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Project Report

on
COMPENSATION MANAGEMENT



SUBMITED BY
Jyoti Prasad Harichandan
Reg.No-1206284095
2012-14




CERTIFICATE

This is hereby certified that Mr Jyoti Prasad Harichandan is a bona-fide
student of Astha School of Management, Bhubaneswar and has
completed his Project, STUDY OF COMPENSATION MANAGEMENT
IN HDFC BANK . during the academic year 2012-2013, at do Project in
HDFC Bank Limited which is a partial requirement for the award of
Master in Business Administration, under BPUT, Odisha.








Bhubaneswar, Odisha. Signature of the guide
Date: _________

STUDENTS DECLARATION

I Mr Jyoti Prasad Harichandan a student of Astha School of
Management, Bhubaneswar hereby declare that this project report
entitled STUDY OF COMPENSATION MANAGEMENT IN
HDFC BANK is a genuine report carried out by me towards the
partial fulfillment of the Master of Business Administration degree.









Place Jyoti Prasad Harichandan
Date. Reg no-1206284095

ACKNOWLEDGEMENT

I acknowledge my indebtedness to our Asst Prof. Sarita dash,Astha
School of Management, for his guidance & clarifying the doubts in the
area of my project study. I am also thankful to all other faculty members
of our college for their kind co-operation with me for the preparation of
the Project in HDFC Bank Limited. I am thankful to all the respondents
who played a major role in completion of this research work and without
their help I could not have completed the project.








Place Jyoti Prasad Harichandan
Date. Reg no-1206284095


CONTENTS
Chapter- 1
Objective
Limitation
Scope
Research methodology

Chapter -2
Introduction to compensation management
Company Profile

Chapter - 3
Data Analysis & Interpretation

Chapter 4
Finding
conclusion

Chapter 5
Questionnaires

OBJECTIVE
This project attempts to understand the objectives:-

To understand in details how to establish pay rates to different level of
employee.
To understand the impact of compensation management on performance
level.
A comparative study of the compensation management strategies followed
in different banks.

LIMITATIONS
Everything has some pros and cons and so certain limitations of this study that we
could observe are as follows:
The area of project work is banking sector so, the data or result may be
approximate as the conclusion is based on the survey method i.e. primary &
secondary source (filling of questionnaire from the employees) may be
hypothetical (imaginary) data.
The organizations which have been studied and surveyed are not providing
us with full information which has hampered the result and conclusion.

Exact data was not been provided.


SCOPE
The scope of this project is to study of the compensation management strategies
in HDFC bank & to evaluate the behaviour & performance of employee on their
work.
RESEARCH DESIGN
INTRODUCTION
A Research Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It specifies the methods and procedures
for acquiring the information needed to conduct the research effectively.
RESEARCH METHODOLOGY
TYPE OF DATA COLLECTED
There are two types of data used. They are primary and secondary data. Primary
data is defined as data that is collected from original sources for a specific purpose.
Secondary data is data collected from indirect sources.

PRIMARY SOURCES
Questionnaire consists of a set of questions presented to respondents. Because of
its flexibility, it is by far the most common instrument used to collect primary data.

SECONDARY SOURCES
These include books, the internet, the company website etc,


INTRODUCTION OF COMPENSATION MANAGEMENT
Compensation Management is an integral part of the management of the
organization. Compensation is a systematic approach to providing monetary
value to employees in exchange for work performed. Compensation may achieve
several purposes assisting in recruitment, job performance, and job satisfaction.
To be effective, the managers must appreciate the value of competitive pay, their
human resources, and have an investment view of payroll costs. It is of prime
importance for an organization to maintain pay levels that attract and retain
quality employees while recognizing the need to manage payroll costs.
The literal meaning of compensation is to counter-balance. In the case of human
resource management, compensation is referred to as money and other
Benefits received by an employee for providing services to his employer. Money
and benefits received may be in different forms-base compensation in money and
various benefits, which may be associated with employee's service to the
employer like provident fund, gratuity, insurance scheme and any other payment
which the employee receives or benefits he enjoys in lieu of such payment.

"Compensation includes direct cash payments, indirect payments in the form of
employee benefits and incentives to motivate employees to strive for higher levels
of productivity
Compensation is a tool used by management for a variety of purposes to further the
existence and growth of the company.
Objectives of Compensation management are:

1.Attracting and Retaining Personnel: From organizations point of view, the
compensation management aims at attracting and retaining right personnel in the
Organization Not only they require persons who are well qualified but they are also
retained in the organization. There is no dirth of personnel at operative levels but
the problems come at the managerial and technical levels
Particularly for growing companies. Not only have they required persons who are
well qualified but they are also retained in the organization. In the present day
context, managerial turnover is a big problem particularly in high knowledgebase
Organizations.

2. Motivating Personnel: Compensation management aims at motivating personnel
for higher productivity. Monetary compensation has its own limitations in
motivating people for superior performance.
3. Optimizing Cost of Compensation: Compensation management aims at optimizing
cost of compensation by establishing some kind of linkage with performance and
compensation.
4. Consistency in Compensation: Compensation management tries to achieve
consistency-both internal and external-in compensating employees. Internal
consistency involves payment on the basis of criticality of jobs and employees'
performance on jobs.



COMPENSATION
PACKAGE
MOTIVATION
NEED
SATISFACTION
EMPLOYEE
RETENTION
Components of Compensation System

Compensation systems are designed keeping in minds the strategic goals and business objectives.
Compensation system is designed on the basis of certain factors after analyzing the job work and
responsibilities. Components of a compensation system are as follows:





SCOPE OF COMPENSATION MANAGEMENT
Compensation management helps to determine the relative worth of a job in an
organization in a systematic, consistent and accurate manner. It also helps in
estimating the basic pay for each job in accordance with the importance of the job
in the organizational hierarchy .once a basic pay is determined , the rewards ,
incentives and benefits attached worth the pay, positions and performance are also
determined . The basic wage, incentives and rewards and benefits, together form
the compensation package of an employee.
JOB
ANALYSIS
PAY
STRUCTURES
SALARY
SURVEY

Direct Compensation

Direct compensation refers to monetary benefits offered and provided to
employees in return of the services they provide to the organization.

Basic Salary

Salary is the amount received by the employee in lieu of the work done by him/her
for a certain period say a day, a week, a month, etc. It is the money an employee
receives from his/her employer by rendering his/her services

House Rent Allowance

Organizations either provide accommodations to its employees who are from
different state or country or they provide house rent allowances to its employees.
This is done to provide them social security and motivate them to work.

Conveyance

Organizations provide for cab facilities to their employees. Few organizations also
provide vehicles and petrol allowances to their employees to motivate them.

Leave Travel Allowance

These allowances are provided to retain the best talent in the organization. The
employees are given allowances to visit any place they wish with their families.
The allowances are scaled as per the position of employee in the organization.

Medical Reimbursement

Organizations also look after the health conditions of their employees. The
employees are provided with medi-claims for them and their family members.
These medi-claims include health-insurances and treatment bills reimbursements.

Bonus

Bonus is paid to the employees during festive seasons to motivate them and
provide them the social security. The bonus amount usually amounts to one
months salary of the employee.

Special Allowance

Special allowance such as overtime, mobile allowances, meals, commissions,
travel expenses, reduced interest loans; insurance, club memberships, etc are
provided to employees to provide them social security and motivate them which
improve the organizational productivity.

Indirect Compensation


Benefits contributions may include: Medical Insurance Prescription Drug
Insurance Dental Insurance Group Life Insurance Long-Term Disability Insurance
Accidental Death Benefits

Tax contributions may include: Disability (Medicare) Worker Compensation
Insurance, Unemployment Insurance

Retirement contributions may include: Severance Award, Voluntary or
Involuntary Retirements Benefits such as VRS etc.

Fringe Benefits or Perks

Employee benefits and (especially in British English) benefits in kind (also called
fringe benefits, perquisites, perks) are various non-wage compensations provided
to employees in addition to their normal wages or salaries. Where an employee
exchanges (cash) wages for some other form of benefit, this is generally referred to
as a 'salary sacrifice' arrangement. In most countries, most kinds of employee
benefits are taxable to at least some degree.

Fringe benefits can also include but are not limited to: (employer-provided or
employer-paid) housing, group insurance (health, dental, life etc.), income
protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation
(paid and non-paid), social security, profit sharing, funding of education, and other
specialized benefits

The purpose of the benefits is to increase the economic security of employees.
The term perks is often used colloquially to refer to those benefits of a more
discretionary nature. Often, perks are given to employees who are doing notably
well and/or have seniority. Common perks are company cars, hotel stays, free
refreshments, leisure activities on work time (golf, etc.), stationery, allowances for
lunch, andwhen multiple choices existfirst choice of such things as job
assignments and vacation scheduling They may also be given first chance at job
promotions when vacancies exist.

Employee benefits in the United States might include relocation assistance;
medical, prescription, vision and dental plans; health and dependent care flexible
spending accounts; retirement benefit plans (pension, 401(k), 403(b)); group-term
life and long term care insurance plans; legal assistance plans; adoption assistance;
child care benefits; and possibly other miscellaneous employee discounts (e.g.,
movies and theme park tickets, wellness programs, discounted shopping, hotels
and resorts, and so on).
NON FINANCIAL COMPENSATION
Non-financial compensation is different incentives given to employees that are not in the form of
direct pay.
Alternative Work Schedules - There are many alternatives to a traditional 5 day, 8-hour
work schedule.
On-the-Job Training- Showing workers how to perform tasks by observing others.
Work/Life Balance - When an employer understands the needs employees have to juggle in
their lives.
Developmental Opportunities - Training and other opportunities for employees to expand
their knowledge and improve their skills.
Casual Dress - Allowing employees to relax their dress code at work
COMPANY PROFILE


INTRODUCTION OF HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name
of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC is India's premier housing finance company and enjoys an impeccable
track record in India as well as in international markets. Since its inception in
1977, the Corporation has maintained a consistent and healthy growth in its
operations to remain the market leader in mortgages. Its outstanding loan portfolio
covers well over a million dwelling units. HDFC has developed significant
expertise in retail mortgage loans to different market segments and also has a large
corporate client base for its housing related credit facilities.

With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned to
promote a bank in the Indian environment.

HDFC Bank began operations in 1995 with a simple mission: to be a World
Class Indian Bank. We realized that only a single minded focus on product
quality and service excellence would help us get there. Today, we are proud to say
that we are well on our way towards that goal.

Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the preferred
provider of banking services for target retail and wholesale customer segments,
and to achieve healthy growth in profitability, consistent with the bank's risk
appetite. The bank is committed to maintain the highest level of ethical standards,
professional integrity, corporate governance and regulatory compliance. HDFC
Bank's business philosophy is based on four core values - Operational Excellence,
Customer Focus, Product Leadership and People.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable
network of over 1412 branches spread over 528 cities across India. All branches
are linked on an online real-time basis. Customers in over 500 locations are also
serviced through Telephone Banking. The Bank's expansion plans take into
account the need to have a presence in all major industrial and commercial centers
where its corporate customers are located as well as the need to build a strong retail
customer base for both deposits and loan products. Being a clearing/settlement
bank to various leading stock exchanges, the Bank has branches in the centers
where the NSE/BSE has a strong and active member base.

The Bank also has a network of about over 3295 networked ATMs across these
cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and
international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American
Express Credit/Charge cardholders.
Capital Structure


Share capital of HDFC Bank
As on 31st March, 2009

Rs. 550 crore
Paid-up capital
Rs.425,38,41,090/-


Bank's equity

19.38%

ADS Depository

17.70 %

Foreign Institutional Investors
(FIIs)

Bank shareholders

27.69 %

5,48,774.



HDFC BANK PRODUCTS

PERSONAL BANKING


Loan Product


Deposit Product

Investment & Insurance

Auto Loan
Loan Against
Security
Loan Against
Property
Personal loan
Credit card
2-wheeler loan
Home loans
Tractor loan
Health Care
Finance
Education Loan
Gold Loan

Saving a/c
Current a/c
Fixed deposit
Safe Deposit
Lockers

Mutual Fund
Bonds
Knowledge Centre
Insurance
General and Health
Insurance


Cards

Payment Services

Access To Bank


Credit Card

Net Safe

Net Banking
Debit Card
Prepaid Card



------------------------------
Forex Services
------------------------------
Product &
Services
Trade Services
Forex service
Branch Locater
RBI Guidelines

Merchant
Prepaid Refill
Bill pay
Direct Pay
Electronic Funds
Transfer
Online Payment
of Direct Tax
One View
ATM
Phone Banking
Branch Network


Data Analysis & Interpretation


1. When was your organization established?

August 1994


2. What types of compensation are available?


Analysis:
There are two type of compensation are available are direct or indirect
compensation. Direct includes Base Pay,Commissions,Overtime Pay,
Bonuses, Travel/Meal/Housing Allowance and indirect compensation
includes vacation, leaves, retirement, taxes.

3. Who handle the compensation management department in your organization?
_______MANAGER__________________________________________

Analysis:
The manager handle the compenstation management department in their
organization.

4. On what basis company provide compensation to their employees.
a) Base Pay b) Commissions
c) Travelling/meal/housing allowance d) Any other




Analysis:

This graph shows that company provide compensation to their employees on the
basis of base pay & Travelling/meal/housing allowance.80% of employee prefer
Travelling/meal/housing allowance & only 20% of employee prefer base pay.



20%
0%
80%
0%
Sales
Base Pay
Commissions
Travelling/meal/housing
allowance
Any other

5. What kind of compensation you prefer.
a) Monetary b) Rewarding
c) Motivation d) Holiday packages





Analysis:

From the chart above we find that, 67% of employee prefers monetary benefits &
only 33% of employee are happy & satisfied with non monetary benefits like
rewards. In this company neither the employee are motivated nor are they satisfied
with holiday package as compensation.

33%
0%
67%
0%
Rewarding
Motivation
Holiday packages
Monetary

6. Are you satisfied with the compensation you receive.
a) Yes b) No







Analysis:
From the chart given above we can clearly see that 80% of employees are satisfied
with the compensation they receives & only 20% of employees are dissatisfied
with the compensation they receives.

80%
20%
Yes
No


7. What do you think that HDFC is providing better compensation package to the
employees.
a) Yes b) No
If NO than which organization do you think?






Analysis:
Yes, HDFC is providing better compensation package to the employees out of 10
employee % of employees are satisfied with the compensation they get and %
of employee are dissatisfied with the compensation provided by the company.
80% 20%
YES NO

8. Is there different type of compensation for different type of services.

a) Yes b) No





Analysis:

Yes, there are different types of compensation for different type of services like
direct and indirect compensation provided to the employee of the organization for
increasing their motivation and retention of employees.

100% 0% 0% 0% 0% 0%
YES
NO
9. Is cash still king in employee compensation.
a) Yes b) No





Analysis:

From the chart given above we can clearly see that the cash is still king there
because everyone is satisfied with the monetary motivation and not by non
monetary motivation. Here we can see that 90% of employees are satisfied
with monetary value rather than
80%
20%
20%
Sales
YES
NO
10. Is Compensation based more on group performance and less on individual
contribution.
a) Yes b) No





Analysis:
In this organization compensation is based more on individual contribution
because every employee is single entity there and they are judge on the basis of
self performance.




10% 90% 90%
YES
NO
11. Is there any procedure of receiving formal feedback by employees on Company
policies, compensation, benefits, and employee attitudes.

a) Yes b) No






Analysis:


Yes, there are procedure of receiving formal feedback by employees on
Company policies, compensation, benefits, and employee attitudes. It helps in
bringing out new ideas. It also helps in improving employee and management
relationship number of ideas helps in choosing the better option from them
which will be more effective and beneficial for the organisation.

90%
10%
10% YES
NO
12. In your organization employees receive effective performance appraisal.

a) Yes b) No



Analysis:

Yes, in our organization employee receive effective performance appraisal because
it give pleasure to the employee by rewards and they also get motivated which
leads to the effective performance.It enhances effectiveness of employees and
boosts the confidence level of employees.




Sales
YES NO
13. Are you getting training for improving the performance.

a) Yes b) No c) cant say


Analysis:

Yes, tanning help in improving the performance of employee. It helps in
developing skills & motivation level of employees. It also provides practical
knowledge. It is necessary for the organization to provide training to their
employees for better performance and update employee time to time. It helps in
increase in the performance & motivation level of employee and also enhance
effectiveness of employees.


-2
0
2
4
6
8
10
12
0 0.5 1 1.5 2 2.5
YES
NO
14. Are you free to give ideas to the higher management.
a) Yes b) No




Analysis:
Yes, the employees are free to give ideas and suggestions to the higher
management. By this new and different ideas are bring out of the box and this help
in taking better decision which may be beneficial for the organization. It also
boosts the confidence level of employees and their ideas are entertained so they get
motivated also.

0
1
2
3
4
5
6
7
8
9
YES NO
YES
NO

FINDINGS
The compensation management policy is good in HDFC bank.
The employee of the organization is satisfactory to the employees.
The employees are motivated because of the environment of the organization.
The products of HDFC bank have good credibility in the region.


CONCLUSION

HDFC is first life insurance Company in India. It has businesses spread out across
the globe. The company faces a large amount of competition. The Compensation
Committee reviews the overall compensation structure and policies of the Bank
with a view to attract, retain and motivate employees, consider grant of stock
options to employees, reviewing compensation levels of the bank's employees.
The project was very satisfying experience for me, not only practically and
academically. It also helped me in enriched my knowledge also.
The Bank's compensation policy is to provide a fair and consistent basis for
motivating and rewarding employees appropriately according to their job / role
size, performance, contribution, skill and competence.




QUESTIONNAIRE



1. When was your organization established?

______________________________________________________________


2. What types of compensation are available?
3. Who handle the compensation management department in your organization?
________________________________________________________
4. On what basis company provide compensation to their employees?
a)Base Pay b)Commissions
c)Travel/Meal/Housing Allowance d)Any other
5. What kind of compensation you prefer?
a) Monetary b) Rewarding
c) Motivation d) Holiday packages

6. Are you satisfied with the compensation you receives?
a) Yes b) No

7. What do you think that HDFC is providing better compensation package to the
employees?
a) Yes b) No
If NO than which organization do you think.

8. .Is there different type of compensation for different type of services?
a) Yes b) No
9. Is cash still king in employee compensation?
a)Yes b) No

10. Is Compensation based more on group performance and less on individual
contribution?
a)Yes b) No

11. Is there any procedure of receiving formal feedback by employees on
Company policies, compensation, benefits, employee attitudes?
a) Yes b) No

12. In your organization employee receive effective performance appraisal?
a) Yes b) No
13. Are you getting training for improving the performance?

a) Yes b) No c) cant say

14. Are you free to give ideas to the higher management?
a) Yes b) No