Ashu Project 51528972 0701084 Salary and Wages Administration

PROJECT REPORT ON

WAGES AND SALARY ADMINISTRATION

SUBMITTED BY MS. ASHLEEN ANAND ADMISSION NO. :- DPGD/JL09/1063 SPECIALIZATION : - HUMAN RESOURCE

WELINGKARS INSTITUTE OF MANAGEMENT & RESEARCH MUMBAI. JUNE 2011

ACKNOWLEDGEMENT

A project can never attain its final destination without the support, encouragement and motivation of the individuals who are related to the one who undertakes the project work. I take this opportunity to express my sincere thanks and gratitude to MR. UTTAM RATHOD, General Manager Personnel and Personnel Manager MR. ANIL DAITHANKAR, for giving me this opportunity to work in this project and guiding me

through this project duration. I would like also to thank the entire respondent for giving me there precious time and relevant information and experience I required, without which this project would have been a different story.

Ashleen Anand

i

INDEX Sr. No 1 2 3 4 5 6 7 8 9 10

Topic

Page No.

EXECUTIVE SUMMERY COMPANY PROFILE OBJECTIVES OF THE STUDY INTRODUCTION TO TOPIC RESEARCH METHODOLOGY DATA ANALYSIS FINDINGS OF THE STUDY SUGGESTIONS AND CONCLUSION LIMITATIONS BIBLOGRAPHY

CHAPTER 1: EXECUTIVE SUMMERY

1 6 13 14 38 41 49 51 54 55

The project was carried out at EPCOS India Pvt. Ltd, Mumbai. The title of this project is The Study of Salary and Wage Administration. The objective of the study is to analyze the Salary Administration in EPCOS India Pvt. Ltd.

The study was conducted to know the structure and salary provided by the Company to its employees. In this project, I studied about the present salary compensation of EPCOS along with the evaluation of the incentives, bonus, and allowances given to the employees.

I also studied the execution of Provident Fund, Gratuity, and Encashment of leave for the final payment of the employee when he/ she leave the company. During the course of project, I got the clear idea about the salary structure and about the overall functioning of the organization.

Introduction:

3

The payment of wages and salary is an inbuilt system with human force for their activity performed. To what extent the payment of wages & salary is reasonable and adequate in consonance to the nature of the work performed, is a question mark. The reason attributed, is the existence of very large labour force and availability of abundant work force whether it is a farm sector of industrial sector. The supply of labour is more then the demand and with the result there is exploitation of cheap labour policy. Later the advent of trade unionism helped to improve the working conditions of labour. Until the Second World War, event the Government adopted a “LAISSEZ – FAIRE” policy in this regard. It was as late as in 1947, that the industrial unrest become so uncontrollable that a tripartite conference was convened of (1) Central and State Govt. (2) Employers, and (3) Employees, which resulted in the industrial trade resolution. It was realized that increase in production was not possible without the fullest cooperation between management and labour. This led to appointment of the fair wages committee and profit sharing bonus committee. Thus, the lot of the worker began to improve of the living. Wages Vs Salary: Payment made to labour is generally referred to as wages. Money paid periodically to persons whose output cannot to be easily measured, such as clerical staff as well as supervisory and managerial staff, is referred to as salaries. Salaries are thus paid generally on a monthly basis and at the times the elements of incentive is introduced in the form of commission, for e.g. paid to salesmen in addition to their salaries. However, it is in area of labour that there are several types of methods of wage payment. Systems of Wage Payment:

4

In case of worker, the wages are depend generally on the rates of wages which may be barely rate or time rate or leased on a piece rate, that is, dependent on worker’s output. There are also various combinations of not only time & piece rate systems, but also several premium plans adopted with a view to incorporate the incentive element and motivate the worker. In addition, there are collective wage payments also. Time of wage Payment: Under this system, the work is paid a certain sum for a fixed period of time that is so much per hour or per day or month. The main advantages under this system are the followings: I.

It is simple in calculation

II. The worker does not rush the job and spoil the quality through a temptation of earning more The following are however the drawbacks of the system: I.

The worker being assured of a fixed payment for the time spend is not tempted to work harder or more productivity as he is not rewarded for the extra effort.

II. The superior worker often tries to protect his slower colleagues by the slacking off himself.

III. The superior worker is discouraged as, although he is more productive, he is paid the same amount. He therefore slackens’ off over a period time. The system is satisfactory from the viewpoint of providing incentive to work harder and more productivity

5

The piece wage system: In this system, the worker is paid a fixed rate per unit produced or job completed. The rate is normally developed on the basis of analysis of previous performance and establishment of average performance of a particular standard of workmanship. The following are the advantages of The Piece Wage System: I.

As the worker is paid more when he produces more, he is inclined to put forth his best efforts. This results in increased productivity, which benefits both the employer and employee.

II. III.

The employee helps management in avoiding delays through breakdown. The superior worker is induced to work hard as at the end of the period he

finds that his pay is large than that of lazy of worker. IV.

In his effort to produce more, the worker may disregard the spoiling of his

tools and machinery used by him for the production. V. It is paid merely on the basis of the number of items produced without regard to quality. The quality of the production is likely to decline. There is thus a tendency to sacrifice quality in favour of quantity. VI.

This system may result in excessive fatigue as the employee tries to work his

hardest and his maximum speed to earn as much as he can.

6

Premium Bonus Method:

As in the piece wage system, the employee is not guaranteed any minimum wage in case the supply of labour is abundant, the piece-wage rate could be so lowered as to lead to sweating and other evils. Because of this, trade unions began to object the piece-wage system. They pressed for a guarantee of a fair minimum wage in connection with certain trends. As a result, of this, a number of systems of wage payments emerged technically known as progressive wage systems.

7

CHAPTER 2: COMPANY PROFILE

Name of the Company Year of Acquisition Factory Office

EPCOS India Pvt. Ltd 1996 Plot No. E 22-25, MIDC, Andheri

Annual Turnover Products Plants of Manufacturing Total No. of Plants in India Plant Head Managing Director Personnel Manager Total No. of Employee Whit Collar Blue Collar

Mumbai- 400059/ Maharashtra. 250 crores Manufacturing of film capacitors 5 All over the World 1 Mr. B. Mitra (President) Mr. H. S. Banerjee Mr. Anil Daithankar 1036 235 254

HISTORY: EPCOS develops, manufactures and markets electronic components modules and systems, focusing on fast-growing leading-edge technology markets: in IT and telecommunications, but also in automotive, industrial and consumer electronics. A uniquely broad product portfolio and truly global presence have made EPCOS a global

8

market leader in products that account for 60 percent of our sales. A further 30 percent is generated by products in which we are the number one in Europe.

EPCOS was floated simultaneously on the Frankfurt and New York Stock Exchanges on October 15, 1999. The listed company emerged from Siemens Matsushita Components, a joint venture founded in 1989 by Siemens and Matsushita. Because of the low trading volume, EPCOS has decided to delist and to deregister from the New York Stock Exchange in November 2007. Since March 2003, EPCOS has been one of the largest companies in the TecDAX index of German technology stocks.

EPCOS ELECTRONIC PARTS AND COMPONENTS

CORPORATE CHARTER

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1.

Vision: The aim of EPCOS India Pvt. Ltd is to make the name EPCOS

synonymous with excellence in electronic components to customers, employees and investors alike.

2.

Business: EPCOS develops, manufactures and markets electronic components

and modules. These products process electronic signals, control power supplies and protect electronic circuitry.

3.

Goals: The Company wants to generate lasting profits and constantly increase

shareholder value. It wants to be a leader in every market that we serve. Their success is based on strict customer orientation, comprehensive and outstanding innovative strength.

4.

Customer Orientation: Providing products and services that make their

customers more competitive is their top priority. The personal commitment of every EPCOS employee makes a vital contribution to customer satisfaction.

5.

Cost and Process Competence: They are continuously improving their work

processes and working hard to keep cutting our cost while increasing their speed and reliability.

10

6.

Innovative Strength: They create innovative products that provide new solutions

for their customers and help to strengthen existing or establish new business relationship. Innovation is the lifeblood of their company.

7.

Investor Orientation: EPCOS shareholders provide the capital for and are the

owners of their company. They do their utmost to maintain and increase shareholder value.

8.

Employee: Their employees are their most precious assets. Their resourcefulness,

competence, motivation and drive are essential to their company’s success. They are committed to a corporate culture that promotes creativity, teamwork and enterprise.

EPCOS: A company that opens up new prospects to customers, investors and employees.

QUALITY POLICY It is their endeavour to make the name EPCOS synonymous with world leadership in passive components by opening up new prospects to customers, investors and

11

employees through customer orientation, innovation cost consciousness and continual improvement in all their business processes.

QUALITY OBJECTIVES

Customer Orientation: Knowing their customers’ needs, requirements and expectations and giving them outstanding prospects and services.

Innovation: Shaping constantly their innovations for the benefits of their customers by giving their employees the freedom to unfold their creativity.

Cost Consciousness: Opening to new approaches and constantly cutting their cost.

Continual improvement: Institutionalize the approach in all functions by updating their quality management system. Above objectives are quantified by individual functions and measured and reviewed to align with quality policy.

PRODUCT PORTFOLIO:

EPCOS is mainly engaged with manufacturing of film capacitors. Following types of film capacitors are manufactured in Nashik Plant:•

DC Capacitors

12

•

AC Capacitors

•

Power Factor Corrections Capacitors (PFC Gas Failed) MKK.

•

Power Factor Correction Resign Filed (PFC).

MARKET POSION In the field of electronic components and modules EPCOS regard itself as number 2 world wide and number 1 in Europe.

EPCOS INDIA PVT LTD

EPCOS has two manufacturing facilities in India1)

Mumbai (Maharashtra) founded in 1996

2)

Kalyani (Kolkata W.B.)

ORGANIZATIONAL CHART PERSONNEL

MANAGEMENT DIRECTOR

13

GENERAL MANAGER

MANAGEMENT SECRETARY

MANAGER

SENIOR EXECUTIVE

EXECUTIVE

OFFICERS

ASSISTANT

14

OFFICER

CHAPTER 3: OBJECTIVES OF THE STUDY

1. To study the Compensation Structure and administration in EPCOS. 2. To know the satisfaction level of the executives and the workers regarding the facilities and allowances given by the EPCOS. 3. To know the satisfaction level of the salary distribution process carried out in EPCOS.

15

CHAPTER 4: INTRODUCTION TO THE TOPIC

DEFINITION OF COMPENSATION According to Rynes {1987}, compensation is particularly important as a recruitment tool because 1.

It is vehicle for satisfying a wide array of human needs,

2.

Salary offers are expressed in clear and comparable terms

3.

Stating salaries have for future salary progressive, and,

4.

Pay system communicate so much about an organization’s philosophy, values,

and practices.

OBJECTIVES OF COMPENSATION: The objectives of any payment systems are numerous and might include the following: 1.

To enable the employees to earn a good and reasonable salary or wage;

2.

To pay equitable sums to different individuals, avoiding anomalies;

3.

To reward and encourage high quality work and output;

4.

To encourage employees to develop better methods of working and their

acceptance; 5.

To discourage wastage of materials or equipment;

6.

To encourage employees to use their initiative and discretion;

7.

To discourage overtime working unless it is very essential;

8.

To raise morale and increases efficiency of the staff and finally keeping

them contended.

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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. 1.

Direct Compensation

2.

Indirect Compensation

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COMPENSATION MANAGEMENT

DIRECT COMPENSATION

INDIRECT COMPENSATION

Salary Basic

Leave Policy

Medical Reimbursement

Hospitalization

Insurance

House Rent Allowance

Flexible Timings Conveyance Leave Travel Allowance Bonus Special Allowance Overtime Wage

Retirals Benefits

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IMPORTANCE OF COMPENSATION:

Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the labour expects wages from the process. Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following: • An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed. • It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. • Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

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• The system should be simple and flexible so that every employee would be able to compute his own compensation receivable. • It should be easy to implement, should not result in exploitation of workers. • It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers. • Such system would help management in complying with the various labour acts. • Such system should also solve disputes between the employee union and management. • The system should follow the management principle of equal pay. • It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. • Sound Compensation/Reward System brings peace in the relationship of employer and employees. • It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. • The system provides growth and advancement opportunities to the deserving employees. • The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.

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• The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. • The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce. • The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.

21

INTRODUCTION TO SALARY ADMINISTRATION

What is Salary?

The Roman word salarium linked employment, salt and soldiers, accepting salt from a person was synonymous with drawing sustenance, taking pay, or being in that person's service. Soldiers were known to have been paid, and maintain instead that the salarium was an allowance for the purchase of salt, at that time salt production was strictly controlled by the monarchy or ruling elite. Today, the idea of a salary continues to evolve as part of a system of all the combined rewards that employers offer to employees. Salary (also now known as fixed pay) is coming to be seen as part of a "total rewards" system which includes variable pay (such as bonuses? incentive pay, and commissions), benefits and perquisites (or perks), and various other tools which help employers link rewards to an employee's measured performance. A salary is a form of periodic payment from an employer to an employee, which is specified in an employment contract. From the point of view of running a business, salary can also be viewed as the cost of acquiring human resources for running operations, and is then termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts. Salary is compensation to an employee for services rendered on a weekly, monthly or annual basis. Salary is usually associated with office employees, supervisors, managers and professional and technical staff. In any organization, salaries and wages constitute a significant portion of the cost of operation of the business.

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Difference between Salary, Wage and Compensation:

Salary refers to the monetary payment on a monthly or annual basis. Wages are the remuneration paid by the employer for the service of a worker who is engaged by the hour, days, week or fortnight. Wages are payments to hourly-rated production and maintenance employee. Compensation refers to all forms of financial returns, tangible services and benefits employees receive as a part of an employment relationship. Compensation may be received directly in the form of cash (wage, bonus, incentives) or indirectly through services and benefits (pensions, health insurance, vacations).

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What is Salary Administration?

Salary administration refers to the establishment and implementation of sound policies and practices of employees’ compensation. Salaries represent a significant portion of the total costs in most of the organizations and so it requires sound administration. The control of salary level is of paramount importance even though the amount of control which can be exerted may vary among organizations and within an organization.

Pay can influence employees’ work behaviours and attitudes. It becomes crucial for managers to ensure that pay systems are designed and administered in fair and equitable manner. The salary administration is thus concerned with the monetary or financial aspects of needs, motivation rewards. The responsibility for salary administration usually lies with the top management.

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Objectives of Salary Administration

1. Control of cost 2. Establishment of fair and equitable structure of remuneration 3. Utilization of wages and salaries as an incentive to greater employee productivity 4. Maintenance of a satisfactory public image 5. Determination of the system of job description and job evaluation 6. Decision of what and how people will be paid 7. Checking all activities of the salary administration group 8. To recommend changes in the salary policy and specific raises for executives at various levels 9. To review salary scheme 10. To attract and encourage staff to make full use of their abilities and develop their potential.

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SALARY AND WAGE ADMINISTRATION PROCESS IN EPCOS

2.1 Introduction: Salary is a form of Periodic Payment from an employer to an employee which is specified in an employment contract. It refers to the employee compensation policy.

2.2 Objective:To define the procedure for Gross Pay and deduction calculation To ensure the correctness of salary calculation and create General Ledger.

2.3 PROCESS:-

2.3.1

Employee Master Data Entry in PAMS:-

Personnel Officer enters Employee Master Data in PAMS. The Reference Documents are Appointment Letter and PER/01 form which the employee fills when he joins the organisation. The Relevant Fields for PAMS entry are as follows: •

Personal Details

•

Booking Details

•

Job Details

•

Salary Details

•

Accommodation Details

•

Family Details

•

Qualification Details

•

Other Details 26

2.3.2 Activity Inputs:

Personnel Executive passes initial appointment Activity for new entrants. This activity is essential to regularise the employees’ details in the system. This will ensure to give salary effect from the date of joining of the new employee. The Path to enter this activity is:-

PAMS  Master Maintenance  EmployeeActivity Input Other Activity  Input (select from the drop down list available)

The reference document for above activity is appointment letter and PER/01. This ensures that the employee is in payroll system.

Systems Support Facility is available in PAMS to maintain Allowances and Tables various grade Structures.

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2.3.3

Uploading of Transactions:

The Transactions which are uploaded are as follows:

• Details of Absenteeism, particularly unpaid leaves are counted. • Overtime Details • Saturday Working. Saturday working allowance is 50% of Basic +VDA + Adhoc Basic) • Attendance Bonus Details • Production Incentive Details • Reversals to deduct the paid for payment on absence • Miscellaneous Recoveries: - Union Recovery, Mediclaim payment Recovery, Death Relief fund and other deductions. • Activity inputs: - This includes Probation activity, confirmation activity; separation activity to be entered in system as per monthly transaction data.

2.3.4

Verification:

Personnel Executive verifies all input data before salary processing.

2.3.5 Salary Processing: Personnel Executive processes the salary. During salary processing PAMS calculates standard and non standard salary of active employees based on payment deduction Tables in system support facility and variable inputs entered. After verification further corrections are made, if necessary.

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2.3.6 Check List:-

After salary processing is over for all the employees, Personnel Executive checks the processed data thru salary query screen as per inputs given. In case of correction, Personnel Executive restores the specific employee details and does necessary corrections and reprocesses the same.

2.3.7 Creation of General Ledger and Salary Summary: -

Personnel Executive processes GL and then after prepares the salary summary and General Ledger Report. Personnel Executive verifies the General Ledger. Previous months and current months’ salary is compared to ensure correctness. The debit and credit amounts shown at the end of GL report is checked and ensured that the debit and credit amounts are same and there is no variance in General report.

2.3.8 Gross Pay and Deduction Calculation: -

In salary summary, Payment and deduction details with Net Salary must be checked. Also ensure that the Bank Salary, Cash Salary and cheque Payments are considered while calculating the salary summary.

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2.3.9 Generation of Bank Advise:-

Personnel Executive prepares Bank Advise. He then sends this Bank advise to Accounts Department to release the salary Cheques. The Personnel Executive checks and verifies the bank advise and salary summary before sending it to the Accounts Department.

2.3.10 Generation of Cash Note: -

Personnel Officer prepares Cash Salary Statement. Cash salary details are then sent to Accounts Department for necessary Cash Provisions. The Cash Salary is disbursed by the Personnel Department.

After receiving cheques from accounts department, personnel department prepares Forwarding Letter and deposits cheques, bank List to respective bank to credit the salary of every employee as per the list provided by the Personnel Officer.

2.3.11 Authorisation of Salary Payment Advise:-

The authorisation of salary payment Advise is done by the Personnel Manager.

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2.3.12 Transfer of GL File to F & A Department:-

The General Ledger prepared by the Personnel Executive, is then transferred to finance and accounts Department.

2.3.13 Uploading General Ledger File in SAP: -

Personnel Officer generates the SAP compatible General Ledger Report and sends to accounts Department for necessary Posting in SAP.

2.3.14 Salary Distribution :-

Accounts Department verifies and sends the cheques to the respective Bank of the Employee, which is then distributed to their respective accounts. This is salary distribution through Bank. If the employee does not hold any bank account, then his salary is encashed by Personnel Officer and distributes to them.

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SALARY AND WAGES ADMINISTRATION STRUCTURE IN EPCOS

Salary and wages administration structure of the EPCOS India Pvt. Ltd. mainly depends upon, 1.

Category

2.

Grades

1. CATEGORY: Category is mainly divided into four types, •

Management

•

Staff

•

Workmen

•

Trainees

I. Management: Management people are the professionals engaged for supervisory work and commercial executives work of the company. These are basically Officers, Executives, Deputy Manager, Senior Manager, President and Managing Director. This Management Category is classified on the basis of Grades, starting from MC1 to MC9.

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II. Staff:

The Staff people are the clerical personnel working in commercial functions, stores. These include Assistance, senior assistant etc. this category is classified into two Grades:•

OE1

•

OE2

III. Workmen:

Average age of the workmen is 32 years. These are the operating hands on working on shop floor for manufacturing activities of the company. Workmen are covered under labour laws. There are254 workers, the qualifications of these workers are ITI (Industrial Training Institute) and NCTVT (National Council for Technical Vocational Training). All the engaged workmen are recruited after completing one year training with the Company. Workers are members of Nashik Workers Union, registered under the Trade Union Act 1926 and is representing the permanent monthly rated workmen in Grade S, S0 and S1, in the factory of the company. A settlement dated 26 th October 2007 was in existence between the parties, i.e. Nashik Workers Union and EPCOS India Pvt. Ltd. It is agreed that the total amount of Rs. 3100/- (Rupees Three Thousand One Hundred only) over the operative period of this settlement as follows:

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Period

Rise

Therein

Therein

Total

Given per

Basic/

Allowances

Month

Month

Adhoc

per Month

Basic per 1.4.2007 to 31.3.2008 1.4.2008 to 31.3.2009 1.4.2009 to 31.3.2010

Month Rs.1200/Rs.175/Rs.175/-

Rs.2400/Rs.350/Rs.350/-

Rs1200/Rs.175/Rs.175/-

Rs.2400/Rs.350/Rs.350/-

It is agreed between the parties that the quantum of benefits to be distributed over various heads for a period of three years commencing from 1st April 2007 and ending on 31st March 2010.

IV. Trainee:

Trainee is the fresher student coming with the technical stroke commercial background. These people are engaged to gain hands of working experience. The company has full fledged training scheme for all these people. The company offers systematic training plan for all these trainees. The Company recruits different types of trainees like Technical Trainees, Graduate Commercial Trainees, Management Trainees, Graduate Engineer Trainees, Diploma Engineer Trainees, etc. The company offers training to these fresh graduates for the duration of one year. The company offers stipend and learning allowances to all engaged trainees. To meet with the needs of educational material and facilities, the company also offers statutory benefits like Provident Fund and ESIC to the trainees. After all successful training period, the company offers employment opportunities are depend on all available vacancies.

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per

3. GRADES:

Grades are distributed to each employee on the basis of category. •

Management

•

Staff

•

Worker

•

Trainees

I. MANAGEMENT:

•

Grade MC1, MC2 and MC3 - Officers and Executive, Senior Executives.

•

Grade MC4, MC5 and MC6 - Deputy Manager, Manager to Senior Manager

•

Grade MC7, MC8 and MC9 - Gm, Senior Gm, President

•

Grade DR – Managing Director

II. STAFF:

•

Grade OE1 - Assistant

•

Grade OE2 – Senior Assistant

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III. WORKER:

•

Grade S – Semiskilled Workers

•

Grade S0 – Skilled Workers

•

Grade S1 – Senior operator or Junior Engineer

IV. TRAINEES:

•

Technical Trainees – ITI

•

Graduate Commercial Trainees – Any Graduates

•

Management Trainees – MBA, MPM

•

Graduate Engineers Trainees – BE

•

Diploma Engineers Trainees – Diploma Engineers

SALARY ALLOWANCES GIVEN TO THE EMPLOYEES

I. MANAGEMENT AND STAFF:

A.

PER MONTH:

•

Basic

•

House Rent Allowance

•

Medical Reimbursement

•

Supplementary allowance

36

B.

ANNUAL:

•

Leave Travel Allowance (LTA) – Annual Payment as per Grade

•

Bonus – Only for eligible employees, those having basic + DA less than Rs. 10,000

II. WORKMEN:

A. PER MONTH: •

Basic

•

Variable Dearness Allowance (VDA)

•

House Rent Allowance (HRA)

•

Conveyance Allowance

•

News Paper Allowance

•

Washing Allowance

•

Education Allowance

•

Adhoc Basic

B. ANNUAL: •

Bonus

•

Exgratia

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III. TRAINEES: A)

ANNUAL:

•

Stipend

•

Learning Allowance

FACILITIES PROVIDED TO THE EMPLOYEE:

1. Mediclaim facility for spouse and parents (For Staff, Management, Workmen) 2. Get-together – twice in a year • Get together with Family • Get together without family 3. Shoes, Aprons 4. Sweets distribution for each employee on Dasara and Diwali 5. Death relief scheme 6. Superannuation Scheme – Only for Management.

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STATUTARY REQUIREMENT

No employer is allowed to pay any employee ‘the compensation’, which is less than the prevailing rate prescribed under the ‘Minimum Wages Act 1948’. Compensation to the Directors of Public Ltd. Companies should be paid according to the provisions of the Companies Act 1956. Apart from the legislations, following important legal enactment’s determines the amount of compensations:

•

The Minimum Wages Act, 1948

•

The Employee State Insurance Act, 1948

•

The Payment of Gratuity Act, 1972

•

The Employee Provident Fund And Miscellaneous Provisions Act, 1952

•

The Payment Of Wages Act,1936

•

The Factories Act, 1948

•

The Payment Of Bonus Act, 1965

The Factories Act, 1948 stipulates the amount of compensation to be paid in respect of overtime work.

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CHAPTER 5: RESEARCH METHODOLOGY

Introduction: Research is an art of scientific investigation through search of new facts in any branch of knowledge. It is movement from unknown to known. The study of research methodology gives the student the necessary training in gathering materials required, and also training in technique for the collection of data appropriate to particular problem. It helps in the use of statistics, questionnaire and controlled experimentation and in recording evidences, sorting it out and interpreting it. Knowledge of research methodology is helpful in various fields. Research methodology plays key role in project work. It consists of series of actions or steps necessary to effectively carry out research and the desired sequencing of these steps. Basic features of a research process are: •

Research always starts with a question or a problem.

•

Its purpose is to find answers to questions through the application of scientific method.

•

It is a systematic and intensive study directed towards a more complete knowledge of the subject studied.

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Methods of Data Collection

Data collection is an elaborate process in which the researcher makes a planned search for all relevant data and is the foundation of all researches. It is the raw material with which a researcher functions. The task of data collection begins after a research problem has been defined and research plan is chalked out. While deciding about the method of data collection to be used for the study the researcher should keep in mind two types of data viz., primary data and secondary data.

Sources of Data

A. Secondary data:

Secondary data is the data already collected by others for purposes other than solution of the problem at hand. In case of Secondary data the nature of data collection work is merely that of compilation. Secondary data has several supplementary uses.

1.

Internal sources: •

Company Records.

•

Service Reports.

•

Annual Report.

•

Company Brochure.

•

Company Library. 41

2. External sources •

Web pages of organizations and journals.

•

Reference Books.

•

Magazines.

•

Newspapers.

B. Primary data:

The data that is being collected for the first time or to particularly fulfil the objectives of the project are known as primary data. In my study work, stratified simple random sampling was the method of Data Collection.

Data Evaluation

All the data and information collected from the secondary sources and company officials was filtered & only relevant data is introduced in the report which helped in achieving objective of the project. This relevant data is finally evaluated to make the final report and to draw the conclusion

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CHAPTER 6: DATA ANALYSIS The data used for analysis is secondary data through internal sources.

A survey was carried out within the executives and workers of the company itself to analyse the data.

Sample sizes of 30 for each were taken to carry out the survey and following questionnaire were provided for the survey.

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FOR EXECUTIVES Sr. Questions No. asked 1

2

3

Not Satisfied

Whether the executives were satisfied with the salary distribution process adopted by EPCOS? Whether the executives were satisfied with the allowances given by EPCOS? Whether the executives were satisfied with the facilities given by EPCOS?

Not Much To Some Quite Satisfied Extent Satisfied Satisfied

Fully Satisfied

-

-

-

-

-

 

-

-

-



-

FOR WORKERS 4

5

6

Whether the workers were satisfied with the salary distribution process adopted by EPCOS? Whether the workers were satisfied with the allowances given by EPCOS? Whether the workers were satisfied with the facilities given by EPCOS?

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-



-

-

-



-

-

-



-

-

I. Whether the executives were satisfied with the salary distribution process adopted in EPCOS? a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied a 0 0

Percentage

Options Response Percentage

b 3 10

c 6 20

d 15 50

e 6 20

Total 30 100

60 50 40 30 20 10 0 a

b

c

d

e

Response Response

Percentage

Interpretation: - Most of the executives were quite satisfied with the salary distribution process adopted by EPCOS.

II. Whether the workers were satisfied with the salary distribution process adopted in EPCOS?

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a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied Options Response Percentage

a 0 0

b 3 10

c 15 50

d 6 20

e 6 20

Total 30 100

60 Percentage

50 40 30 20 10 0 a

b

c

d

e

Response

Response

Percentage

Interpretation: - Most of the workers were satisfied to some extent with the salary distribution process adopted by EPCOS. III. Whether the executives were satisfied with the allowances given by EPCOS? a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied 46

Options Response Percentage

a 0 0

b 3 10

c 12 40

d 9 30

e 6 20

Total 30 100

Percentage

50 40 30 20 10 0 a

b

c

d

e

Response

Response

Percentage

Interpretation: - Most of the executives were satisfied to some extent with the allowances given by EPCOS.

IV. Whether the workers were satisfied with the allowances given by EPCOS? a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied

Options Response

a 0

b 3

c 18 47

d 9

e 0

Total 30

Percentage

0

10

40

30

0

100

Percentage

80 60 40 20 0 a

b

c

d

e

Response Response

Percentage

Interpretation: - Most of the workers were satisfied to some extent with the allowances given by EPCOS.

V. Whether the executives were satisfied with the facilities given by EPCOS? a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied

Options Response Percentage

a 0 0

b 3 10

c 9 30 48

d 18 60

e 0 0

Total 30 100

Percentage

70 60 50 40 30 20 10 0 a

b

c

d

e

Response Response

Percentage

Interpretation: - Most of the executives were quite satisfied with the facilities given by EPCOS.

VI. Whether the workers were satisfied with the facilities given by EPCOS? a) Not satisfied b) Not much satisfied c) To some extent satisfied d) Quite satisfied e) Fully satisfied Options Response Percentage

a 0 0

b 3 10

c 18 60

49

d 9 30

e 0 0

Total 30 100

Percentage

70 60 50 40 30 20 10 0 a

b

c

d

e

Response Response

Percentage

Interpretation: - To the some extent workers are satisfied with facilities given by EPCOS.

CHAPTER 7: FINDINGS OF STUDY

According to this survey, I could conclude following: -

1. Compensation has major impact coming out of age and experience i.e. more age, more experience, more CTC. Therefore, more the length if the service, higher the wages.

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2. As the industry goes number of settlements, it reaches to saturation point, then the increase in the direct wages is minimum.

3. As it matures to saturation point, more benefits come out of facilities and benefits rather than rise in direct wages.

4. Any entrepreneur business organization is run to earn profits and ultimately to make money. In a typical manufacturing set up the buyer i.e. customer decides the product price. A product consists of following cost put on it.

•

Raw material cost

•

Labour cost

•

Overheads

•

Scheduled profit out of that product

In the above cost, the end customer has always expectation of lowering it or to maintain at same level. However, out of above item, raw material cost and labour cast will have always incremental effect. So to have better profit out of manufacturing, you need to have control over overheads as well as labour cost.

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CHAPTER 8: SUGGESTIONS & CONCLUSION

SUGGESTIONS: -

Take care of changes in IT rules Company does compensation restructuring based on change in income tax rules.

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According to survey, to maintain the morale of the employees, management should keep their compensation plan competitive with similar industry.

Transport Facility:-

The company may provide transport facility rather than giving Conveyance allowance. On giving an informal talk with employee of the company, it was found that the employees are more interest in having pick- up and drop facility.

Festival Advance:-

Company may provide a festival advance facility which will prove more beneficial for the employees and which will help them in fulfilling their needs arising during the course of any festive occasion.

Salary Survey:-

Company should conduct salary survey to find out and study recent patterns in similar industry. Based on the finding of such surveys they should restructure the compensation.

Flexible To Suit Added Liabilities:-

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As employees grow in the organization, simultaneously his family liabilities also grow. To accommodate such liabilities like children education, dependent family members’ marriage, and medical expenses this should be considered in deriving compensation package.

Continuous Training And Rewards:-

In the competitive era, to keep feet one need to continuously upgrade him by way of knowledge base and develop things which may utilize for organizational development. Thus, there has to be proper consideration for rewarding such things.

CONCLUSION: -

From this project report, I could conclude that compensation management plays integral role in obtaining organizational goals. 1. Any compensation program must have the strong linkage to the profitability at the production level and business level.

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2. The program should ensure that it establishes accountability, ownership and service orientation at all level. 3. The key to motive employees is compensation package i.e. direct wages are low but other benefits are more which are based on productivity. They vary according to productivity. 4. Compensation helps to retain competent employees in the organization. 5. Attractive compensation package also enhance the competitiveness of the company.

CHAPTER 9: LIMITATIONS

1.

The study was restricted to main branch of EPCOS India Pvt. Ltd.

55

2.

Due to company’s norms and regulations some of the official and financial data

which was important for my project could not be available. 3.

Many times the officials were so busy that they could not answer the queries

related to the topic.

CHAPTER 10: BIBLOGRAPHY

BOOKS:

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•

P. Subba Rao (2007); Essentials of Human Resource Management & Industrial Relations; Himalaya Publication House; Mumbai; pp 400-405.

•

C. B. Mamoria, S. V. Gankar (2007) Personnel Management; Himalaya Publishing House; New Delhi; pp 432-458

INTERNET SITES: •

assessed on Monday 9th June 2008

•

assessed on Wednesday 11th June 2008

•

assessed on Tuesday 17th June 2008

•

assessed on Tuesday 29th July 2008

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