Asad Hussain 508195455

MBA HRM

Roll No.

ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

ASSIGNMENT NO.2

Compensation Management (823)

ON

Designing a staff budget program

SUBMITTED BY_ ASAD HUSSAIN SUBMITTED TO SIR KANWAR M. ANWAR SB. ROLL NUMBER 508195455.

Topic:-

Asad Hussain 508195455

MBA HRM
MOB. NUMBER

Roll No.
03335174447.

ACKNOWLEDGEMENT
All praises to Almighty Allah, the most Gracious, the most Beneficent and the most Merciful, who enabled me to complete this assignment. There is always a sense of gratitude one expresses to others for the helpful and needy service they render during all phases of life. I have completed this assignment with the help of different personalities. I wish to express my gratitude towards all of them. It gives me immense pleasure to express my deep regards and sincere sense of gratitude to Mr. Muhammad Khurshid, Manager (Payroll) PTCL H/Qs, Islamabad for his support which helped me throughout my assignment. I would also like to thank my teacher MR. KANWAR M. ANWAR SB for steering my confidence and capability for giving me insight into assignment by giving me exposure to the arena of competitive and real world. Lastly I would like to thank my parents and friends for their constant support during the duration of my training.

Asad Hussain 508195455

MBA HRM

Roll No.

Thank You One and All ASAD HUSSAIN. ROLL NO. 508195455. MBA (HRM).

EXECUTIVE SUMMARY

This assignment is a research-oriented activity, which represents both the theoretical and practical implication of the topic. In the first section of this assignment, I explain the theoretical aspect of the topic and all major parts has been explained which are involved in the Designing a Staff Budget Programme. For empirical study, I select my own organization (PTCL) and analyze budget process for staff wages and salaries.

Asad Hussain 508195455

MBA HRM

Roll No.

CONTENTS:

TITLE PAGE... ACKNOWLEDGEMENT EXECUTIVE SUMMARY.. CONTENTS..... COMPONENTS OF COMPENSATION SYSTEM TYPES OF COMPENSATION... NEEDS OF COMPENSATION MANAGEMENT..... STRATEGIC COMPENSATION.... DIRECT COMPENSATION INDIRECT COMPENSATION THE BUDGET PROCESS DISTRIBUTING BUDGET WORKSHEETS AND INSTRUCTIONS. CONDUCTING TRAINING SESSION STEPS OF COMPLETE BUDGET PROCESS PRACTICAL STUDY... REVIEW AND APPROVAL REQUIREMENTS. PRINCIPLES..

1 2 3 4 5 6 6 7 8 10 13 14 14 15 17 21 21

Asad Hussain 508195455

MBA HRM

Roll No.

Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The lucrative compensation will also serve the need for attracting and retaining the best employees. Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.

Components of Compensation System Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job
5

Asad Hussain 508195455

MBA HRM

Roll No.

work and responsibilities. Components of a compensation system are as follows:

Types of Compensation Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high Direct Compensation Indirect Compensation Need of Compensation Management
6

organizational

productivity.

Asad Hussain 508195455

MBA HRM

Roll No.

A good compensation package is important to motivate the employees to increase the organizational productivity. Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals. Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose. The most competitive compensation will help the

organization to attract and sustain the best talent. The compensation package should be as per industry standards.

Strategic Compensation Strategic compensation is determining and providing the

compensation packages to the employees that are aligned with the business goals and objectives. In todays competitive scenario
7

Asad Hussain 508195455

MBA HRM

Roll No.

organizations the valuable

have

to

take The

special

measures

regarding have

compensation of the employees so that the organizations retain employees. compensation systems changed from traditional ones to strategic compensation systems. Direct Compensation Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits 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.

Asad Hussain 508195455

MBA HRM

Roll No.

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

Asad Hussain 508195455

MBA HRM

Roll No.

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 Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.

10

Asad Hussain 508195455

MBA HRM

Roll No.

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.

11

Asad Hussain 508195455

MBA HRM

Roll No.

Insurance Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization. Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free.

Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age. Holiday Homes Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. Flexible Timings

12

Asad Hussain 508195455

MBA HRM

Roll No.

Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. The key provisions in a budget enable the organization to evaluate itself in terms of progress made to achieve its stated goals and objectives. Because staff is a prime resource for the organization, establishing and measuring goals in relationship to salary and staff size are prudent objectives of the wage and salary administration programs. It the organization is able to maintain the proper sized staff and offer an affordable yet competitive total pay package to each employee it attempts to attract, retain, and motivate, the organization may win in several ways: it will have the best staff to help it to accomplish its gals, and its pay package should be affordable due to the effort and concern demonstrated throughout the organization to the development of a sound budget planning program for its staff. The Budget Process:
Strategy Sessions with Senior Management Distribute Budget Worksheets and Instructions Training Sessions * Department Managers * Subordinates Staff Compile Statistical Data Collect the Budgets and Verify Data Follow-Up * Advice

13

Asad Hussain 508195455

MBA HRM
* Progress * Deadline

Roll No.

Analyze Forecasts Review and Revise Submit Final Budget Feedback from Managers Monitor Budgeted Versus Actual Performance

1) The process of budget is consisting above mentioned steps, among them the strategy sessions is important one which take first. In strategy sessions with senior management, we make decisions regarding the parameters for the next cycles salary increases. Here we must provide the senior management with results of the most recent research as a foundation for the pay increase recommendations presented. After the strategy has been decided with senior management, set the process in motion. Begin with disseminating information first, thorough written budget forms and second, through training sessions. 2) Distributing Budget Worksheets and Instructions: Before the training meetings, we should distribute the budget forms we will be using to supervisors and mangers so that they can become familiar with them prior to the meeting. When the budget worksheets are distributed to the participant in advance of the training sessions the group dynamics at the meeting are positively affected. Advance distribution
14

leads

to

greater

Asad Hussain 508195455

MBA HRM

Roll No.

familiarity with the forms more interaction in the meeting, and more teamwork during the actual budget process. If the forms are sprung on the participants at the meeting, resistance to the process may ensure. 3) Conducting Training Sessions: Introduce the process to manager within the organization by means of brief training sessions. The key to garnering support among the management levels is the presence of senior management, either with a senior management kickoff at invitation only sessions or with a special announcement stating that the decision has already been made to go ahead with the budget process. Either in the training sessions or in the announcement, discuss salary ranges and market data. These training sessions may in fact be in two stages if the size of the organization warrants: Stage 1: Unit or department mangers Stage 2: Lower level or subordinate personnel COMPLETING THE BUDGET: Regardless of the method of human resource information system (HRIS), computerized or manual, it is essential that the individuals actually preparing the budgets have access to accurate and upto-date information regarding all the members of their staff. Follow these seven steps to complete the budget process:

15

Asad Hussain 508195455

MBA HRM

Roll No.

Step -1) Collect and verify data: It is extremely important that if the organization commits to a staff budget process the requisite resources are committed to verifying the accuracy of the data collected. If errors are allowed to go undetected, they will surface later at the expense of credibility to the wage and salary administration function. Step 2) Compile statistical data: Once the data has been verified, the data must be compiled so that analysis can begin. The data must be presented in such a way that is consistent with the method of HRIS currently in place. For example, on a manual HRIS system preprinted forms with categories presented in comparable form will permit easy transfer of figures. Similarly, automated HRIS systems will plan for formatted budget forms that can provide easy-to-read data entry capabilities as well as categories/ captions consistent with the existing programs. Step 3 ) Analyze forecasts: Analyze the compiled forecasts to determine whether the guidelines determined by senior management have been complied with and to identify those areas that require additional work and alternation. Step 4 ) Review and revise: After reviewing the data, determine which budgets require additional work or revision. Then meet with those mangers to work out a solution within the guidelines of the program established by senior management.

16

Asad Hussain 508195455

MBA HRM

Roll No.

Step 5 ) Submit final budget: After the numbers have received final adjustments and revisions, report the final budget to senior management for its approval. Step 6 ) Report to managers: The next step is to report back to unit managers the final results as approved by senior management. Unit mangers should retina a copy of the finalized budget for audit and review purposes. Step 7 ) Monitor budgeted vs. actual figures: Throughout the year, we are responsible for monitoring the budget process by reviewing every salary action request. This monitoring will ensure that each recommendation has the proper authorization. We must also report the impact of each action on the staff budget. These all the steps which are important ingredient of making budget, but the one thing is very important in whole process the motive and the strategy made should be clear which is easily understandable and also achievable not so hard and not so rough. So the budget process is more effective and helpful to achieve companys goals when the managers are sincere to their job and also making the budget according to their financial boldness.

PRACTICAL STUDY OF THE ORGANIZATION: As per the instructions of Allama Iqbal Open University I have to visit one organization of my choice and have to study a topic allotted to me according to my roll number. As my roll number is
17

Asad Hussain 508195455

MBA HRM

Roll No.

508195455, my topic number is 5, which is Designing a Staff Budget Programme. Keeping in view the instructions of AIOU I selected PTCL .

Introduction PTCL is the largest telecommunications provider in Pakistan. PTCL also continues to be the largest CDMA operator in the country with 0.8 million V-fone customers. The company maintains a leading position in Pakistan as an infrastructure provider to other telecom operators and corporate customers of the country. It has the potential to be an instrumental agent in Pakistans economic growth. PTCL has laid an Optical Fibre Access Network in the major metropolitan centers of Pakistan and local loop services have started to be modernized and upgraded from copper to an optical network. On the Long Distance and International infrastructure side, the capacity of two SEA-ME-WE submarine cable is being expanded to meet the increasing demand of International traffic. Vision To be the leading Information and Communication Technology Service Provider in the region by achieving customer satisfaction and maximizing shareholders' value'. The future is unfolding around us. In times to come, we will be the link that allows global communication. We are striving towards mobilizing the world for the future. By becoming partners in innovation, we are ready to shape a future that offers telecom services that bring us closer. Mission To achieve our vision by having:

18

Asad Hussain 508195455

MBA HRM

Roll No.

An organizational environment that fosters professionalism, motivation and quality

An environment that is cost effective and quality conscious Services that are based on the most optimum technology "Quality" and "Time" conscious customer service Sustained growth in earnings and profitability

Core Values

Professional Integrity Customer Satisfaction Teamwork Company Loyalty

Company Profile PTCL is all set to redefine the established boundaries of the telecommunication market and is shifting the productivity frontier to new heights. Today, for millions of people, we demand instant access to new products and ideas. More importantly we want them for their better living standards with increased values in this ever-shrinking globe of ours. We are setting free the spirit of innovation. PTCL is going to be your first choice in the future as well, just as it has been over the past six decades. Broadband Pakistan: PTCL Broadband is the largest and the fastest growing Broadband service in Pakistan. In less than two years of it launch, PTCL has acquired over 150,000 Broadband customers in over 150 cities and towns across Pakistan, leading the proliferation and awareness of Broadband services across Pakistan. With its entry in this market segment, PTCL opened up a broadband culture in Pakistan, where till a couple of years back there was very little awareness in the country about broadband & high speed internet services. PTCL made the broadband technology affordable by lowering the barriers to entry, by
19

Asad Hussain 508195455

MBA HRM

Roll No.

geographically bringing the service within the reach of a common user across Pakistan and by continuous improvements in customer care for the service. Unique offers that makes PTCLs Broadband unmatchable are special packages for the student segment, FREE modem and installation, FREE dial up service for its Broadband customers and FREE access to movies, music, classical Pakistani dramas, cricket matches, gaming, educational and religious content on PTCLs entertainment portal BUZZ, (made exclusive only to PTCL Broadband subscribers). PTCL also offers multiple FREE personalized e-mail accounts exclusively to its broadband users. In addition, PTCL recently doubled its broadband speed for all its existing and new customers at the same price, making 1 MB as its minimum offered speed. For a connection you simply dial 0800 8 0800 or visit www.ptcl.com.pk Theoretical Study of the Company w.r.t. the topic allotted Roles and Responsibilities Supervisors so in carry much with of the responsibility guidelines. for staff compensation administration within the departments and must do accordance these Department administrators, senior business officers, human resource directors and managers, home department coordinators and supervisors are responsible for assuring their departments compliance with staff posting and classification procedures, including approval and recordkeeping requirements. These Staff Wage and Salary Guidelines provide departments with a framework around which those internal procedures must be developed and executed. From time to time, the Staff Wage and

20

Asad Hussain 508195455

MBA HRM

Roll No.

Salary

Guidelines

may

be

modified

because

of

special

circumstances that require additional restrictions, changes in procedure, or levels of approvals. Failure to comply with the requirements set forth in university and department policies will be cause for disciplinary action, up to and including termination. The Pay Roll Deptt is responsible for the following: Establishing Company compensation principles, Determining salary and wage guidelines. Establishing position descriptions in accordance with Company business practices that comply with Govt of Pakistan laws Determining the classification of positions, Conducting job audits, Ensuring departments utilize job descriptions that most appropriately match work performed, Conducting and participating in compensation surveys Devising departments on various compensation matters based on both internal and external benchmarking, and Monitoring departmental compliance with staff posting and classification procedures. Review and Approval Requirements 1. One-Level-Up Support

21

Asad Hussain 508195455

MBA HRM

Roll No.

The employees direct supervisor and the supervisors supervisor review request and approve submission to next level. 2. Wing/Department Review and Support The most senior position in the department (e.g. EVP, SEVP, etc.) reviews request and approves all discretionary bonuses, mid-year pay increases, overload compensation, merit increases in excess of 3% for eligible staff for next fiscal year. 3. Review and Approval Modified Staff Wage and Salary Guidelines The Executive Vice President reviews request and determines final approval for all discretionary bonuses, mid-year pay increases, overload compensation, merit increases in excess of 3% for eligible staff Principles 1. Minimum Pay All departments must comply with Govt of Pakistan law including minimum pay requirements, minimum wage and salary rates, time and record keeping, overtime pay requirements and pay periods

22

Asad Hussain 508195455

MBA HRM

Roll No.

2. Accountability The authority, accountability and responsibility for staff

compensation administration lies with supervisors, who are required to execute employment actions in accordance with the policies, practices and guidelines established by the university and additional requirements that may be established by their departments. Supervisors are required to consult with the person to whom they report on all employment decisions and transactions affecting the employees that report directly to them. This requirement for one Staff Wage and Salary Guidelines level up review and support applies to all employment decisions including, but not limited to, the determination of, or changes in, salary and wages rates, bonus compensation, perquisites, budget allocation, job postings, employment offers, changes in the terms and conditions of employment, hiring, promotions, demotions, reorganizations, and terminations. 3. Pay Practices Supervisors are accountable for and expected to establish and maintain pay in accordance with these staff wage and salary guidelines and the additional requirements which are prescribed by the president, executive vice president and senior vice president for administration. When determining wage or salary rates or other compensation, perquisites and non-standard benefits, factors such as marketplace comparisons, the education

23

Asad Hussain 508195455

MBA HRM

Roll No.

and experience of the individual, fair and equitable distribution among employees in the same or similar position classifications, individual considered. 4. Pay Comparisons The compensation staff in Payroll Section is available to assist departments in reviewing compensation on a case-by-case basis. The compensation staff will provide departments with salary/wage averages by position. Departments should utilize the recommended hiring ranges as a guide to establishing starting wage and salary rates for newly hired, rehired or transferred staff. 5. Funding Funding for staff compensation is allocated during the budget approval process each fiscal year. Changes to this allocation may only be made during the annual budget approval process or through a specific mid-year budget amendment or modification request, which has been reviewed and approved by the competent authority. performance, and available funding must be

6. Annual Pay Increases

24

Asad Hussain 508195455

MBA HRM

Roll No.

Annual staff pay increases must follow the Review and Approval Requirements and limitations described in these guidelines. Annual staff pay increases are merit-based and should vary according to individual performance and the amount of funding available. Every employee should be informed, in writing, of his or her annual merit increase and new rate of pay, if applicable, before July 1. The reason for the amount of the increase, or lack thereof, should be described and documentation must be retained in the employees file. Performance evaluations be given the should to be based comment on on performance the evaluation the employees

sustained over time and documented in writing. Employees must opportunity Both the documentation. evaluation and

comments must be retained in the employees file. 7. Pay for Transfers and Rehires Employees who transfer or are rehired into posted positions should receive compensation appropriate to the new position, their experience and qualifications and available funding as described in number three above. Employees are not guaranteed the rate of pay associated with their previous position or guaranteed any increase because of a move to a new position.

25