A STUDY ON HRIS WITH REFERENCE TO

COMPENSATION AND BENEFITS MANAGEMENT FOR

MACMILLAN INDA LTD.

Submitted in partial fulfillment of the requirements of

for the award of the degree of

MASTERS OF BUSINESS ADMINISTRATION

of
BANGALORE UNIVERSITY

Submitted By
Mr. RAJESH.V.D
Reg. No. 05JJCM6039

Under the guidance of

DR. ARUN KUMAR
DEAN

KRISTU JAYANTI COLLEGE OF MANAGEMENT AND TECHNOLOGY

BANGALORE
2007

1
 STUDENT’S DECLARATION

I, Rajesh, hereby declared that this project titled “A study on HRIS with
reference to compensation and benefits management for Macmillan” submitted by
me to the department of Management of Bangalore University in partial fulfillment of
requirement of MBA programme is a bonafide work carried by me under the guidance of
Dr. Arun Kumar. This has not been submitted earlier to any other university or institution
for the award of any degree diploma / certificate or published any time before.

Rajesh V D

2
 CERTIFICATE FROM GUIDE & HEAD OF THE INSTITUTION

Certified that this declaration entitled “Study on HRIS with reference to Compensation
and Benefits management for Macmillan India Ltd”, submitted in partial fulfillment for
the award of MBA Degree of Bangalore University was carried out by Mr. Rajesh under
the guidance of Dr. Arun Kumar. This has not been submitted to any other university or
institution for the award of any degree/ diploma/ certificate.

GUIDE DEAN
MBA DEPARTMENT

PRINCIPAL

3
Acknowledgement

My project work would have become practical without the help of grace of the
“Almighty” and timely advice and creative support rendered by many. I express my
affectionate thanks to The Principal, Kristu Jayanti College, and Bangalore for giving
me an opportunity to do this training.

I am highly indebted to my faculty guide Dr. Arun Kumar department of

management studies for inspiring me and for his valuable guidance and assistance
provided. I also thank all other staff members of the department for guiding me in my
training. I would also thank Mr. Abijith Ganguly (HR Manager) of Macmillan India
Ltd, for permitting me to do the practical training in the organization.

I express my sincere gratitude and special thanks to all employees for their
valuable suggestions and keen interest which are extremely helpful in shaping this project
work to success.

Rajesh.V.D

4
 EXECUTIVE SUMMARY

The project “study on HRIS with reference to compensation and benefits” was conducted
at McMillan India Ltd. The project basically dealt with building the compensation and
benefits modules as a part of the Human Resource information system, which was being
implemented in the organization using an Enterprise Resource planning (ERP) package,
SAP – which suited most of the requirements and functions of Macmillan.

The project was initiated by putting down all the activities that were currently being done
at the organization and the activities, which should be pursued in future.

The project involved studying the existing modules of compensation and benefits and
trying to improve it with added features for an easy automation. For this to achieve, there
was a small research conducted by interviewing employees and clients (who have bought
this package or have designed one by their own) by use of a questionnaire designed by
me. With the help of the research I got insight into the latest features that are used in the
compensation and benefits, which helped me to design the needed modules of
compensation and benefits. The modules are designed in such a way that all the activities
are in a sequential order.

The modules designed consisted of every detail beginning from the compensation
philosophy the company should use to the various benefits the company can offer. It
involved designing of various forms, which is built with the idea of simplifying the
process to the maximum extent, and to make it very clear how each form should be used.
The entire modules are looked into form the strategic Human Resource perspective,
which stresses on both the qualitative and quantitative issues compensation and benefits
process. Quantitative measures were particularly used in a few areas to reduce
subjectivity.

The project is provides a clear distinction between who is authorized to use which form,
so that there is no mixing up of decision making and results by un concerned or

5
unauthorized people. The process is made very clear by specifying the objectives of each
activity in the process.

In short, the project deals with the entire spectrum of compensation and benefits from
start to finish in a sequential order to help the employees use each form (each activity) to
the fullest for organizational benefit and to achieve positive results by the end of the
process.

6
 LIST OF CONTENTS

Chapter No Topic Page No

1 Introduction 1-4
2 Company profile 5-9
3 Research design 10 - 12
4 Analysis and interpretation of the data 13 - 73
5 Summary of conclusion and recommendation 74 - 77
6 Bibliography 78 - 79
7 Annexure 80 - 83

LIST OF TABLES

Table No Tables Page No

7
 1 Levels and responsibilities 26
2 Job evaluation points 28 - 29
3 Job evaluation results 39
4 Compensation details 40 - 41

LIST OF CHARTS

Chart No Charts Page No

1 Internally consistent compensation structure 25

8
 2 Compensation administration process 27
3 Establishing pay structure 37
4 Job evaluation results 38

Figure No Figures
1 Compensation policies 62
2 Variable pay 63
3 Analysis of compensation and benefits 64
4 Compensation philosophy 65
5 Job evaluation technique 66
6 Compensation administration process 67
7 Salary structure 68
8 Compensation statistics 69
9 Variable pay 70
10 Incentive plan 71
11 Staff recognition 72
12 Benefits 73

9
 1. INTRODUCTION

1. INTRODUCTION

The project basically dealt with building the compensation and benefits modules as a
part of the Human Resource information system, which was being implemented in the
organization using an Enterprise Resource planning (ERP) package, SAP – which suited
most of the requirements and functions of Macmillan .The project involved studying the
existing modules of compensation and benefits and trying to improve it with added
features for an easy automation.

10
For this to achieve, there was a small research conducted by interviewing vendors (who
already have a package designed for compensation and benefits for a readymade use by
the companies) and clients (who have bought this package or have designed one by their
own) by use of a questionnaire designed by me. With the help of the research I got insight
into the latest features that are used in the compensation and benefits, which helped me to
design the needed modules of compensation and benefits

It involved designing of various forms, which is built with the idea of simplifying the
process to the maximum extent, and to make it very clear how each form should be used.
The entire modules are looked into form the strategic Human Resource perspective,
which stresses on both the qualitative and quantitative issues compensation and benefits
process. Quantitative measures were particularly used in a few areas to reduce
subjectivity.

A Brief Introduction of The Company

Macmillan is one of the largest and best-known publishers in the world. It is

characterized by high-quality academic, educational, fiction and non-fiction publishing in
many forms: educational course materials, science, technology and medicine, college
textbooks, dictionaries, monographs and reference materials.
A unique player in India’s education market, Macmillan India enjoys a cutting-edge
niche as partner-in-progress in the socio-economic development of the country. It is in
this field that Macmillan's flame burns the brightest – publishing educational books and
materials for over 100 years.

The company has the distinction of continuity in India’s fragmented educational market –
which is also amongst the largest and the fastest growing in the world. India has a million
schools however, a large part of the school market is closed to private publishers since
the state governments themselves publish books for state board schools. It is hoped that
state-level educational publishing will be opened to private publishers in due course. This
would be a huge and an exciting opportunity. The Indian publishing community consists

11
of over 5,000 publishers but major and organized players are few.

Macmillan India has over 2,500 titles in its list and has played a significant role in the
growth and success of Indian writing. The company has relationships with over 15,000
schools all over India and with its 22 offices and showrooms, possibly the widest all-
India network.

As a major player in providing typesetting, data coding and conversion and editorial
services to publishers globally, Macmillan has been a pioneer in the information
technology-enabled service (ITES) space. It started its export-oriented typesetting
operations in 1975. Mainly British and European publishers have driven the market so far
but now US publishers are looking actively at outsourcing to India. This will have a
positive impact on the current export market estimated to be around Rs 8,000 million
(US$ 181.82 million) (Source: Industry estimates). Macmillan employs 3,354 staff with
about 1,500 in the ITES activity.

12
Industry Profile

Book Publishing is the industry concerned with the production of literature or

information – the activity of making information available for public view. In some
cases, authors may be their own publishers.

Traditionally, the term publication refers to the distribution of printed works such as
books and newspapers. With the advent of digital information systems and the Internet,
the scope of publishing has expanded to include websites, blogs, and the like.

As a business, publishing includes the development, marketing, production, and

distribution of newspapers, magazines, books, literary works, musical works, software
and other works dealing with information.

Some of the major players are:

Macmillan India ltd

Oxford press
Himalaya publishing house
S.chand publications
Pearson Education
Prentice hall of India pvt ltd
RDSA publishers

The Indian publishing community consists of over 5,000 publishers but major and
organized players are few. The above mentioned are some of them. Mainly British and
European publishers have driven the market so far but now US publishers are looking
actively at outsourcing to India. This will have a positive impact on the current export
market estimated to be around Rs. 8,000 million (US$ 181.82 million) (Source: Industry
estimates).

5
COMPANY PROFILE

6
 2. COMPANY PROFILE

Daniel and Alexander Macmillan, two brothers from the Scottish Isle of Arran, founded
Macmillan in 1843.

Daniel was the business brain, while Alexander laid and the literary foundations,
publishing such great authors as Charles Kingsley, Tomas Hughes, Lewis Carroll, Alfred
Lord Tennyson, Henry James, Tomas Hardy, Rudyard Kipling and H.G.Wells.

As the company evolved, the Macmillan family’s vision continued to inspire the
publishing of major writers including WB Yeats, Sean O’Casey, John Maynard Keynes,
Charles Morgan, Hugh Walpole, Margaret Mitchell, C.P.Snow and Rumer Godden.

INERNATIONAL EXPANSION
An ambitious expansions programme was initiated in the late 1960s when Harold
Macmillan retired from politics after his spell as Prime Minister and Became chairman of
the company.

Serious academic, educational and literary publishing was followed by significant growth
in reference programme and college textbooks as well as educational and scientific
journals.

New international opportunities were grasped and publishing operations were set up in
Japan, Mexico and the emerging markets of Africa and Asia.

MACMILLAN TODAY
Macmillan is one of the largest and best-known international publishers in the world.
High-quality academic characterizes it and scholarly, educational, fiction and non-fiction
publishing in many forms: from STM and social science journals to serious non-fiction
and literary fiction; academic monographs and reference.

7
Macmillan operates in over seventy countries. The diversity and relative autonomy of the
individual companies within the group ensures a vibrancy and local relevance to its
publishing in all markets.

A privately owned company (once owned by the Macmillan family it is now wholly
owned by the Verlagsgruppe Gorge von Holtzbrinck, a German family group), one of the
Macmillan’s strengths is its ability to focus on organic development and investment for
the long term. Macmillan prides itself on a willingness to innovate and on employing
people with the creative and business sense to develop and implement new ideas. Hence,
for example, in current years it has been able to develop ambitious online educational
resources-such as the Macmillan English Campus-and to invest in growing list of
scientific journals ambitiously, extending the nature philosophy and brand to a number of
new ventures.
Macmillan is particularly unusual in the publishing world in its commitment to service. It
is one of the only large publishing group that serves third party clients and its own
companies with services including typesetting and data capture, web design and
development in India, print sourcing facilities in the far east, and warehousing and
fulfillment in the UK, USA and, Australia. Its clients include many other publishers, from
Reed Elsevier through Bloomsbury to yellow pages.

Internationally, the group consists of five main operational units:

1. Nature publishing group (NPG): scientific, technical and medical journals and
reference.
2. Palgrave Macmillan: academic publishing in humanities, social sciences and
business.
3. Pan Macmillan: fiction and non-fiction for adults and children.
4. Macmillan education: English language teaching and general curriculum learning
materials for international markets.

8
 5. Publishing services: book and journal order fulfillment, warehousing and
distribution, printing and electronic production, web development and information
processing.

PRESENT OWNERSHIP
Verlagsgruppe George von Holtzbrinck GmbH, a large media group created in 1971,
owns the Macmillan group. Holtzbrinck owns around 40 companies apart from
Macmillan and is headquartered in Stuttgart.

Its interests include book, magazine and news paper publishers and new media firms.

The group’s portfolio is built upon five key areas:

1. Fiction and non-fiction book publishing.
2. Education science publishing.
3. Business and finance/ national newspapers.
4. Regional newspaper and printing.
5. Electronic media.

Industry Profile

Book Publishing is the industry concerned with the production of literature or

information – the activity of making information available for public view. In some
cases, authors may be their own publishers.

Traditionally, the term publication refers to the distribution of printed works such as
books and newspapers. With the advent of digital information systems and the Internet,
the scope of publishing has expanded to include websites, blogs, and the like.

As a business, publishing includes the development, marketing, production, and

distribution of newspapers, magazines, books, literary works, musical works, software
and other works dealing with information.

9
Some of the major players are:

Macmillan India ltd

Oxford press
Himalaya publishing house
S.chand publications
Pearson Education
Prentice hall of India pvt ltd
RDSA publishers

The Indian publishing community consists of over 5,000 publishers but major and
organized players are few. The above mentioned are some of them. Mainly British and
European publishers have driven the market so far but now US publishers are looking
actively at outsourcing to India. This will have a positive impact on the current export
market estimated to be around Rs 8,000 million (US$ 181.82 million) (Source: Industry
estimates)

10
3. RESEARCH DESIGN

11
 3. RESEARCH DESIGN

• Hypothesis:
Design of human resource information system with reference to
compensation and benefits are highly effective in the organization.

• Population:
The study consists of over 150 employees.

• Sample size:
Selected sample size for the study would be 50 employees.
Selected on a systematic sampling frame work.

Statistical technique:
Suitable statistical technique will be used for the
Analysis of the data.

Scope of the study:

Human Resources Management (HRM) is the attraction, selection, retention,
development, and utilization of labor resource in order to achieve both individual and
organizational objectives. Human Resources Information Systems (HRIS) is an
integration of HRM and Information Systems (IS). HRIS or Human resource Information
system helps HR managers perform HR functions in a more effective and systematic way
using technology. It is the system used to acquire, store, manipulate, analyze, retrieve,
and distribute pertinent information regarding an organization's human resources. A
human resource information system (HRIS) is a system used to acquire, store,
manipulate, analyze, retrieve, and distribute pertinent information about an organization's
human resources.

12
Limitations of the study:
1. The time period taken for the study is only one month, this is very less time to
conduct detailed study about the HRIS
2. The organization should be cooperative enough to do the study.
3. The support from clients and vendors should be cooperative during the survey.

Objectives of the study:

The principle objectives of the study are to analyze the following aspects such as;
• To know about human resource information system.
• To design a human resource information system with reference to compensation
and benefits.
• To analyze and interpret the data.
• To find out the recommendations.

13
4. ANALYSIS AND INTERPRETATION OF
DATA

14
 4. ANALYSIS AND INTERPRETATION OF DATA

HUMAN RESOURCE INFORMATION SYSTEM

DEFINATION:
An HRIS is a management system designed specifically to provide managers with
information to make HR decisions.

1. It is a management system and is used specifically to support management

decision-making.

2. The need for this kind of information has increased in the last few years,
especially in large and/ or diverse companies, where decision-making has been
moved to lower levels.

3. Large companies generally have the advantage when it comes to HRIS’s, the cost
to develop an HRIS for 200 hundred people is usually close to that for 2000
people, so it is a better investment for large companies, larger companies tend to
have systems that have a fair degree of customization.

HRIS systems include the employee name and contacts information and all or some of
the following:
Department, job title, grade, salary, salary history, position history, supervisor, training
completed, special qualifications, ethnicity, date of birth, disability, veterans status, visa
status, benefits selected etc.

HRIS systems include reporting capabilities. Some HRIS track applicants before they
become employees. Some HRIS systems are interfaced to pay roll or other financial
systems.

15
HRIS APPLICATIONS

1. Personnel.

2. Position control.

3. Position clarification.

4. Affirmative action.

5. Automated increase processing.

6. Flexible and traditional benefits administration.

7. Salary survey.

8. Pool accounting budgeting.

9. Salary base component of the budget preparation facility.

HRIS offers a wide array of workforce management tools. From recruiting, through
compensation, performance and benefits administration, and on to COBRA.

JOB AND SALARY HISTORY- tracks dates, rates, locations, divisions, departments, and
salary grades.

Computes and stores compo-ratios, percent-of-range, change amounts, and change

percents. Also computes and stores pay period equivalents for a wide range of pay
frequencies.

16
BENEFITS TRAKING - computes full cost for employee, employer, and dependents.
Support simultaneous prior, current, and open enrollment. Reconciles carrier statements
and provide accurate benefits report.

PERFORMANCE REVIEW - automatically schedules future reviews. Multiple “next

reviews” are allowed for disciplinary and regular reviews. Batch processing speeds data
entry. Batch processing supports rapid entry of course by employee of course.

Thus HRIS contains every field of Human Resource. This helps the organization in many
different ways as read from above and much more.

17
 COMPESATION AND BENEFIT

Compensation is defined as a return given for the work being done. Compensation can be
given in various ways. Most people think money is the only way of giving compensation.

Compensation can be both monetary and non monetary. Handling compensation in any
organization is the most important job. This is a very crucial process and has to be done
in a very systematic manner.

A. COMPENSATION PRINCIPLES AND GOALS

The principles on which the compensation system is based are:

1. Pay system aligned with the vision of the organization.

2. Pay system aligned with the organization’s strategic plan.

3. Maintenance of competitive posture.

4. Simplicity.

5. Pay aligned with contributions.

6. Encouragement of creative non-monetary reward system.

7. Fiscally responsible decentralized salary administration.

8. Open, communicated system.

9. Clear procedures.

18
 10. Recognition of the value of the people.

The procedure in which the compensation and benefits should be handled is designed in a
systematic way in the later parts.

B. BENEFITS AND VARIABLE PAY

Variable pay affected by factor like

1. Availability of sufficient financial resource.

2. Consistency with the organization culture.

3. Linkage with organizational objectives.

4. Clear separation from variable pay.

5. Clear communication.

6. Current updated plans.

7. Measurable performance.

19
Individual incentives are based on

1. Identification of individual performance

2. Independent work

3. Individual competitiveness desired.

4. Individualism stressed in organizational culture.

Bonuses are given based on the individual’s performance and company policies.

Incentives are in various forms like:

1. Non-cash awards

2. Recognition

3. ESOP’s

4. Executive compensation

5. Rewards of motivation etc.

20
An employee who is injured during the course of employment, or suffers from work-
related mental disabilities, as well as occupational diseases, is eligible for workers
compensation benefits. These benefits include weekly compensation benefits. These
benefits include weekly compensation for lost income during the period the employee
cannot work.

RETIREMENT SECURITY BENEFITS

1. Disability retirement benefits

2. Health care for retirees

3. Pension plans

HEALTH CARE BENEFITS

This will include medical and dental

OTHER BENEFITS

21
1. Leave benefits

2. Vacations and holidays

3. Recreation programme

22
C. ANALYSIS AND DESIGN OF COMPENSATION AND BENEFITS

The objective of this project is to study the existing compensation and benefits module at
Macmillan and improving on it so as to atomize it in the proper manner.

For this objective to be achieved I had done a lot of exploratory research by browsing the
Internet, reading books, getting to know the in and out of compensation and benefits.
This involved studying every feature of the module. I had done a research by preparing
the questionnaire and interviewing the concerned person to get the various inputs in a
compensation management and benefits modules.

The features covered various points like

1. Compensation philosophy.

2. Compensation policies.

3. Their grading system.

4. Job evaluation method.

5. Broad banding.

6. Salary structure.

7. Individual compensation statistics.

8. Variable pay.

9. ESOPs.

10. Various kinds of benefits.

11. Pay policies.

23
 DESIGN OF COMPENSATION AND BENEFITS MODULE

COMPENSATION PRINCIPLES AND GOALS

The principles on which the compensation system is based are:

1. Pay system aligned with the vision of the organization.

2. Pay system aligned with the organization’s strategic plan.

3. Maintenance of competitive posture.

4. Simplicity.

5. Pay aligned with contribution.

6. Encouragement of creative non-monetary reward system.

7. Fiscally responsible decentralized salary administration.

8. Open, communication system.

9. Clear procedures.

10. Recognition of the value of people.

24
A. COMPENSATION PHILOSAPHY

Macmillan’s compensation program provides salary and benefits that are competitive
with the external labor market in order to attract, retain and motivate a diverse, talented
and effective staff. The pay program recognizes each staff member’s value and
contributions by tying increases in compensation to job performance, and particularly
by rewarding individuals who meet high performance standards, and differentiating
between superior performers and others.

COMPENSATION APPORCH

Macmillan follows a traditional approach, which offers certain advantages in specific

competitive situations. This very rational and logical approach, which identifies task
and responsibilities, which is then used to decide the jobs, that is valuable. Value of each
job is then used to establish a pay range that reflects a person’s profession as he/she
grows and presumably gets better at the job.

25
INTERNALLY CONSISTENT COMPENSATION STRUCTURE

Max
Level 5

Level 4
S
a
l Level 3
a
r
Level 2
y

Level 1
Min

Degree of Responsibility

Chart No. 1

26
LEVELS RESPONSIBILITIES
Level 1 Operational:
Office boys Filing, greeting guests, answering
telephones.
Level 2 Operational:
Assistants and supervisors Planning and setting agendas, proper
supervision.
Level 3 Operational:
Officers and executives Team management, decision making.

Level 4 Operational:
Managers and assistant managers Decision making for projects, delegation,
leadership.
Level 5 Strategic:
Senior management Setting of policies and procedures,
allocation of funds.

Table No. 1

Note: Level 1 is the jobs with the least responsibilities and level 5 is the one with
maximum responsibilities.

B.COMPENSATION ADMINISTRATION PROCESS

27
 Internally Consistent pay
Structure

Job Analysis
(Job description, Job Specification)

Job Pay
Evaluation Surveys

Pay Pay
Structure
Policies

Individual
Pay Performance
Appraisal

Implementation,
Communication,
Monitoring.

Chart No. 2
C. JOB EVALUATION TECHNIQUE

28
This can be done by point method. This is one of the most widely used methods.
1. Break down jobs in to various compensable factors and place weights or points.

2. A compensable factor identifies a job value commonly present throughout a group

of jobs.

JOB EVALUATION POINT TABLE

Factor 1st Degree 2nd Degree 3rd Degree

1) Know- how
Functional
Expertise
Managerial
Skills
Human
Relations

2)problem solving

Environment

Challenges

3)Accountability
Freedom to act
Impact of the end
Result

Magnitude

29
Table No. 2

COMPENSABLE FACTOR OF THE JOB EVALUATION

KNOW – HOW

1. Functional Expertise: The amount of practical, specialized, or technical

knowledge required.

30
 2. Managerial Skills: The ability to make any activities and functions work
well together. Have more responsibilities than the superiors. Decision making
for various projects.

3. Human Relations: Requirement for skill in motivating people.

PROBLEM SOLVING

1. Environment: The degree of freedom with which the thinking process is

used to achieve job objectives without the guidance of standards, direction from
others.

2. Challenge: The type of mental activity involved; the complexity abstractness

or originality of thought required.

ACCONTABILITY

1. Freedom to Act: Relative presence of personal or procedural control and

guidance; determined by answering the question, how much freedom the
jobholder to act independently?

2. Impact of Result: Impact of the job in terms of money, a determination of

weather the job has a primary effect on end or results have instead a sharing,
contributory, or remote effect.

3. Magnitude: A measure of the sales, budget, rupee value of purchases of

value added, or any other significant figure in terms of money related to the job.

31
JOB EVALUATION QUESTIONNAIRE

Name of employee/id:
Department/Location:
Job title :

32
Purpose and objectives
Please give a brief statement of the purpose of your current job and agreed objectives for
the year (if appropriate)

Main objectives
List in outline only and indicate the approximate percentage of time spent on each
activity or frequency (e.g. daily, weekly, monthly, etc).

Knowledge and skills

a) What are the minimum formal qualifications required to do this job?

b) With those qualifications, how much relevant work experience is required to

perform the job activity?

33
 c) Give examples of the skills, knowledge and /or expertise you consider are
required to perform the job effectively.

Problem solving (fact finding, analysis, initiative, originality, creativity)

Give examples of the range of problems and issues you have had to deal with in the last
12 months. What procedures or other guidance is available to assist you? Indicate the
frequency with which these problems arise.

Decisions
a) Own decisions

b) Advising others( outside your area of work i.e. people not managed by yourself)

34
Impact of decisions
What contribution would you say your job makes to the effective running of the
organization?

What are the potential consequences of error? Please give examples.

Additional information (optional)

Please add any additional information points you wish to make (not covered elsewhere)

35
Signature of the employee signature of HR

PROCESS OF JOB EVALUATION

1. Compassable factors are chosen (explanation in the preceding page)

2. Scales reflecting each different degree within each factor are defined.

36
 Examples: Know-how

1st degree: just knowing the basic skills of doing the job given.

2nd degree: knowing the job in little more depth with additional skills.

3rd degree: knowing everything about the job and handling it perfectly.

3. Now assign points to degrees.

4. Relative importance of each factor must be decided on and it is allotted the

maximum number of points.

5. Once the highest degree of each factor is given a point allocation reflecting its
importance, the lower degrees are assigned proportionately lesser point values.

PAY SURVEYS
Macmillan can do a pay survey, which gives information of them compensation rates for
workers performing similar jobs in other organizations. Many surveys are available
online.

ESTABLISHING PAY STRUCTURE

Job Evaluation Results

37
 Identify Different pay
structures

Revise Pay Grades Compute pay

and Ranges as Ranges
needed Establish Pay Grades

Compute Current pay to

pay ranges

Chart No. 3

JOB EVALUATION RESULTS

Once the job evaluation points are determined we can develop a market line by plotting
the points against the pay survey rates. With this graph we can find out the distribution of
wages across the industry.

38
 Market line

Salary
C

Min A

Pt 1 Pt 2 Pt 3 Pt 4 Pt 5 Pt 6 Pt7

Chart No.4 Job evaluation points

Levels Grades Point Range

Level 1 Below Pt 1

Level 2 Pt 1 - Pt 3

39
Level 3 Pt 3 - Pt 5

Level 4 Pt 5 - Pt 7

Level 5 Pt 7 above

Table No.3

PROCESS OF JOB EVALUATION

1. Define the pay line linking it to job evaluation points.

2. Draw a graph with salary on horizontal axis and job evaluation points on vertical
axis.

3. The points on the line will represent the midpoints of the salary.

4. Each range of points has a maximum, minimum and midpoint.

5. The spread around the midpoint may vary

6. The percentage spread is frequently greater for higher-level positions.

7. The top performing employees will be in the maximum range.

D. SALARY STUCTURE

Name of employee /Id: Date:

Department name / Location:

Compensation details (All figures in INR)

40
BASIC
DEARNESS ALLOWANCE
HRA
CONVEYANCE
COST OF LIVING ALLOWANCE
SPECIAL ALLOWANCE
ATTENDANCE PAY
SHIFT ALLOWACE

SUB TOTAL
STATUTORY BONUS: 20% OF BASIC
VARIABLE PAY

SUB TOTAL

TOTAL

LESS:
PROVIDENT FUND
GRATUITY
INCOME TAX
FESTIVAL TAX
INSUARENCE
MISCELLANEOUS DEDUCTIONS

SUB TOTAL

GROSS CASH COMPENSATION

Table No. 4

No. of Working Days in a month:

No. of Days Present:
No. of days Absent:

41
 1. Note: All the benefits are as per company’s policies, which are subject to change
from time to time.
2. Variable pay is not a part of your guaranteed compensation and will be paid based
on criteria determined by the company from time to time.

E. COMPENSATION STATISTICS

(For individual employee)

Employee Name: Dept/ location:

Employee Id:

Compensation statistics

Hours worked per week

42
 Months worked per year

Weeks worked per year

Hours worked per year

Hourly rate

Annual salary

Number of pays per year

Salary per pay

Compensation as a % of total turnover

Total compensation
* 100
Total turn over

Compensation as a % of cash inflow

Total compensation
* 100
Total cash inflow

43
F. VARIABLE PAY

Macmillan has variable pay incentives in order to

1. Link individual performance to business goals.

2. Reward superior performance.

Variable pay are affected by factors like

1. Availability of sufficient financial resources.

2. Consistency with the organization culture.

3. Linkage with organizational objectives.

44
 4. Clear separation from variable pay.

5. Clear communication.

6. Current, updated plans.

7. Measurable performance.

Individual incentives are based on

1. Identification of individual performance.

2. Independent work.

3. Individual competitiveness desired.

4. Individualism stressed in organizational culture.

45
G. PROPOSED INCENTIVES
1. AWARDS
Cash and non cash awards:
These can be in the form of both cash and non cash awards. This would be given
according to their performance. This can be referred from the module of
performance management system. Non cash awards can be gift certificates, travel
awards etc.

Recognition awards:
This recognizes individual employees for their performance or services. It
includes awards like the “best employee of the year”, “best employee of the
month”.

ESOP:
This allows employee the right to purchase a fixed number of shares of the
company stock at a specified price for a limited period of time. The stock markets

46
 price exceeds the exercise price; employees can exercises the option and sell the
stock at a profit.

Executive compensation:
This includes supplemental benefits, long term incentives, annual bonuses,
executive salaries. Their benefits may take several forms including traditional
retirement, health insurance, vacation and others.

2. CASH AND NONCASH REWARDS FOR THE MOTIVATION

Pre-tax thrift-saving programs: this is to help the employee to know ways of

minimizing his or her tax by investing properly.

Recreational programs: this would include parties on various occasions, personal

development programs etc.

Gift vouchers: this includes sodex ho passes and gift coupons for stores with
which the company has made a tie up with.

Sponsoring for further education: elaboration investment made on star performer

and solid citizens to increase potential.

Personal financial planning: this includes tax planning, budgeting etc.

Loans: this includes housing loan, personal loans, car loan.

Tuition refund: reimbursement of money of the employee has invested in further

studies for the benefit of his job.

47
 Profit sharing: this is a like bonus where the employees get a little percent of the
profit earned.

Company car: employees can make use of the company car when necessary.

Flex time: allowing the employees to work whenever they are comfortable.

Extra vacation: apart from the normal vacation periods, this allows employee to
take a little extra time as a reward of this performance.

Child care: taking care of the children of the employees when they are working.

H. STAFF RECOGNITION AND INCENTIVE AWARD

Certificate of cash award

Date:

Congratulation Mr/Ms you have won cash

award of Rs for your very good performance

in the field of for the year 2006-07.

Keep it up…. Best wishes.

48
 Managing Director/HR/Department head

Note: This payment will be processed on the employee’s next pay schedule subsequent to
the receipt of this document by the concerned department. The award will be subjected to
all taxes.

STAFF RECOGNITION AND INCENTIVE AWARD

Certificate of non cash award

Date:

Congratulation Mr/Ms you have won an

Award for your very good performance in the

Field of for the year 2006-07.

Keep it up… Best wishes

49
 Managing Director/HR/Department head

Certificate of recognition

Date:

Congratulation Mr/Ms you

Have been awarded the title of for

Your very good performance in the field of

For the year 2006-07.

Keep it up…. Best wishes.

50
 Managing Director/HR/Department head

BENEFITS

This is a form of indirect compensation. Benefits can be of many types. Each of them is
explained below.

SECURITY BENEFITS
Worker’s compensation
This provides benefits to people who are injured on the job.

Report of accident/injury

Note: This form has to be duly signed by the employee and has to be submitted to the
concerned department. To be filled in after the recovery of the employee.

Injured employee: Department:

51
Employee ID:

Date of injury: Time:

Give details of injury/accident

Were there any witnesses to the accident? If yes please provide name, address and phone
number.

Did injured employee see doctor? If yes furnish details.

What type of treatment was received?

Has injured employee lost time from work? If yes when did lost time begin?

52
Has employee returned to work? If yes, when did he return?

Name of the supervisor: Date:

Signature of the supervisor Employee signature

I. RETIREMENT BENEFITS

RETIREMENT SECURITY BENEFITS

This would include

1. Disability retirement benefits

2. Health care for retirees

3. Pension plans

HEALTH CARE BENEFITS

This would include

1. Medical and dental

OTHER BENEFITS

53
This would includes
1. Leave benefits

2. Vacation and holidays

3. Recreation programs

DISABILITY RETIREMENT BENEFITS

1. Indicate your pension fund:

2. Employee name/ Id:

3. Date of birth:

4. Marital status: *single *married

5. Address:

6. Home phone:

54
 7. Work phone:

8. E-mail address:

Disability retirement information

9. Retirement date:

10. Type of disability retirement:

*ordinary disability
*accidental disability

Application must be filed within five years of date of accident.

11. Date of accident:

12. Has a claim been field for workers compensation?

*yes *no

13. I declare that I am incapacitate for further service as a

Due to the following reasons:

55
14. Only for accidental disability
Describe the accident(s) and list any witness to it.

15. Salary information – (ordinary disability only)

Were your last three years of service also the years during which you earned the
highest salaries?

*yes *no

(If no, list the three fiscal years (July – June) in which you earned the highest
salaries.

Year 1 Year 2 Year 3

16. Spouse name:

(If you are naming a domestic partner, submit a photocopy of your certificate of
domestic partnership along with this application)

56
 17. Spouse address:

18. Choose a beneficiary option

 Maximum
 Other option
(Maximum: all the retirement benefits will go to the concerned person and not to any
beneficiary and after his/her death, no more retirement benefits would be given to
anyone)

(Other option: give a name of a beneficiary who would receive the benefit)

19. Name of beneficiary: (only if the other option is chosen)

20. Relationship:

21. Birth date:

57
 Signature of the employee Signature of the HR

RETIREMENT HEALTH CARE BENEFITS

Name of the employee/Id:

Location / department:

Date of birth:

Marital status:
Single Married

Address:

Year of retirement:

58
Do you already have the health insurance?
Yes No

If No
I wish to be covered under:

Name of the primary Physician:

I do not wish to be coved under any of the medical plans for the following reasons:

(See instructions on declining or waiving coverage)

I have coverage under my spouse – spouse’s public employer

I have coverage with another employer- list employer

Other (Give Reason)

3 B. Level of coverage (check one)

*Single *Member & Spouse *Family *Parent/ Child(ren)

59
Dependent Information

Name:

Relationship:

Signature of employee manager signature of HR

VACATION/ LEAVE BENEFITS

Name of the employee/ Id:

Location/ Department:

Date of Birth:

Leave Designation:

*Family and Medical leave

*work related injury/ illness
*Neither

Paid Leave

Vacation

60
Vacation in place of sick leave

Maternity leave

Compensatory time

Sick leave
*Illness/ injury
*Medical appointment

Signature of Employee Signature of HR head

Unpaid Leave
*Medical
*Personal

Unpaid time off: (10 or fewer consecutive working days)

Beginning and ending dates

Unpaid leave of absence: (more than 10 consecutive working days)

Beginning and ending dates

Last date worked Last date in active pay status

Additional information: (reason for absence, etc.)

61
Necessary documents should be provided in case of sick leaves for more than 3 days.

I understand that approval of this request is contingent upon the availability of adequate
leave balances. Falsification of this application for leave or of the supporting
documentation is grounds for disciplinary action, up to and including dismissal.

Employee signature: Date:

DATA ANALYSIS AND INTERPRETATION

There was a small survey conducted on the basis of compensation and benefit modules
which I have been developed for the company. The main objective of the survey is to get
the feed back from the employees on the developed modules.

COMPENSATION POLICIES

Opinion of the employees Opinion of the employees

YES NO
90% 10%

62
 100
80
YES
60
NO
40 NO
20
YES
0
YES NO

Figure 1

Drawn from the sample we can come to the decision that 90% of the employees are
satisfied and 10% of the employees are not satisfied with compensation policies.

VARIABLE PAY

Opinion of the employees Opinion of the employees

YES NO
87% 13%

63
 90
80
70
60
50
YES
40
NO
30
20
10
0
YES NO

Figure 2

Drawn from the sample we can come to the decision that 87% of the employees are
satisfied and 13% of the employees are not satisfied with variable pay techniques.

ANALYSIS OF COMPENSATION AND BENEFIT

Opinion of the employees Opinion of the employees

YES NO
95% 5%

64
 YES
NO

Figure 3

Drawn from the sample we can come to the decision that 95% of the employees are
satisfied and 5% of the employees are not satisfied with analysis of compensation and
benefits.

COMPENSATION PHILOSAPHY

Opinion of the employees Opinion of the employees

YES NO
80% 2O%

65
 80

60

40
NO
20
YES
0
YES NO

Figure 4

Drawn from the sample we can come to the decision that 80% of the employees are
satisfied and 20% of the employees are not satisfied with compensation philosophy.

JOB EVALUATION TCHNIQUE

Opinion of the employees Opinion of the employees

YES NO
83% 17%

66
 100
80
YES
60 NO
40 NO
20
YES
0
YES NO

Figure 5

Drawn from the sample we can come to the decision that 83% of the employees are
satisfied and 17% of the employees are not satisfied with job evaluation technique.

COMPENSATION ADMINISTRATION PROCESS

Opinion of the employees Opinion of the employees

YES NO
83% 17%

67
 YES
NO

Figure 6

Drawn from the sample we can come to the decision that 83% of the employees are
satisfied and 17% of the employees are not satisfied with compensation administration
process.

SALARY STRUCTURE

Opinion of the employees Opinion of the employees

YES NO
81% 19%

68
 90
80
70
60
50 NO
40 YES
30
20
10
0
YES NO

Figure 7

Drawn from the sample we can come to the decision that 81% of the employees are
satisfied and 19% of the employees are not satisfied with salary structure.

COMPENSATION STATISTICS

Opinion of the employees Opinion of the employees

YES NO
80% 20%

69
 100 YES
NO NO
50
YES
0
YES NO

Figure 8

Drawn from the sample we can come to the decision that 80% of the employees are
satisfied and 20% of the employees are not satisfied with compensation statistics.

VARIABLE PAY

Opinion of the employees Opinion of the employees

YES NO
77% 23%

70
 80

60
NO
40
YES

20

0
YES NO

Figure 9

Drawn from the sample we can come to the decision that 77% of the employees are
satisfied and 23% of the employees are not satisfied with variable pay.

INCENTIVE PLAN

Opinion of the employees Opinion of the employees

YES NO
86% 14%

71
 YES
NO

Figure 10

Drawn from the sample we can come to the decision that 86% of the employees are
satisfied and 14% of the employees are not satisfied with incentive plan.

STAFF RECOGNITION

Opinion of the employees Opinion of the employees

YES NO
80% 20%

72
 160
140
120
100
NO
80 YES
60
40
20
0
YES NO

Figure 11

Drawn from the sample we can come to the decision that 80% of the employees are
satisfied and 14% of the employees are not satisfied with staff recognition.

RETIREMENT BENEFITS

Opinion of the employees Opinion of the employees

YES NO
92% 8%

73
 100
80 YES
60 NO

40 NO

20
YES
0
YES NO

Figure 12

Drawn from the sample we can come to the decision that 92% of the employees are
satisfied and 8% of the employees are not satisfied with retirement benefits.

74
 5. SUMMARY OF FINDINGS,
RECOMMENDATION AND CONCLUSION

5. SUMMARY OF FINDINGS RECOMMENDATION AND

CONCLUSION

FINDINGS

1. Macmillan follows a conservative policy having not much variable pay

component.

75
 2. There is no lead, lag and match policy; there is a system of payment policy
in place.

3. It is confidential. Only the authorized personnel can have access to it.

4. No change can be made in the policy other than authorized authority.

5. There are established pay grades and pay ranges.

6. Each employee has a basic pay, which is paid monthly.

7. The basic pay depends on the level of job evaluation.

8. There is approximately a 20% bonus, which is given every year.

9. Excellent performance and loyalty are rewarded accordingly.

10. There are both monetary and non-monetary benefits, which are given.

11. The retirement benefit plan is in place.

RECOMMENDTIONS

1. To have a successful incentive compensation plan, an employer should establish

the plan with ongoing communication, manage the performance to ensure that the
skill needed for organizational success are being applied, evaluate performance
so that reviews are informative and link the assessment to financial rewards in a
consistent manner.

2. Pay for performance, or incentive compensation, is more effective with an

accurate and relevant evaluation process.

76
 3. Compensation management and performance should always be tied closely
together and be aligned with company goals.

4. Any compensation changes should be communicated properly to employees so

that they know how they will be affected and are less likely to spread rumors
around the office.

5. Effective compensation management relies on the company’s existing philosophy

and the context for change.

6. Enterprise compensation management (ECM) technology is designed to simplify

human capital planning, management and compensation decision-making.
Although its initial cost is high, the return on investment (ROI) in strategic and
financial results justifies the expenses.

7. To make a business case for an ECM solution, one should identity an executive
sponsor, pin point existing compensation inefficiencies, quantify hard dollar
productivity and strategic benefits, and identify and prioritize the functional
requirements and timelines for development.

CONCLUSION

For years, the purpose of the performance review has been to allocate annual salary
increases. While this process has generally been handled manually, it also has seen a
great deal of controversy and change. Compensation is truly the biggest driver of certain
types of behavior and works differently for various job groups. Incentive compensation is
a great tool to drive sales and specific performance targets, whereas base compensation is
a great tool for driving overall employee satisfaction and improving performance. What
has been missing in all links from compensation to performance is measurement of year-
over-year increases in performance and the impact that compensation has on
performance. Organizations that take an interactive view of the performance management

77
process and ensure that compensation is just one of many outcomes, which might also
include promotion, new opportunities for learning and development, and other forms of
recognition, understand the importance of integrating performance and HRIS to measure
total compensation and rewards. Organizations that still rely on a manual, semi-
automated process as a once-a-year, meet-the-requirement tool will soon realize that the
war for talent and staffing shortages will make it necessary to approach pay-for-
performance as an integrated process.

Although almost all HR managers understand the importance of HRIS, the general
perception is that the organization can do without its implantation. Hence only large
companies have started using HRIS to complement its HR activities.

But HRIS would be very critical for organizations in the near future. This is because of a
number of reasons.

• Large amount of data and information to be processed.

• Project based work environment.
• Employee empowerment.
• Increase of knowledge workers & associated information.
• Learning organization

78
 BIBLIOGRAPHY

BIBLIOGRAPHY

 The company’s existing database.

 Various books of compensation and benefits.

 Magazines, journals etc.

 Human Resource management books.

 www.macmillanindia.com

79
 www.google.com

 www.alstavista.com

80
 ANNEXURE

ANNEXURE

QUESTIONNAIRE
I am Rajesh V.D student of Kristu Jayanti College doing the survey on HRIS with
reference to compensation and Benefit management, to fill full the parietal
requirement of Master in Business Administration for Bangalore University.
To find out the employees different opinion about compensation and benefit modules
questionnaire will be developed on the basis of which I have been developed
compensation and benefit modules in the organization. It will greatly influence on the
further development on this, also out come of this important to draw proper
recommendation and conclusions.

81
Questionnaire on compensation and benefits

Name of the employee:

Designation:

No of years of experience:

1. Is module on compensation policy is satisfactory?

Yes No

2. Is development of module on variable pay is satisfactory?

Yes No

3. Is the analysis of compensation and benefits is satisfactory?

Yes No

4. Weather the compensation philosophy is satisfactory to the employees?

Yes No

5. Percentage of employees those who satisfactory and un satisfy with job evaluation
technique?

82
 Yes No

6. Is compensation administration is satisfactory to the employees?

Yes No

7. Weather the salary structure is satisfactory to the employees?

Yes No

8. Opinion about the compensation statistics.

Yes No

9. Is variable pay is satisfactory?

Yes No

10. Opinion of he employees about incentive plan module.

Yes No

11. Is module on staff recognition is satisfactory?

Yes No

12. Weather module on benefits satisfies the employees?

83
Yes No

84