1.

INTRODUCTION
1.1

OBJECTIVE

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

1.2

LIMITATIONS

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

1.3

SCOPE

The scope of this project is to study of the compensation management strategies in HDFC bank & to evaluate the behaviour & performance of employee on their work.

RESEARCH METHODOLOGY
TYPE OF DATA COLLECTED
There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources.

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

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

SYNOPSIS
INTRODUCTION OF COMPENSATION MANAGEMENT
Compensation Management is an integral part of the management of the organization. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. To be effective, the managers must appreciate the value of competitive pay, their human resources, and have an investment view of payroll costs. It is of prime importance for an organization to maintain pay levels that attract and retain quality employees while recognizing the need to manage payroll costs. Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity.

Objectives of Compensation management are:

1.Attracting and Retaining Personnel: From organizations point of view, the compensation management aims at attracting and retaining right personnel in the Organization Not only they require persons who are well qualified but they are also retained in the organization. 2. Motivating Personnel: Compensation management aims at motivating personnel for higher productivity. Monetary compensation has its own limitations in motivating people for superior performance. 3. Optimizing Cost of Compensation: Compensation management aims at optimizing cost of compensation by establishing some kind of linkage with performance and compensation. 4. Consistency in Compensation: Compensation management tries to achieve consistency-both internal and external-in compensating employees. Internal consistency involves payment on the basis of criticality of jobs and employees' performance on jobs.

COMPONENTS OF COMPENSATIION SYSTEM

JOB ANALYSIS

SALARY SURVEY

PAY STRUCTURES

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

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

House Rent Allowance

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

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

Leave Travel Allowance

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

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

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

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

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

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

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

Fringe Benefits or Perks

Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries. Where an employee exchanges (cash) wages for some other form of benefit, this is generally referred to as a 'salary sacrifice' arrangement. In most countries, most kinds of employee benefits are taxable to at least some degree. Fringe benefits can also include but are not limited to: (employer-provided or employer-paid) housing, group insurance (health, dental, life etc.), income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing, funding of education, and other specialized benefits The purpose of the benefits is to increase the economic security of employees. The term perks is often used colloquially to refer to those benefits of a more discretionary nature. Often, perks are given to employees who are doing notably well and/or have seniority. Common perks are company cars, hotel stays, free refreshments, leisure activities on work time (golf, etc.), stationery, allowances for lunch, andwhen multiple choices existfirst choice of such things as job assignments and vacation scheduling They may also be given first chance at job promotions when vacancies exist.

NON FINANCIAL COMPENSATION

Non-financial compensation is different incentives given to employees that are not in the form of direct pay. Alternative Work Schedules - There are many alternatives to a traditional 5 day, 8-hour work schedule. On-the-Job Training- Showing workers how to perform tasks by observing others. Work/Life Balance - When an employer understands the needs employees have to juggle in their lives. Developmental Opportunities - Training and other opportunities for employees to expand their knowledge and improve their skills. Casual Dress - Allowing employees to relax their dress code at work

INTRODUCTION OF HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian Bank. We realized that only a single minded focus on product quality and service excellence would help us get there. Today, we are proud to say that we are well on our way towards that goal.

SWOT ANALYSIS
STRENGTH.
Superior customer service vs. competitors. Great Brand Image Products have required accreditations. High degree of customer satisfaction. Good place to work Lower response time with efficient and effective service. Dedicated workforce aiming at making a long-term career in the field.

WEAKNESSES

Some gaps in range for certain sectors. Customer service staff needs training. Processes and systems, etc Management cover insufficient.

OPPORTUNITIES

Profit margins will be good. Could extend to overseas broadly. New specialist applications. Could seek better customer deals. Fast-track career development opportunities on an industry-wide basis. An applied research centre to create opportunities for developing techniques to provide added-value services.

THREATS

Legislation could impact. Great risk involved Very high competition prevailing in the industry. Vulnerable to reactive attack by major competitors. Lack of infrastructure in rural areas could constrain investment. High volume/low cost market is intensely competitive.

QUESTIONNAIRE FILLED BY EMPLOYEES

1. When was your organization established?

2. What types of compensation are available?

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

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

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

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

Sales
0% 20% 0% Base Pay Commissions Travelling/meal/housin g allowance Any other

80%

Analysis:

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

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

0% 33% 67%

Rewarding Motivation Holiday packages

0%

Monetary

Analysis:

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

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

20% Yes No 80%

Analysis:

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

7. What do you think that HDFC is providing better compensation package to the employees. a) Yes b) No

If NO than which organization do you think?

80%

20%

YES NO

Analysis:

Yes, HDFC is providing better compensation package to the employees out of 10 employees 80% of employees are satisfied with the compensation they get and 20% of employee are dissatisfied with the compensation provided by the company.

8. Is there different type of compensation for different type of services. a) Yes b) No

100%

0% YES NO

Analysis:

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

9. Is cash still king in employee compensation. a) Yes b) No

Sales

20% 80% 20% YES NO

Analysis:

From the chart given above we can clearly see that the cash is still king there because everyone is satisfied with the monetary motivation and not by non monetary motivation. Here we can see that 90% of employees are satisfied with monetary value rather than non monetary motivation.

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

10%

YES NO

90%

Analysis:

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

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

10% 90% 10% YES NO

Analysis:

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

12. In your organization employees receive effective performance appraisal. a) Yes b) No

Sales

YES

NO

Analysis:

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

13. Are you getting training for improving the performance. a) Yes b) No

12 10 8 6 YES 4 2 0 YES NO NO

Analysis:

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

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

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

Analysis:

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

FINDINGS

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

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

QUESTIONNAIRE
1.When was your organization established? ______________________________________________________________ 2.What type of compensations are available? ______________________________________________________________

3. Who handle the compensation management department in your organization? ________________________________________________________ 4. On what basis company provide compensation to their employees? a)Base Pay b)Commissions d)Any other

c)Travel/Meal/Housing Allowance

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

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

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

If NO than which organization do you think.

8. .Is there different type of compensation for different type of services? a) Yes b) No

9. Is cash still king in employee compensation? a)Yes b) No

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

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

12. In your organization employee receive effective performance appraisal? a) Yes b) No

13. Are you getting training for improving the performance? a) Yes b) No

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

PROJECT REPORT ON STUDY OF COMPENSATION MANAGEMENT IN HDFC BANK

SUBMITTED TOPROF. SHALINI KAKKAR

SUBMITTED BYMEGHA RAWAT (20140101) IESHA GUPTA (20140123) DEEPALI BISHT (20140016) SWATI MISHRA (20140013) SHILPI BHATIA (20140056) SANDIPAN DAS (20140017)

REFERENCES

www.HDFC.com www.google.com www.wikipedia.com