International Compensation & Benefits

Management

A case study on Textile industry

By Nithin Prasad R S

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Presentation overview

Defining C&B Key components of international C&B Classification Nature and scope The case study- Beximco Textile Division [BTD] Effectiveness of BTD’s C&B Analysis - Attractiveness of BTD’s C&B Conclusion Recommendations

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Aim- International Compensation & Benefits management, a

HR issue case study on Beximco Textile Division.

Objectives- Literature study on C&B. Understanding the planning of C&B at textile industry. Analyzing the effectiveness of the BTD’s C&B Analyzing the attractiveness of C&B.

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Defining Compensation & Benefits

The sum total of all forms of payments or rewards provided to employees for performing tasks to achieve organizational objectives is known as Compensation.

The sum total of all forms of payments or rewards provided to motivate, attract and retain employees for performing of tasks to achieve organizational objectives is known as Benefits.

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Key components of international Compensation

Components comprises of-

Basic salary [primary component] Foreign service inducements [may be hardship] Benefits [free fair, pension, social security, vacation] Allowances [compensate differences in living expenditure]

Wage component is, Basic/ DA + variable pay + fringe benefits

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Classification of Compensation

Total Compensation

Financial Non - Financial

Direct Indirect Satisfaction

from jobPraise

& Reward

Base pay

Variable pay

Mandatory and Voluntary Benefits

Recognition and

Service awards

Needs satisfaction and

Self-motivation

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C & B - Nature and scope

It is a complex process which includes decisions regarding pay and benefits

• It suggests an exchange relationship between the employee and the organisation

• It involves design, development, implementation, communication and the evaluation of reward strategy and process of the organization

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Introduction to case studyBeximco Textile Division [BTD]

Beximco Textiles Division [BTD] - industrial conglomerate of Textiles Composite, Bangladesh.

During the last decade the group has been transformed from a local Business House to an International Business House.

BTD’s subsidiaries around the world - UK, USA, Hong Kong, Singapore and Pakistan.

More than 14,000 people work.

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People of the Organisation

Over all BTD has about 14000 employees world wide including the HQ and subsidiaries. Of which,

Around 2900 from spinning dept Around 3000 from fabric 7500 from garments and 800 controlling / management staff. BTD - people are the main strength of the business &

conducts a well structured Compensation & Benefits Package.

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Certain variables influencing Compensation

Any MNC is surrounded by certain influencing factors which vary the compensation structure the factors may be-

Internal environment [goal, capacity to pay, culture, role, labor

composition etc.] External environment [parent nationality, labor market, govt role,

industry type, competitor etc.] Staffing policy [how many, from where, what industrial relations

specify etc.] Strategy [strategy of the MNC towards international compensation].

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Compensation Administration Process

Job analysis

Valuing jobs Pay survey

Pay structure

Individual pay

Implementation,Communication,

Monitoring

Performanceappraisal

Pay policies

•The market rate approach

•Ethnocentric

•Centralized

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Effectiveness of BTD’s C&B So basically BTD had a sophisticated C&B department

with going rate approach. It had a good salary structure, minimal benefits provided,

Revision done from time to time. C&B records maintained by the personnel admin and HR Centralized performance appraisal system. It had a pay policy practice of Ethnocentrisms. Thus it is not a very good success in international C&B

management arena.

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Differential factor of BTD’s C&B

Factors Taken care in C&B

PF of 10% Life insurance Bonus only for 2 fests Medical benefits free for all Leave entitlements Financial assistance

Factors - Needs to be cared in C&B

Transportation facility Driver for executives Mobile – telephone Meal facility only for

executives Accommodations Utility allowance Performance / competency

based bonus, pay etc.

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Compensation Differential

Followed The degree of skill The training required The experience involved The disagreeableness of

the task The hazard attendant on

the work, and

Not Followed The strain of work The responsibilities

undertaken The fatigue involved. Performance based

compensation The mental & physical

requirements

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The need for Compensation & Benefits

Compensation is required to reward employee’s past performance fairly, in line with efforts, skills and competencies.

To attract and retain competitive high performing employees.

To motivate the high performing employees and reinforce desirable employee behavior.

To remain competitive in the labor market. To align employee’s future performance with

organizational goals. To communicate the employees their worth to the

organization. To provide employee social status.

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Analyzing the attractiveness of C&B

The attractiveness of the compensation package of this organization is low.

Recruitment of Qualified fresh graduates is always there in this organization.

As the employees don’t stay long in this organization for their unattractiveness compensation package.

A large number of switching is present in this organization with high turnover ratio.

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Conclusion Beximco textile division - largest firm of the Beximco group of

industries. Has a competitive growth rate in the present market. Organization is run by a number of qualified employee’s and always

compensation packages are made by market analysis. All though the employees are happy to work over there, they are not

satisfied with the C&B compared to their very much competitiveness in the market.

Beximco textile division needs to pay more to the workers for their performance, competitiveness and high qualification and needs to reduce switching and turnover ratio.

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Recommendation

They need to redesign their compensation packages for the grater benefit of the organization.

They need to give more emphasis on the unattended differential factors of C&B.

Add performance/competitive bonuses for the employees. Come up with plans to benefit & retain the experienced

and skilled labor. Salary structure can be altered to cater the compensation

differentials.

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Bibliography

Anonymous,http://www.scribd.com/doc/15660533/Compensation.pdf, Retrieved on 22nd May, 2010

Anonymous,http://www.scribd.com/doc/24744328/Compensation-and-Benefits-Package-of-BTD, Retrieved on 23nd May, 2010

International Human resource management (2007) by K. Aswathappa and Sadhna Dash, 6th edition, Mumbai.

International Human Resource Management, course notes, H. N. Nagesha.

Thank you