........................................................................................................................................10
VARIABLE PAY........................................................................................................................................11
SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE............................................................................11
SALARY STRUCTURE OF A MANAGER....................................................................................................12
SALARY STRUCTURE OF A GENERAL MANAGER.....................................................................................13
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ENTRY LEVEL
LARSEN & TOUBRO
SALARY COMPONENTS
Components of the salary Amount (INR) Percent of CTC
Basic 120000
HRA 60000 50
Conveyance 36000 6.07
Special Allowance 180000 30.35
Team Performance Bonus 75000 12.64
Total Base (A) 471000
INCENTIVES AND ALLOWANCES
Components Amount (INR) Percent of CTC
LTA 20,000 3.37
Telephone 6,000 1.01
Medical 36,000 6.07
CCA 60,000 10.11
Total Incentives (B) 1,22,000
Total (A+B) 5,93,000
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SIEMENS
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS
ComponentsAmount
(INR p.m.)
Amount
(INR p.a.)
Percent
of CTC
(A) Basic Salary 11696 140352
Allowances / Benefits
House Rent Allowance 5,848 70176 50Based on Basic
pay
Conveyance Allowance 1,100 13200 3.3
Based on target
Pay
Medical Allowance 1,250 15000 3.75
Special Allowance 6,048 72576 18.14
Leave Travel Allowance (#) 1,333 15996 3.99
(B) Total Allowances/Benefits 15,579 186948
Base Pay (A+B) 27,276 327300 (C) 81.82
Retiral Benefits (Annual)
Company's Contribution to PF (12%
of Basic Salary)16,843 4.21
Company's Gratuity Provision
(4.81% of Basic Salary)6,751 1.68
Total Retiral Benefits 23,594 (D) 5.89
(E) Total Fixed Pay (TFP) (C+D) 3,50,904
(F)Performance Pay @ 100% p.a. on
Base49,096
(G) Target Pay p.a. (E+F)
4,00,000
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SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS
EARNINGSAmount (INR
p.m.)
Amount (INR
p.a.)
Percent of
CTC
Basic 14,455 1,73,460
HRA 7,227 86,724 49.99
CONVEYANCE ALLOWANCE 800 9,600 2.59
SPECIAL ALLOWANCE 10,456 1,25,472 33.90
Total Rs. 32,938 3,95,256
DEDUCTIONS
PF 1,735 20,820 5.62
CANTEEN 360 4,320 1.16
Total 2,095 25,140
Net Salary Rs. 30,843 3,70,116
COMPARATIVE ANALYSIS
Schneider Electric Infrastructure Limited, L&T and Siemens are in transformer industry but still
their compensation structure varies.
Particulars L &T Siemens Schneider
HRA 50% 50% 50%
Conveyance 6.07% 3.3% 2.6%
Special allowance 30.35% 18.14% 34%
Medical Allowance 6.07% 3.75 N\A
Leave Travel Allowance 3.37% 4% N\A
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From the above table it can be seen as in HRA all the companies have a standard of 50% of
Basic, but variance is there w.r.t. conveyance and special allowance. Where in L&T conveyance
is 6% in Schneider it is 2.6% only.
Siemens pays a special allowance of only 18.14% as compared to other to companies which pay
a significant amount of 30%-34% of total pay.
Schneider as compared to other two companies does not pay Medical allowance and LTA.
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MANAGER LEVEL
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS
SNo. Heads of Payment Amount (INR)
L&T Siemens
(A) Basic Salary p.m. 25,000 29,241
Allowances / Benefits p.m.
House Rent Allowance 10,000 14,621
Conveyance Allowance 15,000 1,100
Medical Allowance 3,000 1,250
Special Allowance 25,000 20,645
Telephone 1,000 -
CCA 7,500 -
Education Allowance 1,500 -
Loan 8,333.33 -
Leave Travel Allowance (#) 30,000 1,333
(B) Total Allowances / Benefits p.m. 10,1333.33 38,949
(C) Base Pay p.m. (A+B) 12,6333.33 68,190
(D) Base Pay p.a. (C*12) 15,16000 81,8280
Retirals (Annual)
Company's Contribution to PF (12% of Basic Salary) 36,000 42,107
Company's Gratuity Provision (4.81% of Basic
Salary) 14,430 16,878
(E) Total Retirals p.a. 50,430 58,985
(F) Total Fixed Pay (TFP) p.a (D+E) 15,66,430 8,77,265
Ecal & Reptation Pay 10,00,000 -
Performance Bonus 1,50,000 1,22,741
(G) Max Variable Component 11,50,000 1,22,741
(H) Target Pay p.a. (F+G) 27,16,430 10,00,006
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(I) Target Pay p.m. 2,26,369.16 83,333.83
COMPARATIVE ANALYSIS
S.No Heads of Payment
As % Of Basic Salary (per month)
As % Of Target Pay (per annum)
As % Of Target Pay (per month)
L&T Siemens L&TSiemen
s L&T Siemens
(A) Basic Salary p.m. 11.04 35.09Allowances / Benefits p.m.
House Rent Allowance 40.00 50.00 4.42 17.55Conveyance Allowance 6.63 1.32Medical Allowance 1.33 1.50Special Allowance 11.04 24.77Telephone 0.44 0.00CCA 3.31 0.00Education Allowance 0.66 0.00Loan 3.68 0.00Leave Travel Allowance (#) 13.25 1.60
(B)Total Allowances / Benefits p.m. 44.76 46.74
(C) Base Pay p.m. (A+B) 55.81 81.83(D) Base Pay p.a. (C*12) 55.81 81.83Retirals Annual(E) Total Retirals p.a. 1.86 5.90
(F)Total Fixed Pay (TFP) p.a (D+E) 57.67 87.73Ecal & Reptation PayPerformance Bonus
(G) Max Variable Component 42.33 12.27(H) Target Pay p.a. (F+G)(I) Target Pay p.m.
The composition of the salary structure of manager sales in transformer industry varies with the
company they are working in. For example, as illustrated above, the HRA varies between 40%
and 50% in Larsen and Toubro and Siemens. The ratio of variable to fixed pay also varies from
company to company. Larsen and Toubro emphasize more on variable pay, which is similar to
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industry pattern for sales whereas in Siemens the fixed component is more. The max variable
component in L&T is around 43% while in Siemens its only 12%.
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GM LEVEL
SALARY STRUCTURE OF LARSEN & TOUBRO
Components of the salary Amount (INR) Percent of CTC
Basic 6,00,000
HRA 2,40,000 40
Conveyance 2,40,000 5.384
Special Allowance 4,00,000 8.973
Performance Bonus 3,00,000 6.729
Ecal & Reptation Pay 2,00,0000 44.86
Total 37,80,000(A)
Incentives and Allowances Amount (INR) Percent of
CTC
Uniform Allowance
LTA 50,000 1.122
Telephone 24,000 0.538
Medical 1,00,000 2.243
Food Coupons
TOTAL 1,74,000(B) 3.903
Education Allowance 24,000 0.538
CCA 1,80,000 4.038
Loan 3,00,000 6.729
TOTAL 5,04,000(C)
TOTAL SALARY (A+B+C) 44,58,000
We could not do a comparative analysis for GM level as we could not get data for this position.
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RECOMMENDATIONS
With the analysis of salary structures, we have come up with the salary structure for an entry
level employee, manager and general manager for a company involved in transformer sales.
The components across the levels are divided into following buckets
Basic salary
Allowance kitty
Special allowance
Variable component
Retiral Benefits
The components would vary across the levels.
We have adopted a Flexible compensation plan (Cafeteria plan) for the compensation
structure across levels. This would allow the employee to design his/her allowance according to
his/her needs, which would lead to employee satisfaction.
BASIC SALARY
Every employee would be paid a fixed amount of basic salary depending on the level s/he falls.
ALLOWANCES
Every employee will be given fixed amounts for
Allowance kitty
Special allowance
List of allowances for allowance kitty & special allowance
The employee will have the discretion to opt for allowances of his/her choice in the “allowance
kitty” and “special allowance”. Employee may also restructure the amount between the
allowances in each bucket. The components in each of the bucket would vary across every level.
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VARIABLE PAY
The variable pay across the levels will be disbursed based on the following to factors:
Unit Performance
Company performance
Weight age for the Unit performance would be 60 % while that of the company’s performance
would be 40 %. This was a common trend observed across organizations involved in transformer
business.
SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE
COMPONENTS Amount (INR) % OF CTCBasic 1,62,000 36.00
Allowance Kitty
HRA 81,000 18.00Conveyance 9,600 2.13Food Coupons 48,000 10.67Medical Allowance 15,000 3.33LTA 12,000 2.67
Total Allowance kitty 1,65,600 36.8Special Allowance Special Allowance 47,113 10.47Total Fixed Salary 3,74,713 83.27
Variable Team Performance Bonus 54,000 12.00
Retiral BenefitsPF 13,495 3.00Gratuity 7,792 1.73CTC 4,50,000
Special Allowance Amount (INR)Uniform Allowance 40,000Entertainment Allowance 5,000Mess Allowance 2,113Total 47,113
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Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market leader and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we decided to keep ourselves at 112th percentile of the median.
The team performance bonus is a total of 12% of the total pay. This 12% is further divided into 40% organizational performance and 60% unit performance. This gives us the internal alignment for the role.
SALARY STRUCTURE OF A MANAGER
COMPONENTS INR % OF NET SALARY
Basic Salary p.m. 4,00,000 25.00
Allowance Kitty
House Rent Allowance 2,00,000 12.50Conveyance Allowance 9,600 0.60Medical Allowance 15,000 0.94Telephone 25,000 1.56Food Coupons 48,000 3.00Education Allowance 25,000 1.56Loan 2,00,000 12.50Leave Travel Allowance (#) 12,000 0.75
Total Allowance Kitty 5,34,600 33.41Special Allowance Special Allowance 78,160 4.89
FIXED SALARY 10,12,760
63.30
Variable Salary Performance Bonus 5,20,000 32.50
Retirals Annual
Company's Contribution to PF (12% of Basic Salary)
48,000 3.00
Company's Gratuity Provision (4.81% of Basic Salary)
19,240 1.20
Total Retirals p.a. 67,240 4.20
CTC 16,00,000
Special Allowance Amount (INR)Uniform Allowance 40,000Fuel 30,000Entertainment Allowance 5,000Messing Allowance 3,160Total 78,160
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SALARY STRUCTURE OF A GENERAL MANAGER
Heads of Payments Individual Components Amount (In Rs. p.a) % of CTC
Basic Salary 4,80,000 15
Allowances Kitty
House Rent Allowance 2,40,000 7.5Conveyance Allowance 9,600 0.3Medical Allowance 15,000 0.47Telephone 40,000 1.25Food Coupons 48,000 1.5Education Allowance 25,000 0.78Loan 4,00,000 12.5Leave Travel Allowance (#) 12,000 0.38
Total Allowances Kitty 149600 24.68Special Allowance Special Allowance 4,09,712 12.8
Retirals Annual
0
Company's Contribution to PF
57,600 1.8 (12% of Basic Salary)
Company's Gratuity Provision
23,088 0.72(4.81% of Basic Salary)Total Retirals p.a. 80,688 2.52
Performance Bonus 14,40,000 45
CTC 32,00,000
Special Allowance Amount (INR)Uniform Allowance 40,000Fuel 50,000Entertainment Allowance 5,000International travel allowance 2,00,000Driver Allowance 1,14,712Total 4,09,712
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