Compensation Mgmt 823

8/3/2019 Compensation Mgmt 823

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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.

Documents

Compensation Mgmt 823