synopsis of compensation

7/28/2019 Synopsis of Compensation

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SYNOPSIS

A STUDY OF

COMPENSATION SYSTEM

IN

COCA COLA LIMITED

Human Resource Management Project Report

[Submitted in Partial Fulfillment]

[Fourth Semester: JanuaryMay, 2013]

As a part of curriculum of

Master of Business Administration (MBA)

From

Bhai Parmanand Institute of Business Studies

Affiliated to

Guru Gobind Singh Indraprastha University, Delhi

Submitted By: Submitted To:Reena Gujral Shri.S.Thiyagarajan

Roll No.02411403911 Project Guide

MBA IV Semesters

Bhai Parmanand Institute of Business Studies

Shakarpur, Delhi-9


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INTRODUCTION

Compensation Management

Services rendered by individuals to organizations have to be adequately paid for. This

compensation generally comprises cash payments, which in addition to wages includes

pensions, bonus for good work, and shared profits. Compensation can also be in the form

of promotion or words of praise. Workers also drive a certain amount of personal

satisfaction as compensation for a job well done. It is difficult to outline and explain

every aspect of payment of compensation. Beside wages there are certain amount of job

compensation which an employee look for such as job satisfaction, job content,

responsibility, creativity and so on.

Compensation building blocks

Effective Compensation views total compensation as a strategic collection of a number of

programs developed to accomplish specific organizational objectives. The programs can

be classified into the following categories:

Base Salary -the fixed amount to be paid (often for performance) according to a system

of job classification or market based criteria.

Incentives -additional variable pay based on performance against objectives and payable

in cash, stock or tax-deferrable arrangements.


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Protective -programs which insure employees against loss of life or earning ability and

which insure against major current expenses:

Life insurance

Medical insurance Survivor's income Dental insurance

Disability income

Capital Accumulation -programs, usually stock plans, that provide the opportunity to

establish a personal estate under attractive conditions. Phantom equity arrangements and

long-term incentives can also be included under this category. Such programs should

serve the owners by aligning management's interests with that of the shareholders.

Retirement Income -plans that defer income for services rendered to a later payment

date (qualified plans such as pensions, profit sharing, and thrift plans as well as

supplemental programs and employment contracts).

Perquisites -company paid allowances beyond direct pay (free parking, automobile and

operating expense, expense allowance, total medical reimbursement, club memberships,

etc).

Paid Time off-vacations, holidays, family leave, jury duty, etc.


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In addition, the way compensation is allocated to and communicated to employees affects

the effectiveness of the programs.

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

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.

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.


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House Rent Allowance

Organizations either provide accommodations to its employees who are from different

state or country or they provide house rent allowances 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.

Fig. 2.1

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.


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Medical Reimbursement

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.

Need of Compensation Management

A good compensation package is important to motivate the employees to increasethe 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 otherpsychological and self-actualization needs to fulfill. Thus, compensation serves

the purpose.


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The most competitive compensation will help the organization to attract andsustain the best talent. The compensation package should be as per industry

standards.

Objectives of Compensation Planning

Some of the important objectives of compensation planning are:

Attract Talent- compensation should be high enough to attract talented people. Since

many organizations compete for hiring right talent and the salaries offered must be high

enough to motivate them to apply.

Retain Talent- the compensation levels far below the expectation of employees or are

not competitive, employees may quit in frustration.

Ensure Equity- pay should equal the worth of the job. Similar jobs should get similar

pays likewise more qualified people should get higher pay.

New and desired behavior- pay should reward loyalty, commitment, experience, risk

taking and other desired behavior where the company fails to reward this behavior,

employees may feel like leaving the company.

Control costs-the cost of hiring people should not be too high effective compensation

management ensures that employees are higher over paid nor underpaid.

Comply with legal rules-compensation plans should invariable satisfy government rules

regarding minimum wages, allowances, bonus, benefits etc.


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OBJECTIVE OF THE STUDY

The main aim of the research is to:-

(1). A detailed study about compensation management.

(2). Survey about compensation management in Coca Cola.

(3). the contribution of compensation management to attract, retain and motivate the

employee of Coca Cola.

Compensation management is the process wherein the management finds out how

effective it has been for the employees.

This study shall give some suggestions for making the present training anddevelopment system more effective.

It shall give organization the direction, how to deal differently with different.


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LIMITATIONS

Most of the respondent feared to give their names. Most of the employees were busy with their tight work and they didnt want to be

disturbed, therefore primary data could not be collected.

The data was confidential therefore the officials were hesitant to disclose it. Study was done in Delhi Branch only, hence the data cannot be generalized for all

branches.

Since the topic was broad as the Payroll System includes a number of allowances,all those aspects could not be covered.

Due to short span of time, the study and collection of data could not be done forall branches.


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RESEARCH METHODOLOGY

A Research Methodology defines the purpose of the research, how it proceeds,how to measure progress and what constitute success with respect to the

objectives determined for carrying out the research study.

The appropriate research design formulated is detailed below:MODE OF DATA COLLECTION:

Broadly there are two methods of data collection:-

Primary data collection method Secondary data collection methodPrimary data collection method: Primary source of data implies collection of data

from its source of origin. It offers you first-hand quantitative information relating to your

statistical study.

I have collected primary data through:-

Questionnaires Interaction with the respondentsSecondary data collection method: Secondary source of data implies collection of

data from some agency or institution which already happens to have collected the data

through statistical survey(s). It does not offer you first-hand information relating to your

statistical study. You are to rely on the information which already exists.


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I have collected secondary data from:-

Internet Books Magazines


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CONCLUSION

Coca Cola is one of the dominant engineering and manufacturing company in India. The

employees say that the overall culture of the organization is good and a transparency is

maintained in all the departments, which gives a better and healthy environment to work

in. The company is in trend with the industry, when it comes to compensation. The

internal parity in the organization for compensation is also good and employed seemed to

be satisfied in this regards.

They said that the recognition from the company is also above average. This recognition

is given in terms of certificate, by the senior management and a proper function is

organized for the same. Team building activities and outdoor tours has also been initiated

recently, for the employees. But when it comes in terms of monetary rewards in regards

of the recognition, the company is a bit conservative. The company provides a good

career path to its employees as annual performance is given which is in accordance

with the employees. The HR of the company says that due to booming industry, the

attrition rate is high, but due to good compensation and work culture, the attrition has

been controlled. The attrition is highest among the low level sales employees.


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BIBLIOGRAPHY

Books:

C.B.Memorial, Personnel Management

Compensation and Rewards system, Uday Parikh, 2009, Crystal Publication

Motivational Theories, David Shaun, 2009, Thomson Publication

Website:

www.cocacola.com

www.google.com

www.yahoosearch.com
http://www.google.com/http://www.yahoosearch.com/http://www.yahoosearch.com/http://www.google.com/


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