Hosea and | iISBN: 81:7446.5464 First Editon: New Delbi, 2007 Copyright © 2007, BLD. Singh All Rights Reserved EXCEL BOOKS AAS, Naraina, Phase 1, New Delhi - 110 028 Published by Anurag Juin for Excel Books, A-45, Naraina, Phase 1, New Delhi-110 028 and printed by him at Excel Printers, C-206, Naraina, Phase I, New Delhi-110 028Brief Contents Preface Acknowledgements Chapter1 Background Cet Hess PRERETOR waite Chapter 3 ‘Wages and Salary Administration at Macro (National) Level Chapter 4 Industry's Compensation Policy (Micro-Level) Chapter 5 Compensation Structure - Indian Practices Chapter 6 Incentive Schemes/Payment-By-Results (PBR) Chapter 7 Performance Linked Compensation Chapter 8 Benefits and Services Chapter 9 Managerial Remuneration Chapter 10 TaxPlanni Chapter 11 Voluntary Retirement Scheme Chapter 12 International Compensation Chapter 13. Compensation Strategy: New Thinking for the New Millennium Chapter 14 Relevant Case Studies Biblngaply ERBBRBRBREBESABR-e Bar a 3 7 zCopyrighted materialDetailed Contents Preface ‘ix Factors and Degrees Defined for Education 80, Acknowledgements xi Extemal Parity 87 Pricing Jobs 95 Designing Pay Ranges and Bands 7 ‘Chapter 1: B: 1 - Concept of Compensation 3 Chapter 5: Compensation Structure System of Compensating 3 =Indian Practices 99 Compensation Dimensions 4 Salary Progression 103 Concept of Reward 7 Methods of Payment 108 Non-financial Compensation System 11 Limitations of the Job-related Compensation 112 Concept of Total Reward System 20 Competency-based Compensation 113 The New Tinudsn Compensation Maanenen! 22 tae 6; tnentive Schemes /Payment -Results (PBR) 12 Chapter 2: Theoretical Dimensions ~ ‘Merits and Demerits of Incentives 123, Economic & Behavioural ————29—=Pre-requisites of Effective Incentive Scheme 124 Economic Theory of Wages 29 Types of Incentive Schemes/Systems 125, a = = 32 _‘Improshare Plan 132 Behavioural (Motivational) Theories 32 Group Incentive Plans 133 Rewards Influence Behavior a) Mncenuines foe Indicecs Washers si Wage Incentive Plans 134 Chapter 3: Wages and Salary ‘Administration at Macro (National) Level 43 Chapter 7: Performance Linked Economic Objectives of Wage Policy 44 Compensation —_ 139 ‘The Sochl Object 44 Performance Appraisal 142 Key Considerations ________________45 Chapter 8: Benefits and Services 179 et Concepe 45 Strategic Perspectives on Benefits 181 Minienoen Wage sel ILO 47 Cussification of Employee Benefits 182 Five Year Plans and Wage Policy $0 Costing Benefis 187 Legal Framework ______51—_ Factors Influencing Choice of Benefit 188 Institutional Mechanism for Wage Determination 54 Statutory Welfare Provisions in India 191 ‘Unilateral Pay Fixation 54 Social Security : Concept and Evolution 194 Collective Bargaining 54 Voluntary Welfare Amenities in India 199. Levels of Bargaining 55 Flexible Benefits 201 Pay Commissions 57 Administration of Benefits and Services 202 ‘Wage Boards a Gaile 63 Chapter 9: Managerial Remuneration __207 ‘An Approach to Public Sector Pay Revision 53; Siemens of eneteral Compression _207. Rewarding A New Approach 215 Chapter 4: Industry's Compensation Policy ‘The Age of Mega-buck Managers (Micro-Level) 67 (Indian Contest) 202 Divergent Perspectives of Management India Inc Spent 286% More on Wages and snd Labour 20 Sélaries in 2005.06 aver 2004.05, Share Compensation Strategy at Micro (Company) Level 71 caf State Cast in Sales Increased from ‘Concept of Internal Equity & External Parity 73 &9%to. 95% __231 job Evaluation 74 — Salaties Growing 30-40% for the Top ‘Methods and Systems of Job Evaluation 78 & Middlelevel Managers in Hospitality 233viii COMPENSATION AND REWARD MANAGEMENT Chapter 10; Tax Planning 237 Case Study 2: Performance Management System ‘Tax Implication of Employee Compensation (PMS) at Bharti ‘Telecom 306 Package to the Employer 239 Case Study 3: Restructuring Incentive Scheme: ‘Tax Efficient Compensation Pac 249 The Experience and Approach of National Salary Strucearing 251 Fertzers Limited 310 sites and Recent Cl in Taxation 252 Chapter It: Voluntary Retirement Scheme 255 Case Study 4: Excel Awards Scheme in BHEL 320 Case Study 5: Eva Incentive Scheme: s ‘The TCS Approach and Experience 323 Approaches to Deal with Workforce Redundancy 257 Cage Smudy 6: NTPC Reward System 329 Costs and Benefits to the Company 263 Case Study 7: Gaiasharing at BP and Chapter 12: International Compensation 271 ‘Ingersoll-Rand 334 eibicni ia Contiensitian a 772 Case Study 8: Family-friendly Benefits at Objectives of the atin 272 Mascot Western Langley 339 Tasresaieiise lerattisie CaeeesASREG, 273 Case Study 9: Executive Pay at RTZ PLC 344 Elements of Espatrate's Compensation Package 273 Case Study IC: Googe India 348 Chapter 13: Compensation Strategy: New. Case Study 11: Google US 350 Thinking for the New Millennium 293 Case Srudy 12: Intel India 354 Pay the Person 294 Case Study 13: Qualcomm 357 Rewarding Excellence 296 Case Study 14: Wells Fargo 367 Individualizing the Pay Srotem 298 Case Srudy 15: Strategising Emplovee ‘Compensation Issues: A Case of PSUs 312 Chapter 14: Relevant Case Studies 301 Case Study 1: Performance Based Biblcgraphy 379 Compensation Structure in Crompton Gees tee i MedesPreface Management of compensation is one of the most important and strategic aspects of Human Resource Management. Employers and employees both are equally concerned and serious about it. Employers want to develop a compensation package which is quite attractive, sustaining and motivating to the employees. At the same time, they would like to keep compensation cost under control to maintain the operating cost. For employees on the other hand, compensation becomes crucial, as it is directly or indirectly related with fulfillment of all human needs, and with off-setting of increased cost of living, Further, they expect the price that their competencies, experience and performance can fetch in the job market. Literature on the subject are mainly from foreign countries, written in their respective industrial and business contexts. There is hardly any book pertaining to the Indian context and the material which is available deals mainly with the traditional wage system. Therefore, students feel difficulty in developing a comprehensive and clear view about Indian compensation and reward system. The book deals with concepts, theories and background related with compensation and seward system as also emerging performance linked payments (variable pay) ete, Italso discusses new trends in Managerial and CEOs’ Compensation. It further discusses Tax Planning and its implication on compensation. This book also touches upon International Compensation Management and contains many live cases on Compensation Management which will provide insight to the students. Thus, the book provides a comprehensive picture of compensation and reward system and will be of real help to Management students and young Managers.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.About the Author Prof. B.D. Singh holds M.A. (Hist). Degree from Patna University and M.A. & (MSW) & LLB from Ranchi University. He did his Executive MBA from IIM, Calcutta. He worked in various capacities in SAIL, RINL and lastly at NALCO, from where he retired as Director (Personnel and Marketing). Besides exposure to a number of national and international training programmes, he completed Advance Management Programme from ASCI, Hyderabad. Prof. Singh is widely traveled throughout the world. He is also associated with HRD network of India & ISTD, holding the post of Co-Chairman of the Diploma Board of ISTD. He is also associated with many management institutes like ASCI, IMC, XIMB, FORE, LBS, IGNOU, as a visiting faculty. Prof. Singh's last assignment was professor, HRM, MDI, Gurgaon. He has more than 45 publications on HR, IR & General Management topics. He does consultancy and training extensively. Some of these companies are MUL, Hero Honda, IPCL, BALCO, SAIL, KPMG, ‘SBI, AAI, PSEB, Moser-Bear, etc. He is on the editorial Board of ‘Abhigyan’ published from Fore School of Management, ‘AWARD? a national journal published by V.V. Giri National Labour Institute and “Gyan” a journal published from CJ-IMT Mohali & Asia-Pacific Business- Review, published from AIM, New Delhi. Presently he is Senior Professor (HRM) and Chairman MDP & Consultancy at IMT, Ghaziabad.