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Vol-2, Issue 3
March 2013
R. Karuppasamy
Research Department
Karpagam University
Coimbatore, India
cpspraveen@gmail.com
Management Studies
SNS College of Technology
Coimbatore, India
rkrangoli@gmail.com
I. INTRODUCTION
Compensation management is one of the most important
functions in any organization and compensation has been an
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March 2013
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CRIT
EMP
GAP
PROD
5
4
5
2.24
2.1
2.31
2.76
1.9
2.69
5
3.7
4
3.2
3.7
2
4.6
5
5
4.3
2.24
2.1
1.82
1.89
2.1
2.1
2.1
1.75
2.1
2.1
2.76
1.6
2.18
1.31
1.6
4.6
4.7
1.82
2.38
2.78
2.32
TECH
QUAL
COST
ORGA
ACHI
COMM
MAIN
SAFE
DISC
ATTI
RELI
LEAD
INTE
PROC
Vol-2, Issue 3
March 2013
2.5
3.25
2.9
2.2
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XII. ILLUSTRATION
Compensation Factors for Body Section Employees:
TABLE II.
COMP CR ER1 WR1 ER2 WR2 ER3 WR3 ER4 WR4 ER5 WR5
PROD
5 2.24 11.2 3.46 17.3 2.9 14.5 3.61 18.05 2.83 14.15
TECH
QUAL
5 2.31 11.55 3.31 16.55 2.58 12.9 3.3 16.5 2.31 11.55
COST
ACHI
4 1.82 9.1 3.28 16.4 2.94 14.7 2.82 14.1 3.18 15.9
19 2.66 13.3
MAIN 3.7 2.1 10.5 3.16 15.8 2.85 14.25 3.3 16.5 2.7 13.5
SAFE 2 2.1 10.5 3.51 17.55 3.7 18.5 3.09 15.45 3.36 16.8
DISC
ATTI
18
RELI
18
LEAD 4.3 2.1 10.5 3.3 16.5 3.09 15.45 3.51 17.55 2.69 13.45
INTE
18 3.39 16.95
PROC 4.7 2.38 11.9 3.61 18.05 3.12 15.6 3.48 17.4 3.47 17.35
Cp
63.8 F 2.441
4.034
3.618
4.017
3.636
ORGA 3.7 2.1 10.5 3.09 15.45 3.25 16.25 3.15 15.75 3.01 15.05
Cp2
2.1 10.5 3.39 16.95 3.55 17.75 3.76 18.8 3.39 16.95
) / ( Cp ) -------------------------- (2)
Employee Number
BASIC
F*10
INCR
NEW Basic
BASIC
E1
8500
2.44
24.41
2075
10575
E2
8000
4.03
40.34
3227
11227
E3
8500
3.62
36.18
3075
11575
E4
8500
4.02
40.17
3414
11914
E5
8500
3.64
36.36
3091
11591
The above data clearly shows how the F values maintain the
internal parity and reward performance. Compare the first and
second employees. E1 has a higher basic salary compared to
E2. But E2s performance has been almost one and a half time
better than E1. The new basic reflects the performance
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Limitation - 2
Another limitation is that the above model doesnt consider
the total amount of budget available for compensation. It
assumes that the organization is ready to meet the incremental
value of compensation paid to employees. But most
companies do have a budget for compensation and would
like to adhere to them. Usually, the total budget for increased
pay packets would be divided amongst the various
organizational units depending on the units size and its
relative importance to the functioning of the organization.
TABLE IV.
Employee
Number
BASIC
F*Inc
(Inc = 500)
NEW
BASIC
E1
8500
2.44
1221
9721
E2
8000
4.03
2017
10017
E3
8500
3.62
1809
10309
E4
8500
4.02
2009
10509
E5
8500
3.64
1818
10318
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March 2013
Limitation-1:
AF 1
Xn
= RF [ F 1 X n ] -------------------------- (4)
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TABLE V.
COMP CR ER1 WR1 ER2 WR2 ER3 WR3 ER4 WR4 ER5 WR5
PROD 5 2.24 11.2 3.46 17.3 2.9 14.5 3.61 18.05 2.83 14.15
QUAL 5 2.31 11.55 3.31 16.55 2.58 12.9 3.3 16.5 2.31 11.55
COST 5 2.24 11.2 3.6
Cp 25 F 2.128
3.524
2.924
3.514
3.016
Illustration:
Let us assume that the organization has a revenue sharing
plan, in which it announces that it would share a part of the
cost savings achieved with the employees. Now, this plan
would require the organization to determine two things. First,
it has to determine which units have been responsible for cost
savings and second it has to find out how to distribute this
within the organizational unit.
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AF 1 X n = (100/Fi) * F 1 X n -------------------------------
(5)
FI 1 X n = I * AF 1 X n -----------------------------------------
(6)
TABLE VI.
REFERENCES
AF
(=F*100/15.116)
FI
(=AF*I/100)
2.128
3.534
2.924
3.514
3.016
14.0778
23.3792
19.34374
23.24689
19.95237
200000
200000
200000
200000
200000
28155.6
46758.4
38687.48
46493.78
39904.74
15.116
Vol-2, Issue 3
March 2013
200000
ACKNOWLEDGMENT
I wish to thank my dad C. P. Srinivasan, my mom S. Sasikala,
my brother S. Naveen for their blessings & support. I wish to
specifically thank my guide Dr. R. Karuppasamy, without
whom this paper wouldnt have come out. Last but not the least
I need to thank my employers ELGI, Coimbatore & Sakthi
Aerospace, Dubai United Arab Emirates, my friends and
non-blood related brothers & sisters for their continuous
support without whom I wouldnt have got this level of
confidence & courage.
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