Journal of Engineering Sciences Vol 14 Issue 06,2023

COMPENSATION MANAGEMENT
1
Palagani.Sai Saranya, 2Dr.P. Venkateswara Rao
1
MBA STUDENT , 2PROFESSOR
DEPARTMENT OF MBA
Malla reddy university, HYDERABAD

ABSTRACT * Achieve faster time-to-value when you

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Compensation management is crucial to structures, and increase guidelines
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focused on achieving goals. You need configurable compensation management
configurable compensation management plans to workflows and multi-component compensation
help your company enforce budget guidelines management
across the enterprise. And, to extend
compensation management globally, you need to * Support a global workforce with capabilities
accommodate multiple languages, currencies, to accommodate multiple languages, currencies,
and cultural requirements. and cultural requirements

The Sum Total compensation management Whether you’re ready to enjoy the benefits of a
system, as part of the unified Sum Total Talent fully integrated talent development deployment,
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management planning with performance
1. INTRODUCTION
management processes, our easy-to-use solution
ensures that your employee increases are fair. Compensation Management is an integral part of
Our intuitive compensation management the management of the organization.
software helps you accurately reward your top Compensation Management contributes to the
performers and equitably distribute consistent overall success of the organization in several
salary adjustments based on merit. And Sum ways. To be effective, the managers must
Total understands how compensation appreciate the value of competitive pay, their
management works best—and how it fits into an human resources, and have an investment view
overall talent development effort. of payroll costs. We want to maintain pay levels
Compensation Management, benefits are: that attract and retain quality employees while
recognizing the need to manage payroll costs.
* Eliminate costly errors associated with
spreadsheets and disparate systems Pay is a difficult topic of conversation in most
organizations. In fact, the topic is altogether
* Engage managers worldwide with self- taboo in many workplaces. It simply isn't
service tools and comprehensive support discussed unless absolutely necessary. And,
when it is necessary, such as when a pay raise
(or lack of one) must be explained to an

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Journal of Engineering Sciences Vol 14 Issue 06,2023

employee, many managers find themselves at a spite of their hesitance, managers are capable of
loss for words. As the dreaded date of such a dealing with this sometimes difficult issue in a
discussion approaches, managers may begin professional and effective manner. By keeping
checking their sick time banks to see if they can the following basic points about pay in mind,
disappear for a day or two. they can address virtually any pay-related topic
with their employees in a professional and
While it may be a touchy subject, pay is a productive manner.
critical factor in the work lives of employees.
Jobs are accepted or rejected based in part on NEED FOR THE STUDY:
starting salary and the opportunity for future
increases in pay. Employees compare their pay Compensation
to that of others in the same line of work. They management of the employees is important if the
constantly compare their pay level to their level employees are satisfied then only the
of contribution, trying to determine whether the organization can function smoothly increases its
ratio of give and receive is a fair one. While it production, faces competition.
may not be a frequent topic of open discussion,
employees think about pay often. If employees are satisfied with their
job they will carry a positive attitude. Hence the
Approaches of compensation management study has been undertaken to assess the
employee Compensation which is necessary for
There are 3P approach of developing a the organization in order to make sound
compensation policy centered on the decisions.
fundamentals of paying for Position, Person
Objectives:
and Performance. Drawing from external
market information and internal policies, this 1) Understand the concepts of compensation
program helps establish guidelines for an management in Hero MotoCorp Ltd.
equitable grading structure, determine capability (Formerly Hero Honda Motors Ltd.)
requirements and creation of short and long-term (Phoenix Motors Pvt. Ltd).
incentive plans.
2) Explore the role of c compensation
The 3P approach to compensation management management
supports a company's strategy, mission and
objectives. It is highly proactive and fully 3) Pay roll system in Hero MotoCorp Ltd.
integrated into a company's management (Formerly Hero Honda Motors Ltd.)
practices and business strategy. The 3P system (Phoenix Motors Pvt. Ltd).
ensures that human resources management plays
a central role in management decision making Other Objectives:
and the achievement of business goals.
 Maintain pay equity
* Paying for position  Simplify the system
* Paying for person
* Paying for performance  Create a new “mindset”

Because it is so important to employees, the  Give managers more autonomy

issue of pay deserves to be clearly addressed. In  Increase transparency

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Journal of Engineering Sciences Vol 14 Issue 06,2023

SCOPE OF THE STUDY project is initiated. Hence this is chosen for my

The compensation management in Hero research.
MotoCorp Ltd. (Formerly Hero Honda
Motors Ltd.) (Phoenix Motors Pvt. Ltd). refers  EXPLORATORY STUDY:
to a person’s feeling of satisfaction on their job. The major purpose of exploratory study is the
It is different from person to person. The identification of problem, the more precision
researcher has chosen to measure the level formulation of problem and the formulation of
compensation management in Hero MotoCorp new alternative courses of action.
Ltd. (Formerly Hero Honda Motors Ltd.)  CASUAL STUDY:
(Phoenix Motors Pvt. Ltd). The study involves the determination of
The study considers the impact the causes of what the researchers are predicting.
of 10 factors on compensation management in it this is mainly a cause and effect study.
concentrates on the effect of factors in general, The research design selected by
but no exclusive study is made on them. the researcher in the present study is
The study considers only the “DESCRIPTIVE” in nature.
perceptual elements of employees and does not
 RESEARCH INSTRUMENT:
focus on ground realities. The scope of study HR research has a one main research
cover: work conditions, compensation, extra instruments in collecting primary data. That is
benefits, conveyance treatment of superiors, questionnaires.
colleagues, duly timings, and grievance reprisal
mechanism and promotion policy. In order to extract first hand information
from the respondents, a pre-tested questionnaire
2. RESEARCH METHODOLOGY was prepare and the same was administered to
The methodology that is adopted for the respondents.
the study is such that it facilities the data
 DATA SOURCES:
accumulation. The information is gathered Data means a collection of facts in real life
through survey method. The survey method has statistical data is a collection of facts in
been adopted for collecting the data from numerical figures. The data sources are usually
employees. identified using the type of data needed. There
 RESEARCH DESIGN: are two types of data.
Research Design is defined as the specification 1. Primary data
of methods and procedures for acquiring the 2. Secondary data
information needed. Generally the research
 PRIMARY DATA:
design is any of the following three types- The first hand information by the
DESCRIPTIVE, EXPLORATORY and investigator by means of observation face to face
CASUAL. questioning, telephone interview and mailing
 DESCRIPTIVE STUDY: questionnaire is called primary data.
Descriptive study/research is marked by the Primary data consists of original information
prior formulations of specific research questions. gathered for a specific purpose.
The investigator already knows a substantial
amount about the research problem before the  SOURCES OF PRIMARY
DATA;-

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Journal of Engineering Sciences Vol 14 Issue 06,2023

For the purpose of present study, the primary the company. This might have led to
data collected from respondents by contacting wring finding in the study.
them personally.
4. The interpretation being based on
 SECONDARY DATA: percentage method is not definite.
Secondary data consists of information that
already exists somewhere, having been collected 5. The report is subjects to changes
for another purpose with fast changing scenario.

 SOURCES OF SECONDARY III. COMPENSATION MANAGEMENT

DATA:
For the purpose of present study, the Human Resource is the most vital resource for
secondary data was collected from published any organization. It is responsible for each and
data of the companies. Population is the every decision taken, each and every work done
aggregate of objects animate and in animate, and each and every result. Employees should be
under study in any statistical investigation. The managed properly and motivated by providing
population for the study here was employees in best remuneration and compensation as per the
Hero MotoCorp Ltd. (Formerly Hero Honda industry standards. The lucrative compensation
Motors Ltd.) (Phoenix Motors Pvt. Ltd). will also serve the need for attracting and
retaining the best employees.
SAMPLING PROCEDURE
With a view to arrive at the sample Compensation is the remuneration received by
population for the study, a “Purposive-Cum an employee in return for his/her contribution to
convenient sampling” was followed. the organization. It is an organized practice that
involves balancing the work-employee relation
SAMPLE SIZE by providing monetary and non-monetary
4) The sample size includes 100 benefits to employees.
employees who are working in the in
Hero MotoCorp Ltd. (Formerly Hero Compensation is an integral part of human
Honda Motors Ltd.) (Phoenix Motors resource management which helps in motivating
Pvt. Ltd). the employees and improving organizational
effectiveness.
LIMITATIONS OF THE STUDY:

1. This study covers those employees Components of Compensation System

who are working at Hero MotoCorp
Ltd. (Phoenix Motors Pvt. Ltd). Compensation systems are designed keeping in
2. The understand and knowledge may minds the strategic goals and business
vary from person to person. The objectives. Compensation system is designed on
replied gives by the respondents are the basis of certain factors after analyzing the
taken for granted, though they are job work and responsibilities. Components of a
not uniform. compensation system are as follows:

3. Since names are mentioned in most

of questionnaires, most of the
employees answered favorable to

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Conveyance

Organizations provide for cab facilities to their

employees. Few organizations also provide
vehicles and petrol allowances to their
employees to motivate them.

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. Leave Travel Allowance
Direct Compensation
Direct compensation refers to monetary benefits These allowances are provided to retain the best
offered and provided to employees in return of talent in the organization. The employees are
the services they provide to the organization. given allowances to visit any place they wish
The monetary benefits include basic salary, with their families. The allowances are scaled as
house rent allowance, conveyance, leave travel per the position of employee in the organization.
allowance, medical reimbursements, special
allowances, bonus, Pf/Gratuity, etc. They are Medical Reimbursement
given at a regular interval at a definite time.
Organizations also look after the health
Basic Salary conditions of their employees. The employees
are provided with medi-claims for them and
Salary is the amount received by the employee their family members. These medi-claims
in lieu of the work done by him/her for a certain include health-insurances and treatment bills
period say a day, a week, a month, etc. It is the reimbursements.
money an employee receives from his/her
employer by rendering his/her services. Bonus

House Rent Allowance Bonus is paid to the employees during festive

seasons to motivate them and provide them the
Organizations either provide accommodations to social security. The bonus amount usually
its employees who are from different state or amounts to one month’s salary of the employee.
country or they provide house rent allowances to
its employees. This is done to provide them Special Allowance
social security and motivate them to work.
Special allowance such as overtime, mobile

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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
Indirect compensation refers to non-monetary
benefits offered and provided to employees in
lieu of the services provided by them to the
organization. They include Leave Policy, Insurance
Overtime Policy, Car policy, Hospitalization,
Insurance, Leave travel Assistance Limits, Organizations also provide for accidental
Retirement Benefits, Holiday Homes. insurance and life insurance for employees. This
gives them the emotional security and they feel
Leave Policy themselves valued in the organization.

It is the right of employee to get adequate Leave Travel

number of leave while working with the
organization. The organizations provide for paid The employees are provided with leaves and
leaves such as, casual leaves, medical leaves travel allowances to go for holiday with their
(sick leave), and maternity leaves, statutory pay, families. Some organizations arrange for a tour
etc. for the employees of the organization. This is
usually done to make the employees stress free.
Overtime Policy
Retirement Benefits
Employees should be provided with the
adequate allowances and facilities during their Organizations provide for pension plans and
overtime, if they happened to do so, such as other benefits for their employees which benefits
transport facilities, overtime pay, etc. them after they retire from the organization at
Hospitalization the prescribed age.

The employees should be provided allowances Holiday Homes

to get their regular check-ups, say at an interval
of one year. Even their dependents should be Organizations provide for holiday homes and
eligible for the medi-claims that provide them guest house for their employees at different
emotional and social security. locations. These holiday homes are usually
located in hill station and other most wanted
holiday spots. The organizations make sure that
the employees do not face any kind of
difficulties during their stay in the guest house.

Flexible Timings

Organizations provide for flexible timings to the

employees who cannot come to work during

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normal shifts due to their personal problems and Neutral 18

valid reasons.
Strongly disagree 12
Need of Compensation Management

 A good compensation package is

important to motivate the employees to
increase the organizational productivity.
 Unless compensation is provided no one
will come and work for the organization.
Thus, compensation helps in running an
organization effectively and
accomplishing its goals.
 Salary is just a part of the compensation
system, the employees have other
psychological and self-actualization
needs to fulfill. Thus, compensation Interpretation:
serves the purpose.
The survey revealed that most of the
 The most competitive compensation will
employees agree for the reason of their pay and
help the organization to attract and
compensation package is adequate and fair in
sustain the best talent. The
comparison to performance and some are
compensation package should be as per
disagree.
industry standards.
2. Medical facilities provided by the
organization suites your health needs?

OPTIONS NO OF RESPONSES

Strongly agree 38

Agree 46

disagree 14

3. DATA ANALYSIS AND Strongly disagree 0

INTERPRETATION

1. Pay and compensation package is

adequate and fair in comparison to
performance.
OPTIONS NO OF RESPONSES

Strongly agree 18

Agree 52

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Interpretation:

The survey revealed that most of the

employees agree and strongly agree for the
reason of the medical facilities provided by the
organization which suits their health needs, and
few are disagree.

3.Recognition & rewards are given based on

employee performance.

Interpretation:
OPTIONS NO OF RESPONSES
About 72% said that the reward
Strongly agree 18 system is fair and adequate and 28% responded
that it is not fair.
Agree 48
5. Do you think that a good workman gets
Neutral 16
motivated with frequent Compensative pay? Is
Disagree 18 conducted?

(a) YES (b) NO

No. of
s.no Options Responses Percentage

1 YES 44 88

2 NO 6 12

TOTAL 50 100
Interpretation;

The survey revealed that most of the

employees agree and strongly agree for
recognition and rewards are given based on
employee performance but some are disagree.

4. Do you think the reward system is fair and

adequate?

(a) YES (b) NO

Interpretation:
No. of
s.no Options Percentage
Responses A majority of 88% of the
1 YES 36 72 employees said that a good workman gets
2 NO 14 28 motivated with frequent Compensative pay and
TOTAL 50 100 12% of the employees are not satisfied with
above.

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FINDINGS  Suggestive and collective bargaining

should be more effective that they can
Employees in Hero MotoCorp Ltd play much greater role in eliminating the
(Phoenix Motors Pvt. Ltd) are well communication gap between
satisfied with Management towards the management and workers.
proper decision in generating their own
ideas working environmental conditions.  The committees should pay more
 A study portrays that 75% of attention on areas where is scope for
respondents show improvement in the improvements, so as to improve the
quality of workmanship, in participating overall performance of the company.
the organization.
 The Compensation management in  The employees want the company to
management provides better give rewards in accomplishing the tasks.
understanding to the employees about
their roles in achieving the goals of the  Improve the promotion and recognition
company. system.
 The Compensation management in
management acts as a complimentary  Every year a survey should be
body to help collective bargaining that conducted by management regarding the
creates healthy work atmosphere and grievances and settlement should be
legal relations in Hero MotoCorp Ltd done so that every employee will work
(Phoenix Motors Pvt. Ltd). with dedication.
 Every member in the organization are
very much well satisfied with the job, in  See that the quality of food is
developing their working conditions, maintained in the canteen.
and following their rules and regulations
at regular intervals of time, conducted  The suggestions of the workers must be
by the management. given importance in the decision
 A study portrays, 60% of employees making.
rate excellent in maintaining good
relations in the organization between  The various other facilities and schemes
workers and management and 25% are provided by the company such as sports,
well satisfied with the relations maintain recreation, compensation and benefit
by the management towards the packages, incentives etc are satisfactory.
workers.
SUGGESTIONS 4. CONCLUSION
 There should be coordination and “The global business environment is buzzing
cooperation between executives and with the single most important issue of Building
non-executives. a competitive edge by creating and retaining a
large number of Employees than their goods and
 The employees have a high degree of services every organization is therefore seized of
understanding of the concept of the task of establishing sustaining its worth to
worker’s participation in management the customer, who has been rendered
unpredictable by competition”

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Therefore every business is making a continuous

effort for achieving Employees effort for
achieving Employees loyalty

In short it is total organizational culture and

brand equity, which face challenge. So that there
is a perennial struggle amongst organizations to
sustain their existence in the market place, and
hence in order to sustain the stiff competition the
company has to take up market Research
frequently to know the changing needs &
preference of the Employees.

This helps the company to reframe the policies

in providing cutting edge technology to satisfy
the Employees & retain him for a life time.

BIBLIOGRAPHY
BOOKS

Aswathappa.k, Human resource and personnel

management, 3/e, TMH, 2003.

Mamoria.C.B and Gankar.S.V. Personnel

management, text and cases, Himalaya
Publications, 2003.

Gary Dessler, Human Resource Management,

9/e, Prentice Hall India, 2003.

G.C. Berry, Business Statistics, 2/e, TMH, 2003.

S.P. Gupta, Statistical Methods, 34/e, Sultan

Chand & Sons.

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