A PROJECT REPORT ON

__________________________________________________

AT

_____________________________________________

HYDERABAD

A PROJECT REPORT SUBMITTED TO

OSMANIA UNIVERSITY; HYDERABAD

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE AWARD OF THE DEGREE IN

BACHELORS OF BUSINESS ADMINISTRATION

SUBMITTED

BY

_________________________________

_______________________________

VILLA MARIE PG COLLEGE FOR WOMEN;

SOMAJIGUDA- 82

2014-2016
 DECLARATION

I hereby declare that this Project Report titled Training & Development at My Home
Industries Limited, Hyderabad submitted by me to the Department of Business
Management, O.U., Hyderabad, is a bonafide work undertaken by me and it is not submitted
to any other University or Institution for the award of any degree diploma / certificate or
published any time before.

Name and Address of the Student Signature of the Student

 CERTIFICATION

This is to certify that the Project Report Training & Development at My Home Industries Limited,
Hyderabad submitted in partial fulfillment for the award of MBA Programme of Department of Business
Management, O.U. Hyderabad, was carried out by Hari Priya R under my guidance. This has not been
submitted to any other University or Institution for the award of any degree/diploma/certificate.

Name and address of the Guide Signature of the Guide

Index

CONTENTS
CHAPTER 1 INTRODUCTION

CHAPTER 2 RESEARCH METHODOLOGY

CHAPTER 3 INDUSTRY PROFILE

CHAPTER 4 COMPANY PROFILE

CHAPTER 5 THEORETICAL FRAME WORK

CHAPTER 6 DATA ANALYSIS & INTERPRETATION

CHAPTER 7 FINDINGS & SUGGESTIONS

CHAPTER 8 CONCLUSION & BIBLIOGRAPHY

ANNEXURE QUESTIONNAIRE

CHAPTER -1

INTRODUCTION

Introduction:

INTRODUCTION OF REMUNERATION MANAGEMENT

Remuneration Management:
Remuneration is a systematic approach to providing monetary value to employees in exchange
for work performed. Remuneration may achieve several purposes assisting in recruitment, job
performance, and job satisfaction.

Remuneration management, also known as wage and salary administration, remuneration

management, or reward management, is concerned with designing and implementing total
Remuneration package. The traditional concept of wage and salary administration emphasized
on only determination of wage and salary structures in organizational settings. However, over
the passage of time, many more forms of Remuneration as discussed earlier, entered the
business

field which necessitated to take wage and salary administration in comprehensive way with a
suitable change in its nomenclature. Beach has defined wage and salary administration as
follows:

"Wage and salary administration refers to the establishment and implementation of sound
policies and practices of employee Remuneration. It includes such areas as job evaluation,
surveys of wages and salaries, analysis of relevant organizational problems, development and
maintenance of wage structure, establishing rules for administering wages. Wage payments,
incentives, profit sharing, wage changes and adjustments, supplementary payments, control of
Remuneration costs and other related items"

Components of Remuneration system:

The literal meaning of Remuneration is to counter-balance. In the case of human resource

management, Remuneration is referred to as money and other Incentives received by an
employee for providing services to his employer. Money and Incentives received may be in
different forms-base Remuneration in money form and various Incentives, which may be
associated with employee's service to the employer like provident fund, gratuity, and insurance
scheme, and any other payment which the employee receives or Incentives he enjoys in lieu of
such payment. Cascio has defined Remuneration as follows:
"Remuneration includes direct cash payments, indirect payments in the form of employee
Incentives and incentives to motivate employees to strive for higher levels of productivity”

Based on above description of Remuneration, we may identify its various components as

follows:

Wage and Salary:

Wage and salary are the most important component of Remuneration and these are essential
irrespective of the type of organization. Wage is referred to as remuneration to workers
particularly, hourly-rated payment. Salary refers to as remuneration paid to white-collar
employees including managerial personnel. Wages and salary are paid on the basis of fixed
period of time and normally not associated with productivity of an employee at a particular
time.

Incentives:

Incentives are the additional payment to employees besides the payment of wages and salaries.
Often these are linked with productivity, either in terms of higher production or cost saving or
both .These incentives may be given on individual basis or group basis.

Fringe Incentives:

Fringe Incentives include such Incentives which are provided to the employees either having
long-term impact like provident fund, gratuity, pension; or occurrence of certain events like
medical Incentives, accident relief, health and life insurance; or facilitation in performance of job
like uniforms, Canteens, recreation, etc.

Perquisites:

These are normally provided to managerial personnel either to facilitate their job performance
or to retain them in the organization. Such perquisites include company car, club membership,
free residential accommodation, paid holiday trips, stock options, etc.
OBJECTIVE OF THE STUDY

Human beings within the organization control and manage materials and other resources in the
organization in order to achieve the organizational goals and objectives. As a result of this, it is
imperative for any organization that wants to be successful to pay adequate attention to the
needs of human beings who contribute to the organizational success.

a. To examine the process of total Remuneration system in the organization

b. To examine the difficulties involved in implementing the system.

c. To make recommendations on how best to apply the system in the company

d. Managing the internal and external consistency in the Remuneration.

SCOPE OF THE STUDY

In today’s world organizations tries more to assess the worth of an individual in terms of his
performance and contribution to the organizations. With the growing demand of workforce and
constant challenges in the business environment, organizations have to evolve and accurate
system for evaluating jobs and assessing their worth. Remuneration 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 Incentives attached worth the pay, positions and performance are also

determined . The basic wage, incentives and rewards and Incentives, together form the
Remuneration package of an employee

Shriram Insight is a reputed company giving employment to huge no. of

people around the world hence the study on Remuneration management in Shriram Insight will
help the company, the employees, and the society in fairly manner.
NEED FOR THE STUDY

 To identify the Remuneration technique followed in the company.

 Organizational complexity towards Remuneration.
 To improve the quality of work standards for the achievement of goals, of each
employee and organization’s through Remuneration.
 Directly or indirectly motivate employees through Remuneration.
 To know how Shriram Insight developed the organizational work climate to retrench the
employees.

CHAPTER- 2

RESEARCH METHODOLOGY

RESEARCH & METHDOLOGY OF THE STUDY:

Workers Remuneration is one of the most pressing problems in the any industry today.
Each of the fifty states has a workers’ Remuneration law there are wide differences in the costs,
Incentives and administration of these laws between the states. To accomplish this goal the
research team felt a review of the construction industry was needed to identify best practices
and to use these practices in formulating guidelines for improves workers Remuneration
management.

The methodology intends to explain the sequence of research steps undertaken in

studying salary administration in Shriram Insight It focuses on the following information.

The research team presents several findings of its research efforts plus offer
several recommendations on both workers Remuneration management practices and other
measures for evaluating employee safety performance.

RESEARCH PROJECT:

There are three types of research projects .They are

1. Exploratory

2. Descriptive

3. Causal

Exploratory method means to gather preliminary data to shed on the nature of the real nature
of the problem and suggest new ideas or hypothesis.

Descriptive method means it designs the name as they describe the phenomena with out
establishing association between factors

The data may be the-

1. Behavioral variables of people under study.

2. Situational variables that existed are forthcoming.

Causal is to test the cause and effect relationship.

The research project under study is Descriptive in nature.

RESEARCH DESIGN:

Research design is defined as the specification of methods and procedures for acquiring
the information needed. It is a plan of organizing framework for doing the collection of data.
Generally the research designs are three types, viz.. Exploratory, Descriptive and casual.

Now the total study is of Descriptive type because each and every item is clearly
described.

RESEARCH HUMAN RESORURCES:

The Research H.R that is used in this study is Questionnaire. A questionnaire consists of
a set of questions presented to the respondents for their answer. The researcher has used
questionnaire as the instruments of research, to collect the information. A questionnaire
consists of both open ended and closed ended questions and personally administered to the
respondents.

METHODOLOGY OF THE STUDY:

1. Sampling method -convenience sampling

2. Sample size -A sample size of 50 respondents has been taken

3. Sampling unit - Shriram Insight

4 Sampling elements - employees of Shriram Insight

5. Research instrument – structured questionnaire

6. Statistical method -Percentage Method, Bar graph

NOTE-

Percentage Method- No of respondents * 100

 Total

RESEARCH INSTRUMENT-There is two research instruments for collecting primary data. They
are:

a) Questionnaire: Contains assets questions presented the respondents for their answers

b) Mechanical: Mechanical devices like Galvanometer, Tachistoscope, Eyecamara, and

audiometer are used in research.

QUESTIONNAIRE:

The Questionnaire which is used here is structured and closed end one .It is one which there is
definite, concrete and predetermined questions. Liker Scale is used in the questionnaire. It
makes a statement description what ever is being evaluated. The response is then given a scale
whose positions range from “strongly disagree”

SAMPLING PROCEDURE:

The sampling procedure determines how the respondents be chosen. They are two types of
sampling .they are

1. PROBABILITY SAMPLING -probability methods are those in which the population eleme

The various methods of sampling can be grouped under 2 broad heads.

 Probability Sampling (Random)

 Non-Probability Sampling (non-Random)
Probability Sampling methods are those in which every item in the Universe has a known
chance, or probability, of being chosen for sample. This implies that the selection of sample
items is independent of the persons making the study that is the sampling operation is
controlled, objectively that the items will be chosen strictly at random.
 Non- Probability sampling methods are those, which do not provide every item in the
universe with a known chance of being included in the sample. The selection process is, at
least, particularly subjective.

Sampling Methods

Non-probability Samples Probability Samples

Judgment Sampling Stratified Sampling

Quota Sampling Systematic Sampling

Convenience Sampling Cluster Sampling

SIMPLE RANDOM SAMPLING:

It refers to those sampling techniques in which each and every unit of the population lies
an equal opportunity of being selected in the sample.

In Simple Random sampling which items get selected in the sample is just a matter of
chance – personal bias of the investigator does not mean haphazard- it rather means that the
selection process is such that the chance only determines which items shall be included in the
sample.

SOURCES OF DATA:

Two types of data can be considered for any research. They are:

 Primary Data
 Secondary Data
PRIMARY DATA-The primary data are which are collected a fresh and for the first time and thus
to be original in character. This consists of original information gathered for specific purpose.
The normal procedure is to interview people individually and/or on groups to get required
data .Here the data being sought is various reasons for Remuneration.

The primary data will be collected through questionnaire. These method has been chosen
keeping in view its simplicity and incase of few questions the respondents are free to present
their own views, opinions and suggestions.

SECONDARY DATA-The secondary data are these which have been collected by someone else
and which have already been passed through statistical process.

In case the secondary data will be collected from the reports like H.R manuals of the company
reports of the company name, books of various authors and from web sites of the company and
others. This consists of information that already exists somewhere, that has been collected
through a structured questionnaire and it collected through various policy documents, manuals
and handouts etc available in the company.

The researchers available the “SURVEY RESEARCH” type of research is where the researchers
goes to the responded with the questioner and clarifies doubts raised by the respondent and
note the responses. It is a form of personal interviewing of the respondent...

STATISTICAL TOOLS USED:

Percentage Analysis:

In this research various percentage are identified in the Analysis and they are presented
Pictorially by way of Bar Diagrams and Pie charts in order to have a better quality.

DIRECT SCALING SYSTEMS:

o TWO point Scaling system.

o Four point Scaling system.
o Five point Scaling system.
CONTACT METHODS-

The choices in contact methods are mail, telephone or personal interviews. The personal
interviewing is the most versatile of the three method .The research has used personal
interviewing method.

The researcher went to the respondents, and presented the questionnaire for
their answers.

LIMITATIONS OF THE STUDY:

 Project duration is limited to 45 days.

 As a method adopted is convenience sampling, results may not be accurate.
 Most of the employees not responded for our questionnaire during office hours.
 Some of the respondents could not spare much time to answer the questionnaire
because of lack of their valuable time.
 Complete information has not revealed by the employee for administrative response.
 CHAPTER 3

INDUSTRY PROFILE

Industry Profile

INDUSTRY PROFILE

INVESTMENT IN INDIAN MARKET

India is believed to be a good investment despite political uncertainty, bureaucratic hassles,

shortages of power and infrastructure deficiencies. India presents a vast potential for overseas
investment and is actively encouraging the entrance of foreign players into the market. No
company, of any size, aspiring to be a global player can, for long ignore this country, which is
expected to become one of the top three emerging economies.

Success in India

Success in India will depend on the correct estimation of the country's potential;
underestimation of its complexity or overestimation of its possibilities can lead to failure. While
calculating, due consideration should be given to the factor of the inherent difficulties and
uncertainties of functioning in the Indian system. Entering India's marketplace requires a well-
designed plan backed by serious thought and careful research. For those who take the time and
look to India as an opportunity for long-term growth, not short-term profit- the trip will be well
worth the effort.

Market potential

India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom,
and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second
largest among emerging nations. (These indicators are based on purchasing power parity). India
is also one of the few markets in the world, which offers high prospects for growth and earning
potential in practically all areas of business. Despite the practically unlimited possibilities in
India for overseas businesses, the world's most populous democracy has, until fairly recently,
failed to get the kind of enthusiastic attention generated by other emerging economies such as
China.

Lack of enthusiasm among investors

The reason being, after independence from Britain 50 years ago, India developed a highly
protected, semi-socialist autarkic economy. Structural and bureaucratic impediments were
vigorously fostered, along with a distrust of foreign business. Even as today the climate in India
has seen a sea change, smashing barriers and actively seeking foreign investment, many
companies still see it as a difficult market. India is rightfully quoted to be an incomparable
country and is both frustrating and challenging at the same time. Foreign investors should be
prepared to take India as it is with all of its difficulties, contradictions and challenges.

Developing a basic understanding or potential of the Indian market

Envisaging and developing a Market Entry Strategy and implementing these strategies when
actually entering the market are three basic steps to make a successful entry into India. The
Indian middle class is large and growing; wages are low; many workers are well educated and
speak English; investors are optimistic and local stocks are up; despite political turmoil, the
country presses on with economic reforms. But there is still cause for worries- Infrastructure
hassles.

The rapid economic growth of the last few years has put heavy stress on India's infrastructure
facilities. The projections of further expansion in key areas could snap the already strained lines
of transportation unless massive programs of expansion and modernization are put in place.
Problems include power demand shortfall, port traffic capacity mismatch, poor road conditions
(only half of the country's roads are surfaced) and low telephone penetration.

Indian Bureaucracy

Although the Indian government is well aware of the need for reform and is pushing ahead in
this area, business still has to deal with an inefficient and sometimes still slow-moving
bureaucracy.

Diverse Market

The Indian market is widely diverse. The country has 17 official languages, 6 major religions, and
ethnic diversity as wide as all of Europe. Thus, tastes and preferences differ greatly among
sections of consumers. Therefore, it is advisable to develop a good understanding of the Indian
market and overall economy before taking the plunge.
INTERNATIONAL PORTFOLIO FLOWS:

International portfolio flows, as opposed to foreign direct investment (FDI) flows, refer to capital
flows made by individuals or investors seeking to create an internationally diversified portfolio
rather than to acquire management control over foreign companies. Diversifying internationally
has long been known as a way to reduce the overall portfolio risk and even earn higher returns.
Investors in developed countries can effectively enhance their portfolio performance by adding
foreign stocks particularly those from emerging market countries where stock markets have
relatively low correlations with those in developed countries.

International portfolio flows are largely determined by the performance of the stock markets of
the host countries relative to world markets. With the opening of stock markets in various
emerging economies to foreign investors, investors in industrial countries have increasingly
sought to realize the potential for portfolio diversification that these markets present.

It is likely that for quite a few years to come, FII flows would increase with global integration.
The main question is whether capital flew in to these countries primarily as a result of changes
in global (largely US) factors or in response to events and indicators in the recipient countries
like its credit rating and domestic stock market return. The answer is mixed – both global and
country-specific factors seem to matter, with the latter being particularly important in the case
of Asian countries and for debt flows rather than equity flows.

FOREIGN INSTITUTIONAL INVESTMENT IN INDIA:

MILESTONES
 India embarked on a programme of economic reforms in the early 1990s to tie over its
balance of payment crisis and also as a step towards globalisation.
 An important milestone in the history of Indian economic reforms happened on
September 14, 1992, when the FIIs (Foreign Institutional Investors) were allowed to
invest in all the securities traded on the primary and secondary markets, including
shares, debentures and warrants issued by companies which were listed or were to be
listed the stock exchanges in India and in the schemes floated by domestic mutual funds.
 Initially, the holding of a single FII and of all FIIs, NRIs (Non-Resident Indians) and OCBs
(Overseas Corporate Bodies) in any company were subject to a limit of 5% and 24% of
the company's total issued capital respectively.
 ( In order to broad base the FII investment and to ensure that such an investment would
not become a camouflage for individual investment in the nature of FDI (Foreign Direct
Investment), a condition was laid down that the funds invested by FIIs had to have at
least 50 participants with no one holding more than 5%. Ever since this day, the
regulations on FII investment have gone through enormous changes and have become
more liberal over time.
 ( From November 1996, FIIs were allowed to make 100% investment in debt securities
subject to specific approval from SEBI as a separate category of FIIs or sub-accounts as
100% debt funds. Such investments were, of course, subjected to the fund-specific
ceiling prescribed by SEBI and had to be within an overall ceiling of US $ 1.5 billion. The
investments were, however, restricted to the debt instruments of companies listed or to
be listed on the stock exchanges.
 In 1997, the aggregate limit on investment by all FIIs was allowed to be raised from 24%
to 30% by the Board of Directors of individual companies by passing a resolution in their
meeting and by a special resolution to that effect in the company's General Body
meeting.
 ( From the year 1998, the FII investments were also allowed in the dated government
securities, treasury bills and money market instruments.
 ( In 2000, the foreign corporates and high net worth individuals were also allowed to
invest as sub-accounts of SEBI-registered FIIs. FIIs were also permitted to seek SEBI
registration in respect of sub-accounts. This was made more liberal to include the
domestic portfolio managers or domestic asset management companies.
 ( 40% became the ceiling on aggregate FII portfolio investment in March 2000.
 ( This was subsequently raised to 49% on March 8, 2001 and to the specific sectoral cap
in September 2001.
 ( As a move towards further liberalization a committee was set up on March 13, 2002 to
identify the sectors in which FIIs portfolio investments will not be subject to the sectoral
limits for FDI.
 ( Later, on December 27, 2002 the committee was reconstituted and came out with
recommendations in June 2004. The committee had proposed that, 'In general, FII
investment ceilings, if any, may be reckoned over and above prescribed FDI sectoral
caps. The 24 per cent limit on FII investment imposed in 1992 when allowing FII inflows
was exclusive of the FDI limit. The suggested measure will be in conformity with this
original stipulation.' The committee also has recommended that the special procedure
for raising FII investments beyond 24 per cent up to the FDI limit in a company may be
dispensed with by amending the relevant regulations.
 ( Meanwhile, the increase in investment ceiling for FIIs in debt funds from US $ 1 billion
to US $ 1.75 billion has been notified in 2004. The SEBI also has reduced the turnaround
time for processing of FII applications for registrations from 13 working days to 7
working days except in the case of banks and subsidiaries.
 All these are indications for the country's continuous efforts to mobilize more foreign
investment through portfolio investment by FIIs. The FII portfolio flows have also been
on the rise since September 1992. Their investments have always been net positive, but
for 1998-99, when their sales were more than their purchase
ACTS AND RULES

FII registration and investment are mainly governed by SEBI (FII) Regulations, 1995.

ELIGIBILITY FOR REGISTRATION AS FII: Following entities / funds are eligible to get registered as
FII:

1. Pension Funds

2. Mutual Funds

3. Insurance Companies

4. Investment Trusts

5. Banks

6. University Fund s

7. Endowments

8. Foundations

9. Charitable Trusts / Charitable Societies

Further, following entities proposing to invest on behalf of broad based funds(a fund established
or incorporated outside India, which has at least twenty investors with no single individual
investor holding more than 10% shares or units of the fund) , are also eligible to be registered as
FIIs:

1. Asset Management Companies

2. Institutional Portfolio Managers

3. Trustees

4. Power of Attorney Holders

 INVESTMENT OPPORTUNITIES FOR FIIs

The following financial instruments are available for FII investments

a) Securities in primary and secondary markets including shares, debentures and warrants of
companies, unlisted, listed or to be listed on a recognized stock exchange in India;

b) Units of mutual funds;

c) Dated Government Securities;

d) Derivatives traded on a recognized stock exchange;

e) Commercial papers.

Investment limits on equity investments

a) FII, on its own behalf, shall not invest in equity more than 10% of total issued capital of an
Indian company.

b) Investment on behalf of each sub-account shall not exceed 10% of total issued capital of an
India company.

c) For the sub-account registered under Foreign Companies/Individual category, the investment
limit is fixed at 5% of issued capital.

These limits are within overall limit of 24% / 49 % / or the sectoral caps a prescribed by
Government of India / Reserve Bank of India.

Investment limits on debt investments

The FII investments in debt securities are governed by the policy if the Government of India.
Currently following limits are in effect:
For FII investments in Government debt, currently following limits are applicable:

For corporate debt the investment limit is fixed at US $ 500 million.

TAXATION

The taxation norms available to a FII is shown in the table below.

Nature of Income Tax Rate

Long-term capital gains 10%

Short-term capital gains 30%

Dividend Income Nil

Interest Income 20%

Long term capital gain: Capital gain on sale of securities held for a period of more than one year.

Short term capital gain: Capital gain on sale of securities held for a period of less than one year.

BRIEF PROFILE OF IMPORTANT INSTITUTIONS:

A brief profile of important institutions included in the study is given below.

RESERVE BANK OF INDIA

India's Central Bank - the RBI - was established on 1 April 1935 and was nationalized on 1
January 1949. Some of its main objectives are regulating the issue of bank notes, managing
India's foreign exchange reserves, operating India's currency and credit system with a view to
securing monetary stability and developing India's financial structure in line with national socio-
economic objectives and policies.

The RBI acts as a banker to Central/State governments, commercial banks, state cooperative
banks and some financial institutions. It formulates and administers monetary policy with a
view to promoting stability of prices while encouraging higher production through appropriate
deployment of credit. The RBI plays an important role in maintaining the exchange value of the
Rupee and acts as an agent of the government in respect of India's membership of IMF. The RBI
also performs a variety of developmental and promotional functions.

The first concern of a central bank is the maintenance of a soundly based commercial banking
structure. While this concern has grown to comprehend the operations of all financial
institutions, including the several groups of non-bank financial intermediaries, the commercial
banks remain the core of the banking system. A central bank must also cooperate closely with
the national government. Indeed, most governments and central banks have become intimately
associated in the formulation of policy.

They are often responsible for formulating and implementing monetary and credit policies,
usually in cooperation with the government. they have been established specifically to lead or
regulate the banking system.

SECURITUIES AND EXCHANGE BOARD OF INDIA

In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of
India through an executive resolution, and was subsequently upgraded as a fully autonomous
body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board
of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and
autonomous regulatory board with defined responsibilities, to cover both development &
regulation of the market, and independent powers has been set up.
The basic objectives of the Board were identified as:

To protect the interests of investors in securities;

To promote the development of Securities Market;

To regulate the securities market and

For matters connected therewith or incidental thereto.

Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalization requirements, margining, establishment of clearing
corporations etc. reduced the risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the
eligibility criteria, the code of obligations and the code of conduct for different intermediaries
like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio
managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk
identification and risk management systems for Clearing houses of stock exchanges, surveillance
system etc. which has made dealing in securities both safe and transparent to the end investor.

Another significant event is the approval of trading in stock indices (like S&P CNX Nifty &
Sensex) in 2000. A market Index is a convenient and effective product because of the following
reasons:

It acts as a barometer for market behavior;

It is used to benchmark portfolio performance;

It is used in derivative instruments like index futures and index options;

It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and also
to diversify the trading products, so that there is an increase in number of traders including
banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to
transact through the Exchanges. In this context the introduction of derivatives trading through
Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.

BOMBAY STOCK EXCHANGE:

Of the 22 stock exchanges in the country, Mumbai's (earlier known as Bombay), Bombay Stock
Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of
the total trading volume in the country. Established in 1875, the exchange is also the oldest in
Asia. Among the twenty-two Stock Exchanges recognized by the Government of India under the
Securities Contracts (Regulation) Act, 1956, it was the first one to be recognized and it is the
only one that had the privilege of getting permanent recognition ab-initio.

Approximately 70,000 deals are executed on a daily basis, giving it one of the highest per hour
rates of trading in the world. There are around 3,500 companies in the country which are listed
and have a serious trading volume. The market capitalization of the BSE is Rs.5 trillion. The BSE
`Sensex' is a widely used market index for the BSE.

The main aims and objectives of the BSE are to provide a market place for the purchase and sale
of security evidencing the ownership of business property or of a public or business debt. It
aims to promote, develop and maintain a well-regulated market for dealing in securities and to
safeguard the interest of members and the investing public having dealings on the Exchange. It
helps industrial development of the country through efficient resource mobilization. To establish
and promote honorable and just practices in securities transactions

BSE Sensex
The BSE Sensex is a value-weighted index composed of 30 companies with the base April 1979 =
100. It has grown by more than four times from January 1990 till date. The set of companies in
the index is essentially fixed. These companies account for around one-fifth of the market
capitalization of the BSE.

NATIONAL STOCK EXCHANGE OF INDIA

The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges, which recommended promotion of a
National Stock Exchange by financial institutions (FIs) to provide access to investors from all
across the country on an equal footing. Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the Government of India and was incorporated in
November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
operations in Derivatives segment commenced in June 2000.

S&P CNX Nifty

S&P CNX Nifty is a well-diversified 50 stock index accounting for 23 sectors of the economy. It is
used for a variety of purposes such as benchmarking fund portfolios, index based derivatives
and index funds.

S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a
joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the
index as a core product. IISL have a consulting and licensing agreement with Standard & Poor's
(S&P), who are world leaders in index services.
The average total traded value for the last six months of all Nifty stocks is approximately 58% of
the traded value of all stocks on the NSE

Nifty stocks represent about 60% of the total market capitalization as on March 31, 2005.

Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.07%

S&P CNX Nifty is professionally maintained and is ideal for derivatives trading.

CHAPTER 4

COMPANY PROFILE

Stock Broking business of the group was started in 1995, promoted by professional
entrepreneurs and incubated by the Shriram Group through its entity, Shriram Insight Share
Brokers Ltd.
Stock Broking business commenced operations with a corporate membership in NSE in the cash
segment in 1996. Membership in the derivatives segment in the NSE was acquired in 2003.
The Business has expanded into the commodities market with a trading-cum-clearing
membership in the Multi Commodity Exchange (MCX) and the National Commodities and
Derivatives Exchange (NCDEX) through a 100% subsidiary.Stock Broking business is firmly
focused in the rapidly growing High Networth Individual (HNI) and Retail space. Member:
National Stock NSE SEBI Reg. No. : NSE-CM [INB 230947033] | BSE-CM [INB 010947035] || NSE-
F&O [INF 230947033] ,DP [IN-DP-CDSL-293-2005] ,MCX [Membership No: 10115] |The business
has an active client base of over 1,50,000.The business operates through 1000 branches with
equal no. of trading terminals. The business model of Stock Broking largely focused on owned
branches in the initial years and has now graduated into the franchisee mode of expansion that
will cater to PAN India target market. Rapid expansion has been made possible in this two-
pronged strategy of owned and franchised outlets and is expected to have an end-state
distribution, networking over 3000 branches. As the business starts targeting the next level of
mass affluent customers, expanding into wealth management and advisory space, same would
also become a key thrust area that can potentially enhance profitability and shareholder value
in the medium term.

Shiram Insight Logo:

Shiram Insight slogan

About Shiram Insight

The Group has also made investments in Manufacturing, Value Added Services, Project
Development, Engineering Services, Pharmaceuticals, Machined & Auto Components, Press
Dies & Sheet Metal Stamping, Packaging, Information Technology, Property Development etc.

Genesis of the Shriram phenomenon

The 30,000 Cr Shriram Group had its humble beginnings in the Chit Fund business over three
decadesago. R Thyagarajan, AVS Raja and T Jayaraman were the “three musketeers” who
ventured into these businesses. Not many in the financial services industry thought at that time,
this small Chit Funds business in Chennai would indeed be the foundation for the financial
conglomerate that Shriram is today.

The Shriram Way!

Shriram Group’s businesses strive to serve the largest number of common people. Consider
these: Commercial Vehicle Financing, Consumer & Enterprise Finance, Retail Stock Broking, Life
Insurance, Chit Funds and Distribution of Investment & Insurance Products. Our foray into Non-
Life (General) Insurance is again a strong expression of this commitment.

Milestones

Year Milestone

1974 Commencement of Business - Shriram Chits

1979 Commencement of Business - Shriram Transport Finance Co (STFC)

1982 Commencement of Business - Shriram Investments Ltd

1984 IPO of STFC

1986 Commencement of Business - Shriram City Union Finance Co (SCUF)

1988 IPO of SCUF

1989 Commencement of Business - Shriram Overseas Finance Ltd

1995 Commencement of Business- Shriram Properties Pvt Ltd

1999 Commencement of Business - Shriram Insight Share Brokers Ltd

1999 Citicorp CV financing tie up with STFC

2000 Commencement of Business - Shriram EPC Ltd

2000 Commencement of Business - TAKE Solutions Ltd

2004 Commencement of Business - Shriram Capital Ltd

2005 Entry of Chryscapital as Partner with STFC & EPC

2005 Entry of Sanlam as Life Insurance business partner and commencement of business-
Shriram Life Insurance Co

2006 Merger of Shriram Investments Ltd & Shriram Overseas Finance Ltd with STFC

2006 Commencement of Business - Shriram Fortune Solutions Ltd

2006 Commencement of Business - Shriram Value Services

2006 Entry of TPG as STFC's partner

2007 Shriram EPC's JV with Leitner Technologies for Manufacture of wind turbines

2007 EPC's foray into Air Pollution Control with Hamon through JV

2007 Orient Green Power was founded by Shriram EPC

2007 IPO of TAKE Solutions Ltd

2008 Commencement of Business - Shriram General Insurance Ltd

2008 IPO of Shriram EPC Ltd

2009 NCD Placement of Rs 10 Bn by STFC

2010 IPO of Orient Green power

Industrial Investments

The Group has also made investments in Manufacturing, Value Added Services, Project
Development, Engineering Services, Pharmaceuticals, Machined & Auto Components, Press
Dies & Sheet Metal Stamping, Packaging, Information Technology, Property Development etc.

Non-Finanical service:-

Shriram Group has always encouraged entrepreneurship by demonstrating continuous apetite

for investing in start-up manufacturing business.

Our Investment

The Group has also made investments in Manufacturing, Value Added Services, Project
Development, Engineering Services, Pharmaceuticals, Machined & Auto Components, Press
Dies & Sheet Metal Stamping, Packaging, Information Technology, Property Development etc.

About Founder

Mr.R Thyagarajan, Founder

Chairman of the Shriram Group of Companies - Promoted the Shriram Group Companies in
1974. Today the group has over 15, 000 employees and operating through 700 locations and
manage funds of over 15,000 Crores in the business of financial services including life insurance
and general insurance.

• Masters in Mathematics
• Masters in Mathematical Statistics from Indian Statistical Institute
• Associate of Chartered Insurance Institute (A.C.I.1), London
• Visiting faculty of Asian Institute of Insurance, Philippines on Consequential Loss Insurance.

By inculcating the philosophy of “putting people first”, he has transformed the Shriram Group
into India’s Premier Networked Financial Services Supermarket Chain. The Network Shriram
comprises over 650 Branches and Service Centers, served by more than 6000 employees and
60,000 agents committed to ensuring world-class customer service. The Group’s aggregate
turnover exceeds Rs. 5000 crores.

Shiram group Services

Financial Services :-

Helping Create Wealth. Empowering people through prosperity. Resulting in inclusive growth.

The relentless pursuit of this mission, since our inception in 1974 has given the Shriram Group
our raison d'être and our distinct identity. The Group’s reputation for effectiveness,
transparency and integrity has helped it to become one of India’s largest Financial Services
Network.The Group’s Financial Services Businesses manage assets exceeding Rs.40,000 crores,
has 6.5 million clients, served by 1,00,000 Agents and 36,000 employees, through 2700
Branches across India.Our core financial services businesses are housed under the holding
company Shriram Capital Ltd:

 Commercial Vehicle Finance

 Life Insurance
 General Insurance
 Consumer & Enterprise Finance
 Financial Product Distribution
 Retail Stock Broking
 Chit Funds

Non-Financial Services:-

Shriram Group has always encouraged entrepreneurship by demonstrating continuous apetite

for investing in start-up manufacturing business.

Our Investment

The Group has also made investments in Manufacturing, Value Added Services, Project
Development, Engineering Services, Pharmaceuticals, Machined & Auto Components, Press
Dies & Sheet Metal Stamping, Packaging, Information Technology, Property Development etc.

Corporate management :-

Board Of Directors

Arun Duggal

Mr. Arun Duggal is an experienced international banker and has advised companies on financial
strategy, M&A and capital raising.
He is Chairman of Board of Directors of Shriram, Shriram Properties Limited, Shriram City Union
Finance Limited and Shriram EPC Limited. He is the Vice Chairman of International Asset
Reconstruction Company. He is on the Board of Directors of Jubilant Energy NV., Patni
Computers (Chairman - Audit Committee), Fidelity Fund Management, LNG Petronet (Nominee
Director of Asian Development Bank), Manipal Acunova, Zuari Industries, Info Edge (India), Dish
TV India , Mundra Port & SEZ, and Hertz (India). Mr. Duggal is Advisor to IMA (formerly
Economist Intelligence Unit, India). He is a member of the Investment Committee of Axis Private
Equity. He was on the Board of Governors of the National Institute of Bank Management. He is a
Board Member and erstwhile Chairman of the American Chamber of Commerce, India. Mr.
Duggal is involved in several initiatives in social sector. He is a founder Director of Bellwether
Microfinance Fund which provides equity capital to promising Micro Finance organizations and
helps them in capacity building. He is a Trustee of Centre for Civil Society. New Delhi, which
focuses on improving the quality and access of education to students especially for the poor. He
is Senior Advisor (Asia Pacific ) to Transparency International Berlin, which is undertaking a
number of initiatives to combat corruption problem around the world. Mr. Duggal had a 26
years career with Bank of America, mostly in the U.S. Hong Kong and Japan. His last assignment
was as Chief Executive of Bank of America in India from 1998 to 2001. He spent ten years (1981-
1990) with the New York Corporate Office of Bank of America handling multinational
relationships. From 1991-1994 as Chief Executive of Bank of America Asia Limited, Hong Kong
he looked after Investment Banking activities for the Bank in Asia. In 1995 he moved to Tokyo as
the Regional Executive, managing Bank of America 's business in Japan, Australia and Korea.
From 2001 to 2003 he was Chief Financial Officer of HCL Technologies, India. A Mechanical
Engineer from the prestigious Indian Institute of Technology, Delhi, Mr. Duggal holds an MBA
from the Indian Institute of Management, Ahmedabad. He teaches Banking & Finance at the
Indian Institute of Management, Ahmedabad as a visiting Professor.

 R.Sridhar (Managing Director)

 Adit Jain
 S.Venkatakrishnan
  Maya Shanker Verma
 Mukund Manohar Chitale
 Puneet Bhatia
 Ranvir Dewan
 Sumatiprasad M. Bafna
 S.Lakshminarayanan

Services offered from Shiram Insight

 CHAPTER- 5

THEORETICAL FRAME WORK

LITERATURE REVIEW

Literature review

Human Resource

William R. Tracey, in The Human Resources Glossary defines Human Resources as: "The people
that staff and operate an organization"; as contrasted with the financial and material resources
of an organization. Human Resources is also the organizational function that deals with the
people and issues related to people such as Remuneration, hiring, performance management,
and training. A Human Resource is a single person or employee within your organization.

Human Resource Management (HRM) is the function within an organization that focuses on
recruitment of, management of, and providing direction for the people who work in the
organization. Human Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with issues related to
people such as Remuneration, hiring, performance management, organization development,
safety, wellness, Incentives, employee motivation, communication, administration, and training.
Human resources is a term used to describe the individuals who comprise the workforce of an
organization, although it is also applied in labor economics to, for example, business sectors or
even whole nations. Human resources is also the name of the function within an organization
charged with the overall responsibility for implementing strategies and policies relating to the
management of individuals (i.e. the human resources). This function title is often abbreviated to
the initials 'HR'.

Human resources is a relatively modern management term, coined in the 1960s. [citation needed] The
origins of the function arose in organizations that introduced 'welfare management' practices
and also in those that adopted the principles of 'scientific management'. From these terms
emerged a largely administrative management activity, co-ordinating a range of worker related
processes and becoming known, in time as the 'personnel function'. Human resources
progressively became the more usual name for this function, in the first instance in the United
States as well as multinational corporations, reflecting the adoption of a more quantitative as
well as strategic approach to workforce management, demanded by corporate management
and the greater competitiveness for limited and highly skilled workers.

Functions

The Human Resources Management (HRM) function includes a variety of activities, and key
among them is deciding what staffing needs you have and whether to use independent
contractors or hire employees to fill these needs, recruiting and training the best employees,
ensuring they are high performers, dealing with performance issues, and ensuring your
personnel and management practices conform to various regulations. Activities also include
managing your approach to employee Incentives and Remuneration, employee records and
personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these
activities themselves because they can't yet afford part- or full-time help. However, they should
always ensure that employees have—and are aware of—personnel policies which conform to
current regulations. These policies are often in the form of employee manuals, which all
employees have.
Note that some people distinguish a difference between HRM (a major management activity)
and HRD (Human Resource Development, a profession). Those people might include HRM in
HRD, explaining that HRD includes the broader range of activities to develop personnel inside of
organizations, including, e.g., career development, training, organization development, etc.

There is a long-standing argument about where HR-related functions should be organized into
large organizations, e.g., "should HR be in the Organization Development department or the
other way around?"

The HRM function and HRD profession have undergone major changes over the past 20–30
years. Many years ago, large organizations looked to the "Personnel Department," mostly to
manage the paperwork around hiring and paying people. More recently, organizations consider
the "HR Department" as playing an important role in staffing, training and helping to manage
people so that people and the organization are performing at maximum capability in a highly
fulfilling manner.

WHAT ARE THE FUNCTIONS OF HRM IN ORGANISATIONS?

There are seven main functions of HR .

They are :

Function 1: Manpower planning

Function 2: Recruitment and selection of employees

Function 3: Employee motivation

Function 4: Employee evaluation:

Function 5: Organizational relations

Function 6: Provision of employee services

Function 7: Employee education, training and development

Features

Its features include:

 Organizational management
 Personnel administration

 Manpower management

 Industrial management

REMUNERATION MANAGEMENT

MEANING OF WAGE/ REMUNERATION PAYMENT:

Wage is a monetary payment made by the employer to his employee for the work done
or services rendered. It is a monetary Remuneration for the services rendered. A worker may
be paid Rs. 100 per day or Rs. 4500 per month. This is wage payment. The worker gives his
services and takes payment called wage payment. Industrial workers are paid remuneration for
their services in terms of money called wage payment. Wages are usually paid in cash at the end
of one day, one month or one week. Money wage is the monetary Remuneration or price paid
by the employer to his employee for the services rendered. Such Remuneration is also called
wage or salary or reward given by an organisation to a person in return to a work done.

Generally, Remuneration payable to an employee includes the following three

components:

 Basic Remuneration for the job (wage/salary)

 Incentive Remuneration for the employee on job

 Supplementary Remuneration paid to employees (fringe benefit and employee services)

IMPORTANCE OF WAGE PAYMENT:

1. To worker:

Wage payment is important to all categories of workers. Wage is a matter of life and
death to workers/employees. Their life, welfare and even social status depend on wage
payment. It is only source of income to large majority of workers. They and their unions always
demand higher wages and other monetary Incentives.

Majority of labour problems and disputes are directly related to wage payment. The
efficiency of workers and their interest and involvement in the work depend on wage payment.
Even their attitude towards employer depends on wage payment. In brief, wage payment is a
matter of greatest importance to workers. Wage problem is the most pressing and persistent
problem before the entire labour force.

2. To employer:

Wage payment is equally important to employers as their profit depend on the total
wage bill. An employer in general is interested in paying low wages and thereby controls the
cost of production. However, low wages are not necessarily economical. In fact they may prove
to be too costly to the employer in the long run. E.g. In garment manufacturing company if
tailors are not paid properly then it is difficult for the company to retain them. An employer has
a moral and social responsibility to pay fair wages to his worker as they are equal partners in the
production process. He should give fair wages which will benefit to both the parties. Employees
will offer full co-operation to the management when they are paid attractive wages. On the
other hand, strikes and disputes are likely to develop when workers are paid low wages or when
they are dissatisfied and angry due to low wage rates. It is possible to earn more profit by
paying attractive wages to workers. E.g. Reliance, Citi Bank, Motorola are earned huge profits
because of their higher pay packages.

3. To government:

Government also give special importance and attention to wages paid to industrial
workers as industrial development, productivity, industrial peace and cordial labour-
management relation depend on the wage payment to workers. Government desires to give
protection to the working class and for this minimum wages act and other Acts are made. In
India, wages are now link with the cost of living. This is for the protection of workers.
Government is the biggest employer in India and the wage rates of government servant and
employees of public sector organisations are decided by government only. Revision of pay scale
of government employees made for adjusting their wages as per the cost of living. For this,
“Pay Commission” is appointed and pay scale is adjusted as per the recommendations made.

In India, wage payment is very critical, controversial and delicate issue for all categories
of work force. This is due to poverty, rising prices, mass unemployment and rising population.
Wage payment indeed a vexatious problem and needs to be tackled from economic, social and
humanistic angles.
CONCEPT OF FAIR WAGES:

Fair wages is the wage which is above the minimum wage but below the living wage.
Obviously the lower limit of the fair wage is the minimum wage and the upper limit is set by the
ability of the industry to pay. Between these two limits, fair wages should depend on the factors
like –

1. Prevailing rates of wages in the same occupation

2. Prevailing rates of wages in the same region or neighbouring areas

3. Employers ability to pay

4. Level of national income and its distribution

5. Productivity of labour

6. Status enjoyed by the industry in the economy

Hence it can be said that fair wages are determined on industry cum region basis.
When fair wages are paid employees enjoy higher standard of living. It is accepted fact that
wages must be fair and reasonable. Wages is fair when the employee is able to meet its
essential needs and enjoy reasonable standard of living. ”Equal pay for equal work” serves as
base of fair wage.

According to Encyclopaedia of social science,”Fair wages are equal to those received by

the workers performing work of equal skill, difficulty or unpleasantness.”

Factors Influencing Wage And Salary Structure

 The organization’s ability to pay:

Wage increases should be given by those organizations which can afford them.
Companies that have good sales and therefore high profits tend to pay higher wages
than those which are running at a loss or earning low profits because of the high cost of
production or low sales.

 Supply and demand of labour:

 If the demand and certain skills are high and the supply is low the result is rise in the
price to be paid for these skills. The other alternative is to pay higher wages if the labour
supply is scarce and lower wages when it is excessive.

 The cost of living:

When the cost of living increases, workers and trade unions demand adjusted wages to
offset the erosion of real wages. However when living costs are stable or decline the
management does not resort with this argument as a reason for wage reduction.

 The living wage:

Employers feel that the level of living prescribed in workers budget is opened to
argument since it is based on subjective opinion.

 Job requirements:

Jobs are graded according to the relative skill responsibility and job conditions required.

 Trade unions bargaining power:

Trade unions do affect the rate of wages. Generally the stronger and more powerful
trade union, higher the wages.

 Productivity:

Productivity is another criterion and is measured in terms of output man-hour. It is not

due to labour efforts alone. Technological improvements, greater ingenuity and skill by
the labour are all responsible for the increase in productivity.

 Prevailing market rate:

This is also known as ‘comparable wages’ or ’going wage rate’. Reason behind this is
competition demand that competitors adhere to the same relative wage level.
  Skill levels available in the market:

With the rapid growth of industries, business trade there is shortage of skilled resources.
The technological development, automation has been affecting the skilled levels at a
faster rate.

Psychological and social factors: This determine in a significant measure how hard a
person will work for the Remuneration received or what pressures he will exert to get his
Remuneration increased.

Components Of Employee Remuneration

The remuneration packet of an employee includes wage/salary, incentives, fringe Incentives,

perquisites and finally non-monetary Incentives

1. Wages and salary:

a. Wages represent hourly rates of pay, and salary refers to the monthly rate of pay,
irrespective of the number of hours put in by the employee. Wages and salaries
are subject to the annual increments. They differ from employee to employee,
and depend upon the nature of job, seniority, and merit.

2. Incentives:

a. Incentives are paid in addition to wages and salaries and are also called
‘payments by results’. Incentives depend upon productivity, sales, profit, or cost
reduction efforts.There are: (a) Individual incentive schemes, and (b) Group
incentive programmes. Individual incentives are applicable to specific employee
performance. Where a given task demands group efforts for completion,
incentives are paid to the group as a whole. The amount is later divided among
group members on an equitable basis.
3. Fringe Incentives:

a. These are monetary Incentives provided to employees. They include the benefit
of: (a) Provident fund, (b) Gratuity, (c) Medical care, (d) Hospitalization payment,
(e) Accident relief, (f) Health and Group insurance, (g) Subsidized canteen
facilities, (h) Recreational facilities, and (i) Provision of uniforms to employees.

4. Perquisites:

a. There are special Incentives offered to managers/executives. The purpose is to

retain competent executives. Perquisites include the following: (a) Company car
for traveling, (b) Club membership, (c) Paid holidays, (d) Furnished house or
accommodation, (e) Stock option schemes, etc.

b. 5.Non-monetary Incentives:

c. These Incentives give psychological satisfaction to employees even when

financial benefit is not available. Such Incentives are: (a) Recognition of merit
through certificate, etc. (b) Offering challenging job responsibilities, (c)
Promoting growth prospects, (d) Comfortable working conditions, (e) Competent
supervision, and (f) Job sharing and flexi-time.
Remuneration is a systematic approach to providing monetary value to employees in exchange
for work performed. Remuneration may achieve several purposes assisting in recruitment, job
performance, and job satisfaction.

Remuneration is not the cut-and-dry subject it used to be. Once you had to worry only about an
employee's base salary or, at most, a base salary and commission. Today, you need to think in
terms of Remuneration packages - including salaries, stock options, employee stock ownership
plans, pay-for-performance plans, bonuses, profit sharing, commissions, non-cash rewards,
variable pay, and much more.
To recruit, retain, and motivate the best employees, you need to understand Remuneration and
reward plans and how they relate to your company's growth.
We'll help you get a handle on everything from settling on a Remuneration strategy to creating a
variable pay plan with this collection of checklists, benchmarks, and advice.

Remuneration as Motivation
The Power of Base
A Remuneration expert explains how to improve your Remuneration strategy by developing an
effective, market-driven base pay system. Pay for Performance -- and Nothing Else Employment
relationships are transactional by nature. Today's transactions are fast moving, short-term and
fully exposed, as free agents negotiate with managers for project and contract work.
Remuneration Strategy
Recruiting Top Talent, One by One. This CEO tweaked her company's Remuneration package
over time to attract key managers.
Wage Wars.
EVOLUTION OF REMUNERATION:

Today’s Remuneration systems have come from a long way. With the changing
organizational structures workers’ need and Remuneration systems have also been
changing. From the bureaucratic organizations to the participative organizations,
employees have started asking for their rights and appropriate Remunerations. The higher
education standards and higher skills required for the jobs have made the organizations
provide competitive Remunerations to their employees.

Remuneration strategy is derived from the business strategy. The business goals and
objectives are aligned with the HR strategies. Then the Remuneration committee or the
concerned authority formulates the
Remuneration strategy. It depends on both internal and external factors as well as the life
cycle of an organization.
 Evolution of Strategic Remuneration
Traditional Remuneration Systems

In the traditional organizational structures, employees were expected to work hard and
obey the bosses’ orders. In return they were provided with job security, salary increments
and promotions annually. The salary was determined on the basis of the job work and the
years of experience the employee is holding. Some of the organizations provided for
retirement Incentives such as, pension plans, for the employees. It was assumed that
humans work for money, there was no space for other psychological and social needs of
workers.

Change in Remuneration Systems

With the behavioral science theories and evolution of labour and trade unions, employees
started asking for their rights. Maslow brought in the need hierarchy for the rights of the
employees. He stated that employees do not work only for money but there are other
needs too which they want to satisfy from there job, i.e. social needs, psychological needs,
safety needs, self-actualization, etc. Now the employees were being treated as human
resource.

Their performance was being measured and appraised based on the organizational and
individual performance. Competition among employees existed. Employees were expected
to work hard to have the job security. The Remuneration system was designed on the basis
of job work and related proficiency of the employee.
 Maslow’s Need Hierarchy
Today’s Modern Remuneration Systems
Today the Remuneration systems are designed aligned to the business goals and strategies.
The employees are expected to work and take their own decisions. Authority is being
delegated. Employees feel secured and valued in the organization. Organizations offer
monetary and non-monetary Incentives to attract and retain the best talents in the
competitive environment. Some of the Incentives are special allowances like mobile,
company’s vehicle; House rent allowances; statutory leaves, etc.

Remuneration defined

Remuneration can be defined as all of the rewards earned by employees in return for their
labour. This includes:

 Direct financial Remuneration consisting of pay received in the form of wages, salaries,
bonuses and commissions provided at regular and consistent intervals
 Indirect financial Remuneration including all financial rewards that are not included in
direct Remuneration and can be understood to form part of the social contract between the
employer and employee such as Incentives, leaves, retirement plans, education, and employee
services
 Non-financial Remuneration referring to topics such as career development and
advancement opportunities, opportunities for recognition, as well as work environment and
conditions

In determining effective rewards, however, the uniqueness of each employee must also be
considered. People have different needs or reasons for working. The most appropriate
Remuneration will meet these individual needs. To a large degree, adequate or fair
Remuneration is in the mind of the employee.

A good Remuneration strategy includes a balance between internal equity and external
competitiveness. Remuneration and Incentives affect the productivity and happiness of
employees, as well as the ability of your organization to effectively realize its objectives. It is to
your advantage to ensure that your employees are creatively compensated and knowledgeable
of their Incentives.
TYPES OF REMUNERATION:

# DIRECT REMUNERATION:

Direct Remuneration refers to monetary Incentives offered and provided to employees in

return of the services they provide to the organization. The monetary Incentives include
basic salary, house rent allowance, conveyance, leave travel allowance, medical
reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular
interval at a definite time.
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.
Leave Policy

It is the right of employee to get adequate number of leave while working with the
organization. The organizations provide for paid leaves such as, casual leaves, medical leaves
(sick leave), and maternity leaves, statutory pay, etc.

Overtime Policy
Employees should be provided with the adequate allowances and facilities during their
overtime, if they happened to do so, such as transport facilities, overtime pay, etc.

Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an
interval of one year. Even their dependents should be eligible for the medi-claims that
provide them emotional and social security.
An ideal Remuneration system heavily depends upon the following factors:

Demand and Supply Position:

Each profession demands certain skills, technical education, personal qualities, and experience
to execute the job. If the demand is more and supply less, subsequently the Remuneration to be
paid will be high and vice-versa.

Nature of Business:

If the product or service is having the nature of yielding high profits, obviously the
Remuneration paid is comparatively higher than what is paid for in other low profit yielding
businesses.

Size of business:

Large organizations like international companies give higher Remuneration as compared to

small industries.

Current Sate of Industry:

Many units producing alike product form an industry. It is an accepted rule that unlike units
falling under the industry follow the current wage level in the industry. In the same way, the
pattern of Remuneration i.e. constituent of the pay package is approximately analogous with
little difference among these units.

Management Thinking:
 Every organization (the people who run the business) has its own philosophy. Every business has
its own principles and thinking. Various organizations have great concern about the employees
and show a high sense of communal responsibility. They provide profusely non-statutory
welfare reimbursements to their employees. Even though the number is small, the recompense
to employees is better, regardless of the foregoing factors.

Disagreeability of the Job:

Certain jobs in contrast to others are unlikable for example, social workers, nurses, cleaners,
teachers, fire brigade, doctors, etc. their jobs have many diverse kinds of working surroundings.
Ability and skills of facing long hours of work, high pressure, stress, monotony, and continuous
alertness are required by these jobs. Therefore, the accessibility of persons for such job is less
and as a result the preference is second or third. For such works, the Remuneration has to be
attractive.

An employee who makes $35,000 a year may be happy as a clam with

his Remuneration until he learns that Frank in the cube next door makes $40,000. Three rules
for handling the delicate subject of employee salary information.
Shifting Workplace Values Alter Pay Strategies
Incentive Remuneration is becoming the norm, and salary increases seem to pattern economic
performance.

IMPORTANCE OF REMUNERATION

Remuneration and Reward system plays vital role in a business organization. Since, among four Ms, i.e.
Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a
business process without Men. Every factor contributes to the process of production/business. It expects
return from the business process such as rent is the return expected by the landlord, capitalist expects
interest and organizer i.e. entrepreneur expects profits. Similarly the labour expects wages from the
process.
 Labour plays vital role in bringing about the process of production/business in motion. The other factors
being human, has expectations, emotions, ambitions and egos.
Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities,
evaluation, etc. It helps in finding out required level of education, skills, knowledge, training, etc for the job
position. It also depicts the job worth i.e. measurable effectiveness of the job and contribution of job to the
organization. Thus, it effectively contributes to setting up the Remuneration package for the job position.

Importance of Job Analysis

Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals
and strategic objectives. It forms the basis for demand-supply analysis, recruitments, Remuneration
management, and training need assessment and performance appraisal.

Components of Job Analysis

Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job
analysis can be further categorized into following sub components.
Job Position
Job position refers to the designation of the job and employee in the organization. Job position forms an
important part of the Remuneration strategy as it determines the level of the job in the organization. For
example management level employees receive greater pay scale than non-managerial employees. The non-
monetary Incentives offered to two different levels in the organization also vary.

Job Description

Job description refers the requirements an organization looks for a particular job position. It states the key
skill requirements, the level of experience needed, level of education required, etc. It also describes the roles
and responsibilities attached with the job position. The roles and responsibilities are key determinant factor
in estimating the level of experience, education, skill, etc required for the job. It also helps in benchmarking
the performance standards.

Job Worth
Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is
also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job
evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is
determined that how much the job is worth, it becomes easy to define the Remuneration strategy for the
position.

Therefore, job analysis forms an integral part in the formulation of Remuneration strategy of an organization.
Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for
setting up the Remuneration packages, for reviewing employees’ performance with the standard level of
performance, determining the training needs for employees who are lacking certain skills.

Pay structure:

Once job analysis has been done organizations need to decide upon the pay structures. Pay structure
refers to the process of setting up the pay for a job in an organization. The process deals with internal
and external analysis to estimate the Remuneration package for a job profile. Internal equity, External
equity and Individual equity are the most popular pay structures. Job description provides the in
depth knowledge about the job profile and its worth.

Pay structures are the strong determinant of employee’s value in the organization. It helps in
analyzing the employee’s role and status in the organization. It provides for fair treatment to all
employees. Pay structures also include the estimation of incentives.
The level of incentives also depends on the level of job position in the organizational hierarchy.
Internal Equity
The internal equity method undertakes the job position in the organizational hierarchy. The process
aims at balancing the Remuneration provided to a job profile in comparison to the Remuneration
provided to its senior and junior level in the hierarchy. The fairness is ensured using job ranking, job
classification, level of management, level of status and factor comparison.
External Equity
Here the market pricing analysis is done. Organizations formulate their Remuneration strategies by
assessing the competitors’ or industry standards. Organizations set the Remuneration packages of
their employees aligned with the prevailing Remuneration packages in the market. This entails for fair
treatment to the employees. At times organizations offer higher Remuneration packages to attract
and retain the best talent in their organizations.
 Salary survey

Organizations have to bridge the gap between the industry standards and their salary packages. They
cannot provide Remuneration packages that are either less than the industry standards or are very
higher then the market rates. For the purpose they undertake the salary survey. The Salary survey is the
research done to analyze the industry standards to set up the Remuneration strategy for the
organization. Organizations can either conduct the survey themselves or they can purchase the survey
reports from a reputed research organization. These reports constitute the last 2-5 years or more
Remuneration figures for the various positions held by the organizations. The analysis is done on the
basis of certain factors defined in the objectives of the research.

Hence, the organizations offer most competitive packages to acquire the best talent around. It has been
found that that there are many MNCs in the Indian healthcare industry who want to put the management
on a global scale.
The Remuneration package includes the following components. Apart from the regular components,
medical practitioners are also provided with the special Incentives mentioned below.
Figure: Special Incentives offered in Indian Healthcare & Medicine Industry

COMPONENTS OF PAYROLL

The traditional aspect of equal pay in equal regions has been taken over by the new phenomena of
competitive pay across the industries. Globalization and business expansions have caused the
organizations to attract and retain the talented workforce. They also keep in the mind the internal parity
i.e. the pay structures are comparable with respect to the job positions in the organizational hierarchy.

employees' salaries, wages, bonuses, net pay, and deductions. It consist of the employee ID,
employee name, date of joining, daily attendance record, basic salary, allowances, overtime pay,
bonus, commissions, incentives, pay for holidays, vacations and sickness, value of meals and
lodging etc. There are some deductions such as PF, taxes, loan installments or advances taken by
employee.

Payroll is administered on monthly basis and annual basis.

While administrating the monthly payroll basic salary, HRA, conveyance, and other special
allowances such mobile, etc are considered. There are some deductions
which are provident fund (12%) of the salary, taxes and other deductions.

Figure: Components of Monthly Payroll

Deductions such as tax and loan/advances taken by the employee from organizations are
deducted only where applicable. Dearness Allowance and House rent allowance is provided at a
fixed rate stated by the employment law. Provident fund is deducted from the gross salary of
employee on the monthly basis as per the employment law, which is provided later to the
employee. Organizations also contribute the same amount to the provident fund of the
employee.
Annual payroll consists of leave travel allowances, incentives, annual bonuses, meal
vouchers/reimbursements, and medical reimbursements.

Figure: Components of Annual Payroll

Allowances, incentives, bonuses and reimbursements are based on organizational policies. Some
organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some
organizations go for performance based incentives.
PAYROLL MANAGEMENT PROCESS

Calculation of gross salaries and deductible amounts is a tedious task which involves risk. Some of the
organizations use the traditional manual method of payroll processing and some go for the advanced
payroll processing software. An organization opts for any of the following payroll processing methods
available::

Manual System
Manual payroll system is the traditional payroll system which involves pen and ink, adding machine,
spreadsheet, etc instead of computers, software and other computerized aids. The process was very
popular when there were no computerized means for payroll processing.

Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll.
Sometimes the construction industry and manufacturing industry also use the manual payroll systems for
the contractual labour, as theses contracts are on daily/weekly basis.
There is full control in the hands of owner. But the process is tedious, time consuming and risky as it is
more prone to errors.
Figure: Various Payroll Processes
Accountant
Accountant is a professional having a degree/diploma course in finance/accountancy. He/she is
responsible for all the activities related to payroll accounting. He/she has the sound knowledge of
accounting principles and globally accepted standards.
The process adds costs to the organization. It involves paying someone who is responsible for calculating
the salaries of others. The financial control regarding salary goes in the hand of accountant.

Payroll Software
In today’s computerized environment, payroll system has also developed itself into automated software
that performs every action needed by the payroll process. It helps in calculating the payable amounts and
deductions very easily. It also helps in generating the pay slips in lesser time. Automated calculations result
in no errors. Data is validated automatically by the software.
It needs professionals to make use of the software for its efficient working.

Payroll Outsourcing
Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and
deductions. The outsourcing organization is responsible for all the activities of the payroll accounting. It
saves time and cost for the organization. If there is more number of employees (say more than 900-1000)
in the organization, payroll outsourcing would be very much beneficial.

The data is provided to the consultants/outsourcing firms. The various payroll functions undertaken by the
outsourcing organizations are as follows:

 Analysis of Payroll records, payroll taxes

 Medical claim processing

 Employee Insurance & Provident fund processing

 Quality Audit procedures & planning

1.Workmen's Remuneration Act

To provide Remuneration for workmen in cases of industrial accidental / occupational diseases

in the course of employment resulting in disablement or death. Coverage for persons employed
in Factories, Mines, Plantations, the Railways and others mentioned in Schedule II of the Act.

Incentives

Remuneration for Death

- Minimum - Rs.20,000 Maximum - Rs.1,14,000

Remuneration for Permanent disablement

- Minimum - Rs.24,000 Maximum - Rs.70,000

Temporary disablement
- 50% of wages for a maximum period of 5 years.
The Contract Labour (Regulation & Abolition) ACT, 1970
- Not to be required to work beyond 9 hours between 6 A.M. and 7 P.M. - with the exception of
mid-wives and nurses in plantations.

The Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979
- ISMW ACT - Separate toilets and washing facilities to be provided in employment covered by
the 3rd and 6th laws.

The Factories Act

- In factories, women not to be engaged for cleaning, lubricating or adjusting any part of
primemover or transmission machinery; maternity leave upto 12 weeks with wages to be
provided.

Maternity Benefit Act

- Maternity Incentives to be provided on completion of 80 days working.

- Not required to work during six weeks immediately following the day of delivery or
miscarriage.

- No work of arduous nature, long hours of standing likely to interfere with pregnancy/normal
development of foetus or may cause miscarriage or likely to affect health to be given for a
period of one month immediately preceding the period of six weeks before delivery.

- On medical certificate, advance maternity benefit to be allowed.

- Rs.250.00 as medical bonus to be given in case when no prenatal confinement and post-natal
care is provided free of charge.
Equal Remuneration Act, 1976
- Payment of equal remuneration to men and women workers for same or similar nature of
work protected under the Act and also under the provisions at ISMW Act, mentioned above.

- No discrimination permissible in recruitment and service conditions except where

employment of women is prohibited or restricted by or under any law.

Employees' State Insurance (General) Regulation

- Claim for maternity benefit becomes due on the date medical certificate is issued for
miscarriage, sickness arriving out of pregnancy, confinement or premature birth of child.

2.Payment of Gratuity Act, 1972

Objective
- To provide for payment of gratuity on ceasing to hold office
Coverage
- Factories, Mines, Oil fields, Plantations, Ports, Railway Companies, Shops & Commercial
Establishments and to other establishments to which the Government extends the law.

3.Employees State Insurance Act

Objective
To provide for health cover, Medical care and Cash Incentives for

- Sickness

- Maternity

- Employment injury

- Pensions to dependents in case of Death (or) Employment injury

Eligibility
- Employees drawing wages not exceeding Rs.3000/- per month

4.The Payment Of Bonus Act, 1985

Objectives
- To provide statutory obligations for payment of bonus to persons employed in certain
establishments on the basis of profits or productivity.

Scope And Coverage

- Applicable all over India to factories under the Factories Act and to other establishments
employing 20 or persons on any day during a year.
- Government can extend its coverage to establishments employing between 10 and 20 workers.

- Covers all workers including supervisors, managers, administrators, technical and clerical staff
employed on salary or wages not exceeding Rs 2500/- per month.

5.The Trade Union Act, 1926

Objective
- To confer a legal and corporate status on registered trade unions.

Scope And Coverage

- Applicable to unions of workers as well as associations of employers.

- Extends to the whole of India. - A central legislation but administered and enforced by the
state governments.
6.The Industrial Disputes Act, 1947

Objectives
- To provide a machinery for peaceful resolution of disputes and to promote harmonious
relation between employers and workers.

Scope and coverage

- Applicable to all industrial and commercial establishments

- Covers all workers and supervisors drawing salaries up to Rs. 1600/- per month.

- Not a applicable to person employed in managerial and administrative capacities.

INDIRECT REMUNERATION

PAY FOR TIME AT WORK

Breaks - Rest periods of short duration, running from 5 minutes to about 20 minutes. They are
used to promote the efficiency of the employee and are customarily paid for as working time.
They must be counted as hours worked. Within the State of Texas, these Incentives are a matter
of agreement between the employer and the employee.

Agency Events - Special events or programs planned by an agency to foster and develop an
agency’s culture planned during an agency’s work hours.

Training Hours - The time that employees are allowed for training activities and for which they
receive pay.

NOT AT WORK

Sick leave

State employees are entitled eight hours of sick leave per month. Sick leave with pay may be
taken when an employee is prevented from performing duties because of sickness, injury, or
pregnancy and confinement. Sick leave may also be taken if an employee needs to care for a
member of his or her immediate family who is actually ill. Sick leave may be taken to care for
members of an employee's family who do not reside in the same household only if the time
taken is necessary to provide care to a spouse, child, or parent of the employee who needs such
care as a direct result of a documented medical condition.

To be eligible for accumulated sick leave with pay for a continuous period of more than three
working days, an employee must send the administrative head of his or her agency a doctor's
certification, or an acceptable written statement of facts, showing the nature of the illness.
Agency heads may grant employees extended sick leave if they believe it is warranted.

Each agency may establish a sick leave pool where employees donate hours to the pool to be
used by other employees who experience a catastrophic illness or injury that forces an
employee to use all of their sick leave time.

Holiday

State agency employees are entitled to a paid day off from work on national and state holidays
observed by the state. These holidays are specified by the Legislature each session. A state
agency must have enough state employees on duty during a state holiday to conduct the public
business of the agency except for those state holidays that fall on a Saturday or Sunday, the
Friday after Thanksgiving Day, December 24th, or December 26th.

Employees who actually work on a national holiday or a state holiday will be allowed
compensatory time off during the 12-month period following the date of the holiday worked.

Admin leave

Agency heads are allowed to grant 32 hours of administrative leave per fiscal year to employees
for outstanding performance.

Vacation

Employees receive vacation leave based on length of their service.

Jury Service

An state employee is entitled to serve on a jury without any deduction from wages. Officers or
employees of the Senate, the House of Representatives, or any organization in the legislative
branch of state government establish exemption from state jury service.

Emergency leave
State employees are entitled to time off with pay for a death in the family. An employee's
family is defined as the employee's spouse, the employee's and the spouse's parents, and
children, brothers, sisters, grandparents, and grandchildren of the employee. An agency head
may also grant emergency leave for other reasons determined to be for good cause.

Income protection program.

MANDATED INCOME PROTECTION PROGRAMS

There are some federally mandated income protection programs.

Workers' Remuneration - A benefit paid to an employee who suffers a work-related injury or

illness.

Unemployment Insurance - A program designed to provide a financial safety net for individuals
who become unemployed through no fault of their own.

Social Security and Medicare Taxes (FICA) - Taxes intended to help the elderly with retirement
and health care costs.

VOLUNTARY INCOME PROTECTION PROGRAMS

The State of Texas also offers some income protection programs for state employees:

Health Insurance - insurance against loss by illness or bodily injury.

Life Insurance - insurance to be paid to a beneficiary when the insured dies.

Retirement - program designed to provide an income for your retirement and other future
financial needs.
Deferred Remuneration Plans - employer deduction from pay where employee does not pay
tax until they receive the distributions at a later date.

NON-FINANCIAL REMUNERATION

Non-financial Remuneration 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.

Importance of Remuneration / REWRAD System in business organizations.

Money makes the mare go is the proverb. It holds good for all the factors participating in the
business process expects its fair share of prosperity of the business. Remuneration/ Reward
System plays a vital role in the business organization. And its importance can be very well
ascertained as follows:

1. sound Remuneration/Reward System brings amicability and peace in the relationship of

employer and employees.
 2. The system brings out the best out of every employee in the organization. It aims at
creating a healthy competition among them. And as such, encourages them to work
hard and efficiently.
3. The system provides adequate opportunities to those who wish to perform better. The
system provides growth and advancement opportunities to the deserving employees.
4. The system upholds the principle of equal wages. It provides transparency and parity
too.
5. The perfect Remuneration system provides platform for happy and satisfied workforce..
this minimizes the labour turnover. The organization enjoys the stability.
6. The organization is able to retain the best talent by providing them adequate
Remuneration thereby stopping them from switching over to another job.
7. The business organization can think of expansion and growth if it has the support of
skillful, talented and happy workforce.
8. The sound Remuneration system is hallmark of Organization’s success and prosperity.
The success and stability of organization is measured with pay-package it provides to its
employees.
9. Both employer and employees get benefited because of the sound Remuneration
System.
10. A sound Remuneration System helps the organization keep pace with changing
environment. It helps the organization to cope up with the wage levels in neighboring
industries.
11. Sound Remuneration System minimizes the complaints from the employees, provides
them the congenial work environment to perform better and sets up for them the
targets to be achieved. Definite targets help employees know their role in the
organization, which minimize wastage, and enhance overall efficiency. It also helps
organization to reduce the cost of production and maximize profits.
There are basically two Remuneration system viz. Basis Time Rate and Piece Rate. Theses two
systems are devised to make payment to workers of different skills, efficiency levels. Its is meant
for making payment, which should adequate compensate the worker for his efforts.
The Remuneration System

Time Rate Piece rate Bonus Profit sharing Indirect

Monetary

Incentive

1. Time Rate System:

This system is divided into three categories.

Time Rates

Ordinary level High Wage Level Graduated Time Rates

Ordinary Level:

It is calculated on time (daily, monthly, weekly etc.)The formula for calculation of salary
is

Rate per hour X Hours worked = Earnings (RPH X HW=E).

 High Wage Level :

It is calculated on hourly basis put over time is not paid. The formula for calculation of
salary is

RPH X HW = E

Graduate System:

Payment : the basis is linked with dearness cost of living. The index of cost of living is
varying and that is considered for calculating the remuneration.

Formula: Basic Salary is Rs. 2,000/- and Cost of living Index (D.A) is 100% then, Rs
2000+100% of Rs 2000 as cost of living is added, thus total remuneration is Rs. 4000/-. It
after 6 months, cost of living index change 15%. Then basic salary + 150% of basic salary
i.e Rs 3,000/- will make it Rs, 5000.

2. Piece Rate/ Payment Rate ( Payment by Results)

System of Piece Rate ( Payment by Results)

Straight Piece Rate Piece & Time Combination Differential Piece Rate
 Taylor System Merrick System Gantt Task System

Straight Piece Rate:

Payment : Flat rate is applicable per unit, which is predetermined. The time spent is not
considered.

Formula: PPR X O = Earnings.

Piece Rate and Time Rate Combinations:

Payment: It is a dual rate system, designed to perfect inefficient workers. The worker is ensured
to get the mi9nimum payment. If the payment is calculated on the basis of piece rate
guarantees and number of pieces fall below the minimum wages guaranteed, he is paid by time
Rate.

Differential Piece rate:

Payment: In favour of piece rate system, minimum wages were assured. However, under this
system, instead of combining time-rate and piece-rate, there are dual rates for different
efficiency level. The purpose behind keeping high piece rate for higher efficiency is as the level
of production increases, the cost per unit falls.

4. Bonus:

Bonus is given by the company to their employees as a reward. It is been fixed by the
government i. e 8.33%. Bonus encourages the employees to work hard. It is a motivating factor
for the employees to improve their efficiency.

5. Profit Sharing:.
 Profit Sharing is the most motivating factor. When the company makes profit it gives
some kind of share to their employees as a Annual increment. This helps to motive
employees to work hard and get more increment.

6. Indirect Monetary Incentive :

Indirect Monetary Incentives like traveling allowance, HRA, Dearness

allowance, medical facility, etc are very motivating for the employees.