CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION TO THE STUDY

The sound compensation system is hallmark or accomplishing its goals of

organizations success and prosperity. The success and stability of organization is
measured with pay-package it provides to its employees. As organizations
continue to face mounting competitive pressures, they seek to do more with less
and do it with better quality. As goals for sales volume, profits, innovation and
quality are raised, employment growth is often tightly controlled and in many
cases substantial cuts in employment have been made. To accomplish more with
fewer employees call for effective management of human resources. A key factor
in promoting effective delivery of goods and services is provision of a
performance base compensation system to the employees.
A good compensation system is important to motivate the employees to increase
the organizational productivity. Compensation helps in running an organization
effectively. Employees typically depend on wages, salaries, and so forth to
provide a large share of their income and on benefits to provide income and
health security. For employee, compensation decisions influence their cost of
doing business and thus, their ability to sell at a competitive price in the product
market.
In addition, compensation decisions influence the employers ability to compete
for employees in the labour market (attract and retain), as well as their attitudes
and behaviors with the employer. The focus of employee compensation literature
has been on defining these dimensions, understanding why organizations differ on
them (determinants), and assessing whether such differences have consequences
for employee attitudes and behaviors, and for organizational effectiveness.
The project entitled “STUDY ON EFFECTIVENESS OF EMPLOYEE
COMPENSATION MANAGEMENT SPECIAL REFERENCE TO MOOPAN
AUTOMOBILES,TIRUR.”Give way to know the employee compensation proess
of MOOPAN AUTOMOBILES,TIRUR and attempted to provide some ways so
as to make employee compenstaion more effective.

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1.2 RESEARCH PROBLEM

My research problem is “A STUDY ON EFFECTIVENESS OF

EMPLOYEE COMPENSATION MANAGEMENT WITH SPECIAL
REFERENCE TO MOOPAN AUTOMOBILES, TIRUR”

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1.3 OBJECTIVES OF STUDY

PRIMARY OBJECTIVES

To study and analyse the effectiveness of compensation management


system with special reference to “MOOPAN AUTOMOBILES TIRUR”

SECONDARY OBJECTIVES
 To study about employee satisfaction over compensation.
 To study the factors influencing the compensation system.

To know the present compensation system in the firm.

To study about the payment method and the reward plan followed.

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1.4 SCOPE OF THE STUDY

An ideal compensation system will have positive impact on

the efficiency and result produced by employees. it will encourage the employees
to perform better and achieve the standards fixed. A good compensation system is
important to motivate the employees to increase the organisation productivity. It
will raise the morale , efficiency and cooperation among the workers. It, being
just and fair would provide satisfaction to the workers.

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1.5 NEED AND SIGNIFICANCE OF THE STUDY

The needs of this study is Compensation and benefits programs are ways
employers recruit new hires and keep loyal talent from to better jobs. Understand
what are different workers by talking to existing employees or take a look at
industry data.

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1.6 LIMITATIONS OF THE STUDY

No project is without limitations and it becomes essential to

figure out the various constraints that we underwent during the study. The
following points in this direction would add to our total deliberations

 The study is based upon only a sample from the population.


 Retrieval of information from the records and journals consumed
considerable time.
 There is a chance for the respondents to give biased information as
the questionnaire is given to them through their superior.

 The employees were busy with their daily schedule and it was very
much difficult for them to give time.

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
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1.7 INDUSTRY PROFILE

The Indian automobile industry seems to come a long way since the first car that
was manufactured in Mumbai in 1898. The automobile sector today is one of the
key sectors of the country contributing majorly to the economy of India. It
directly and indirectly provides employment to over 10 million people in the
country. The Indian automobile industry has a well established name globally
being the second largest two wheeler market in the world, fourth largest
commercial vehicle market in the world, and eleventh largest passenger car
market in the world and expected to become the third largest automobile.The
growth of the Indian middleclass along with the growth of the economy over the
last few years has resulted in a host of global auto giants setting their foot inside
the Indian Territory. Moreover India also provides trained manpower at
competitive costs making the country a manufacturing hub for many foreign
automobile companies. India proves to be a potential market as compared to most
of the other countries which are witnessing stagnation as far as automobile
industry growth is concerned.
With a scintillating 2.3 million units produced in 2008 the Indian automobile
industry bagged the position of being the ninth largest in the world. Following
economic liberalization, Indian domestic automobile companies like Tata Motors
Maruti Suzuki and Mahindra and Mahindra expanded their production and export
operations in and across the country and since then the industry has only shown
signs of growth. The automobile industry comprises of heavy vehicles (trucks,
buses, tempos, tractors), passenger cars, and two-wheelers.India is a very
favorable market for small cars be it production, sales or export. Since the Indian
automobile industry is the largest manufacturer of small cars companies like
Hyundai and Nissan Motors export about 2,40,000 and 2,50,000 annually. India
emerged as Asia's fourth largest exporter of automobiles, behind Japan, South
Korea and Thailand. The Indian automobile exports registerd a 22.30 percent
growth in the year 2009. The growth trend was as follows:Two Wheelers-
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MAJOR PLAYERS IN TWO-WHEELERS
Hero motors
Hero Motocorp ltd., fomally Hero Honda, is an Indian motorcycle and scooter
manufacturer based in New Delhi, India. The company is the largest two wheeler
manufacturer in the world. In India, it has a market share of about 46% share in
two wheeler category. The 2006 Forbes 200 Most Respected companies list has
Hero Honda Motors ranked at #108.0n 31 march 2013, the market capitalization
of the company was Inr 308 billion.

Hero Honda started in 1984 as a joint venture between hero cycles of India and
Honda of Japan. In 2010, when Honda decided to move out of the joint venture,
Hero Group bought the shares held by Honda. Subsequently, in August 2011 the
company was renamed Hero MotoCorp with a new corporate identity.

In June 2012, Hero Motocorp approved a proposal to merge the investment arm
of its parent Hero Investment arm of its parent Hero Investment Pvt Ltd. Into the
automaker. The decision comes after 18 months of its split from Motors.

Yamaha motors
Yamaha motors are a Japanese manufacturer of motorcycles, marine products
such as boats and outboard motors, and other motorized products. The company
was established in 1955 upon separation from YamahaCorporation, and is
headquartered in Iwata, SHIZUOKA, Japan. Yamaha Motor conducts global
development, production and marketing operations through 109 consolidated
subsidiaries as of 2012.Led by Gnocchi Kawakami, the company's first president,
Yamaha Motor began Production of its first product. The YA-I in 1955.The
125cc motorcycle won the 3rd Mount Fuji Ascent Race in its class. And launched
a legacy by which the company continues to pursue motorsports as a means to
accelerate development.

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TVS motors
TVS was established by T.V. Sundaram lyengar. He
began with Madurai's first bus service in 1911 and founded T.V.Sundaram
lyengar and Sons Limited, a company that Consolidated its presence in the
transportation business with a large fleet of trucks and buses under the name
of Southern Roadways Limited. When he died in 1955 his sons took the
company ahead with several forays in the automobile sector, including
finance, insurance, and manufacture of two-wheelers, tires and components.
The group has managed to run 33 companies that account for a combined
turnover of nearly $3 billion.
Over the years TVS Motor has gown to be the largest in the Group, both in
terms of size and turnover, with four state of the art manufacturing plants in
Hosur, Mysore and Nalagarh in India and Karawang in Indonesia. TVS
Motor is credited with many Innovations in the Indian automobile
industry,notable among them being the introduction of India's first two-seater
moped, the TVS 50cc. The company became the leader in its category of sub
100
cc mopeds, having sold 7 million units. It also introduced the TVS scooty,
which is India's second largest brand in the scooterette segment. The TVS
Jive launched in November 2009 became India's first clutch-free motorbike
aimed at a stress free rider experience while the unisex scooter TVS Wego is
targeted at urban couples, featuring body-balance technology for easier
handling. On I June 2012, TVS Motors reported a dip of 5% in its total sales
for May 2012. In July 2012, TVS Motors and BMW Motorrad were reported
to be in talks for technology sharing. On 8 April 2013, BMW Motorrad and
TVS Motor Company signed a cooperation agreement with the aim to
develop and produce motorcycles in the segment below 500cc.

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 In July 2013, TVS Motor announced plans to construct a
motorcycle assembly plant in Uganda and to introduce two new models suited
to the East African environment. The new plant is expected to become
operational in 2014.

Mahindra motors
Mahindra Motors is an indian multinational automobile
manufacturing corporation headquartered in Mumbai, Maharashtra, India. It
is one of the largest vehicle manufactures by production in india and the
largest seller of tractors across the world. It is a part of Mahindra group, and
indian conglomerate.
It was ranked as the 10th most trusted brand in India, by
The Brand Trust Report. Indian study 2014.1t was ranked 21st in the list of
top companies of India in Fortune India 500 in 2011.1ts major competitors in
the Indian market include Maruti SUZUKI, Tata Motors, Ashok Leyland,
Toyota, Hyundai, Mercedes-Benz and others

Honda motors
Honda Motorcycle and Scooter India, Private Limited is
the wholly owned Indian subsidiary of HERO Honda, kinetic Honda Motor
Ltd and Honda Siel Cars India. When Keita Muramatsu arrived in India as
CEO of Honda Motorcycles &Scooters India in 2011. The fully-owned
subsidiary of Honda Motor Company churned out 1.6 million bikes annually.
Today, with a capacity of 3.6 million and a planned production of 4.5 million
by 2015-16, growth has

been astounding. It was one of the reasons that helped Honda to conquer
India, the world's largest two-wheeler market

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Bajaj Auto Pvt Ltd
Bajaj Auto Limited is Indian two-wheeler and three-wheeler
manufacturing company. Bajaj Auto manufactures and sells motorcycles,
scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was
founded by Jamnalal Bajaj in Rajasthan in the 1930s. It is based in Pune,
Mumbai, with plants in Chakan (Pune), Waluj and Pantnagar in Uttarakhand.
The oldest plant at Akurdi (Pune) now houses the R&D Centre 'Ahead'.
Bajaj Auto is the world's third-largest manufacturer of
motorcycles and the second-largest in India. It is the world's largest three-
wheeler manufacturer. On 31 March 2013, its market capitalization was NR
520 billion (US$9.57 billion), making it India's 23rd largest publicly traded
company by market value. The Forbes Global 2000 list for the year 2012
ranked Bajaj Auto at 1,416.
Motorcycles in production are the Platina, Discover, Pulsar and Avenger.
Bajaj also distributes motorcycles in India for other manufacturers, such as
the Kawasaki Ninja 250R, the Ninja 650R and new for 2012, the KTM Duke
200. In FY 2012-13, it sold approx. 3.76 million motorcycles which
accounted for 31% of the market share in India. Of these, approx. 2.46
million motorcycles (66%) were sold in India and remaining 34% were
exported
INDIAN TWO WHEELER INDUSTRY
India is the largest manufacturer in the world, it stand next only to Japan
and China in terms of number of two wheelers manufactured
and sold respectively. The Indian motor cycle industry can broadly categorized
in toIndian motor cycle and indo-Japanese motor cycle, the indo-Japanese motor
cycle segment is dominated by hero group, Bajaj and Escorts in collaboration
with Japanese vehicle manufactures Honda, Kawasaki & Yamaha respectively.
The Indian motorcycles segment is dominated by Bajaj, Escort & Enfield. In the
motorcycles sales in western region leads with a market share of 40% of the total
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 sales. South & North region come second & third with in the market share of
28% & 17.5% of total motorcycles sales respectively.Bajaj auto began trading in
improved VESPA Scooters in 1948. Meanwhile Automobile product of India
(API) Commenced production of scooters in the country in the early 50's until
1958. API & Enfield were only producers of two-wheelers in India. However,
Bajaj signed a technical collaboration in 1960 With Piaggio of Italy to produce
Bajaj scooters. This deal expired ill4971. The coordination of motorcycles
manufactures was no different. Until the mid-80's, there were only three major
motorcycles manufactures in India namely Rajdhooth, Escorts and Enfield. The
two wheeler market was opened to foreign manufactures in the mid 80s, the
industry, which had seen a smooth ride before, faced fierce foreign competition.

Motorcycle companies like the Yamaha, Honda, Kawasaki

set up shop in India in Collaboration with various Indian two wheelers
companies. Companies like Escorts, Rajhooth, and faced immense competition
from 100cc Japanese technology bikes. Bikes manufactured by Hero Honda, the
only manufacturing four-strokes at that time, gained massive popularity, in the
mid 80's Kinetic introduced a gearless scooter in collaboration with Honda. This
scooter instantly popular with the young generation, especially people who
found too difficult to geared scooters. The introduction. of scooters created
another Segment for people such as women and teenagers who could not get
used either motorcycles or gearless scooters. Many companies such as Kinetic,
TVS and Hero also started manufacturing mopeds that proved immensely
popular with people who wanted a simple riding machine.
EMPLOYEE COMPENSATION
Employee compensation refers to the benefits (cash, vacation , etc.) that an
employee receives in exchange for the service they provide to their employer.
According to Edwin B Flippo

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“The function of compensation is defined as the adequate and equitable
remuneration of personnel for their contributions to the organizational
objectives.”
Employee compensation is the essence of human resource management.
Different organizations establish different types of payment scheme to satisfy
their workers. Some rely to introduce monetary benefits along with other type
of fringe benefits, monetary or non-monetary, provided to employees in
exchange of their contribution and service to the organization. But
compensation does not refer to intrinsic reward. It comprises only the
extrinsic rewards.
Employee compensation is generally one of the largest
costs or expenses for any organization approximately 92% of the working
population in the United States are made of employees earning compensation
from their employer. There are many different types of compensation paid to
employees. The following are a few examples of the compensation paid to
employees.

 cash compensation consisting of wages or salaries

 retirement plans (employer compensation)
 life insurance and disability insurance
 paid leave for is vacation and sick
 employer-paid health insurance

A standard base pay program offers fixed salary ranges for each position type
for employees performing the standard duties of their jobs. Set up minimum
and maximum levels within those pay ranges to account for variations in
experience and skill level. When setting the base pay structure determine
where the firm company falls within the firm own industry, as well as
competing industries that may also offer job opportunities for the firm
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employees. The firm can use internet to find industry-standard salary levels
for specific jobs in specific geographical areas.
Once the firm base pay structure is in place, most companies then set up a
merit pay program that will take the employee through the salary range for
their position at a performance-driven speed. This comes into play when the
employee‟s managers do annual employee performance reviews. The
downside of this is that employees being to see it as a „given‟ that they will
get a salary increase after each evaluation instead of a motivation to perform
better in their jobs. For this reason, more companies are moving toward more
of a reward-based compensation style also called Incentive Compensation.
Compensation describes the cash rewards paid to employees in exchange for
the services they provide. It may include base salary, wages, incentives and/or
commission. The compensation includes cash rewards as well as any other
company benefits.

COMPENSATION STRATEGY
Defining a compensation strategy is an important activity for all companies,
including startups. The compensation strategy must be:
 Reasonably competitive such that it attracts and retain quality people.
 Structure to ensure that employee’s efforts are directed to
achieving the company’s goals.
 Your compensation strategy must be structured to best meet your
unique business circumstances.
As a startup, you may not be able to compete with large companies on salary.
Therefore, you should consider a combination of options to attract and retain
key employees.
Do not underestimate the value of the advantage or perquisites that your
company has to offer that may not be readily available in larger companies-

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 opportunities for interesting work, lack of hierarchy, flexible environment,
and so on.
Some people are motivated by the desire to be on the leading edge of
scientific or technological advances. They may take less pay to work for a
startup if they believe in its future and the work it has to offer.
SALARY AND WAGES
A salary (or wage) is a fixed amount paid in exchange of
an employee‟s services. For full-time employees, salary is generally
described in annual, monthly, bi-weekly or weekly amounts. For part time
employees, it is generally described as hourly amount.

To determine an appropriate salary and/or salary range that your company is

willing to pay for a position, you must:
 Establish the value of the position based on your
organizational requirements
 Understand what the market is paying for a similar position

Incentives: drivers in attracting the best employees

Compensation can be divided into salary, benefits and
incentives while salary and benefits must be competitive, incentives are the
most
likely drivers of attracting and retaining the best employees in startups. There
are three key types of incentives:

1. Bonus

Individuals are rewarded based on attainment of performance based
goals (individual, team and/or company).

Goals must be realistic and closely matched to the business and
people involved.

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 
Payout potential should be large enough to be significant to the
individual.

Bonuses can be setup to directly drive and support the company‟s
needs
(for example, profitability, annual results, successful completion of
projects and/or significant project milestone).

2. Profit sharing

Payment is tied to company profits.

A pre-determined percentage of profit is shared among all employees.

Profit sharing bonuses are generally paid out once a year in the
form of cash or on a deferred basis.


3. Stock options

An individual receives the option to buy company share for a set
price during a specified time frame

0ption can be exercised by the individual at any time during the
agreed-upon term and subject to any vesting schedule.

Stock options are often part of management‟s executive compensation
but may be offered to key employees in lieu of higher salary-especially
where the business is not yet profitable and/or cash flow is constrained.

If the business does well and the company‟s stock rises, the holders
of the options share in the financial benefits.

In general, if the company permits a long period from the date of
issue to the last date for exercising the option, it will encourage the
employee to stay with the company and be fully committed to its
success.

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1.8 COMPANY PROFILE
ABOUT TVS
TVS motor company is the third largest two- wheeler
manufacturer in India and one among the top ten in the world, with annual
revenue of more than Rs 10,998 Cr in 2015-16 (around USD 1.6 billion) and
is the flagship company of the, USD 7.20 billion in 2014-15, TVS group. The
company has annual sale of 2.5 million units a year. TVS motor company is
also the 2nd largest exporter in India with exports to over 60 countries.
TVS motor company ltd(TVS motors), member of the
TVS group, is the largest company of the group in terms of size and turnover
with more than 2.8 Cr customers riding a TVS bike. Mr. Venusrinivasan the
chairman of TVS motor company has led by example, winning many laurels
including the prestigious “Padma shri” award “order of diplomatic service
merit” medal from Korean president, the JRD Tata corporate, the star of Asia
award by Business week.
Today TVS motor function through a nationwide network
of 3500 touch points including dealers authorized service centers and other
certified points across the states in India.

HISTORY OF THE COMPANY

TVS was established by T.V.Sundaramiyengar. Sundaramiyengar was born in

1877 in Thirukkurungudi in the Thirunelveli district of Madras presidency,
British India. He began with Madurai‟s first bus service in 1911 and founded
T.V Sundaramiyengar and sons limite, a company that consolidated its
presence in the transportation business with a large fleet of trucks and buses
under the name of southern roadway limited. When he died in 195 his sons
took the company ahead several forays in the automobile sector, including
finance, insurance, manufacture of two- wheelers, tyres, andcomponents. The

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group has managed to run 33 companies that account for a combined turnover
of nearly $3 billion.
TVS motor company ltd, the flagship company of TVS
group is the 3rd largest two- wheeler manufacturer in India. In india
manufactures a wide range of two- wheelers from mopeds to racing inspired
motor cycles. The company is having their manufacturing plants at Hosur in
Tamil Nadu, Mysore in Karnataka and Solal in Himachal Pradesh. They also
have one unit located at Indonesia. Their subsidiaries include Sundaram auto
components ltd, TVS motor company (Europe) BV, TVS motor (Singapore)
pvt ltd, TVS energy ltd and TVS housing ltd. TVS motor company ltd is a
part of Sundaram clayton group in TVS group of companies. In the year 1979
Sundaram- Clayton ltd started moped division at Hosur to manufacture 50
mopeds. In the year 1982, the company entered in to technical know- how
and assistance agreement with Suzuki Motors Co Ltd of Japan and in the year
1985, they incorporated new company Lakshmi auto components Pvt Ltd for
the manufacture of critical engine and transmission parts. In the year 1986,
the company acquired the assets of the moped divisions from
Sundaramclayton ltd. Also, the name of the company was changed from Indo
Suzuki motor cycles ltd to TVS Suzuki ltd. In the year 1992, launched two
modes of motorcycle namely, Samurai and shogun and in the year 1993,
launched TVS Scooty. During 1999 to 2000, TVS Suzuki ltd amalgamated
with Sundaram auto engineers ltd, an unleashed group company which was
incorporated in the year 1992.

TVS MOTOR COMPANY LIMITED

TVS motor company, the flagship company of the TVS group, is India‟s third
largest two- wheeler manufacturer and one among the top ten in the world.
The TVS group was established back in 1911, when the founder of the
company, Shri T.V.Sundaramiyengar created an enduring business, led by a
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 family of like- minded workers and managers united by a set of high, yet
sharesprinciples. Driven by this inspiration, the TVS group has today
emerged as India‟s leading player in the automobile and automotive
components industries. The group has 30 companies employing a workforce
of around 40,000 people. TVS motor company is the largest among the group
companies terms of size and turnover.

Today TVS motor company has,


4 manufacturing plants.



16% market share in the two- wheeler industry in India.



Product offerings in all segments of the two- wheeler industry in India.



Product offerings for the three wheeler industry in India



More than 15 million customers.



Products exported to more than 50 countries world wide.

Leading from the front, the chairman of TVS motor

company, Mr. VEnusrinivasan, has won many laurels for the company. The
most recent awards conferred on him, while being head of the confederation
of Indian industries include the Honorius Causa Doctor of Science (D.Sc) for
his outstanding contributionin the field of quality movement and
manufacturing excellence, the civilian honour „Order of Diplomatic Service
Merit‟(Heung- in Media) conferred by the president of the Republic of
Korea, his excellency lee myung- bakin recognition of his valuable
contribution in promoting Korea- India bilateral relations and the prestigious

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honour by the president of India with the padmashri award for his valuable
and outstanding contributions in the field of trade industry.

The company‟s penchant for quality resulted in it becoming the first two-
wheeler manufacturer to win the coveted Deming award in 2002. The year
2007 also proved to be a special one for the company as in that year, it
became the first Indian automobile manufacturer to roll out many as seven
new products on a single day, a testimony of manufacturing process. TVS
motor company is committed to achieve total consumer satisfaction through
excellence in quality, its management philosophy based on five pillars of
TQM (total qualitymanagement). Quality awareness therefore percolates
through the entire organization from new product development to sales
service.
TVS motor company has international presence in more than 50 countries in
Asia, African and Latin American continents and will enter more
international markets in due course. In India, the company functions through
a strong network of sales, service, authorized service centers and other
certified service points.

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 1.9 RESEARCH METHODOLOGY

Research methodology is the way to systematically solve

the research problem. it may be understood as a science of studying how
research is done scientifically. In this we study the various steps that are
generally adopted by researcher in studying his research problem along with
logic behind them.
Methodology gives us the blue print of activities to be
carried out systematically in order to complete the study successfully. The
methodology of our study has several steps. They are

Formulating the research problem



Extensive literature review



Developing the objectives



Preparing the research design including sampling design.



Collecting data



Analyze the data



Generalization and interpretation



Preparation of the project report or presentation of result-formal write
ups of conclusion reached

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1.9.1 TYPES OF RESEARCH

The research design adopted is descriptive research design. Descriptive study

is to describe the state of view as it exists as present. It is a fact finding
investigation.

DESCRIPTIVE RESEARCH
The main goal of this type of research is to describe the data and
characteristics about what is being studied. The idea behind this type of
research is to study frequencies, averages, and other statistical calculations.
Descriptive research is a study designed to depict the participants in an
accurate way. The three main ways to collect this information are:
observational, defined as a method of viewing recording participants. Case
study, defined as an in-depth Study of an individual or group of individuals.

1.9.2 PERIOD OF THE STUDY

The period of the study is 21 days (Dec 01-Dec 31 ).

1.9.3 SAMPLE SIZE

Samples of 50 employees in MOOPAN AUTOMOBILES TIRUR
were taken for the study.

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 1.9.4 SAMPLING METHOD
Purposive sampling method is used for collecting the required data
analysis.

SIMPLE RANDOM SAMPLING

A simple random sample is a subset of a statistical population in
which each member of the subset has an equal probability of being chosen.
An example of a simple random sample would be Samples of 50 employees
in MOOPAN AUTOMOBILES TIRUR were taken for the study.

1.9.5 POPULATION
The population includes employees in MOOPAN AUTOMOBILES
TIRUR.

1.9.5 SOURCE OF DATA

The data collected can be of two broad categories:

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1.9.6 STATISTICAL TOOLS USED
Data collected from the respondents were than analyzed with the help of
the following tools.
 Table
 Bar diagram
 Pie diagram

 Table
Table also known as number of diagram detailed points including the
statistical tools of table.
 Bar diagram
A bar graph is a visual tool that uses bars to compare data among
categories.
 Pie diagram
A pie diagram is used to show the break-up of the total into component
part in a pie diagram the length of each sector is proportional to the quantity.

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 CHAPTER- 2
REVIEW OF LITERATURE

Page | 26
REVIEW OF LITERATURE

An important principle of our human resources policy is

linking employees' compensation to their performance and enabling them to
share in the company's success. Regular benchmarking against competitors
and a globally standardized system help us to set base salaries in line with the
demands and responsibilities of each position. These salaries are
supplemented by performance-related compensation components and
extensive fringe benefits. In the emerging markets and developing countries,
too, the compensation levels are to be aligned to the local market conditions.
In keeping with the Human Rights Position, the aim should be to pay the
employees adequate salaries that ensure they and their families have an
appropriate standard of living.
Compensation administration is one of the most important
areas of human resource management because sound compensation policies,
programmes and their effective execution are essential to procure, maintain
and develop the human resource of the organization to get effective result
from them. It involves the selection, designing, development and direction of
programmes designed to implement compensation or incentive policy through
financial rewards. 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 compensation. 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 compensation costs and other related items”.

Page | 27
Edwin B Flippo
"The function of compensation is defined as the adequate
and equitable remuneration of personnel for their contributions to the
organizational objectives."
Compensation is a key factor in attracting and keeping the
best employees and ensuring that the organization has the competitive edge in
an increasingly competitive world. The Compensation Management
component enables to differentiate between the remuneration strategies and
those of competitors while still allowing flexibility, control and cost
effectiveness. It provides a toolset for strategic remuneration planning that
refl
ects the organization culture and pay strategies, and it empowers line
managers within a framework of flexible budget control.

Lawler 1990 & Ledford 1991

As another response to the drawbacks of job-based
systems, some organizations have turned to an alternative type of structure
based on individual characteristics such as
Skill or knowledge (Lawler. 1990; Ledford. 1991). The
idea is very simple. If you want employees to learn more skills and become
more flexible in the jobs they perform, pay them to do it. It is. However, "a
fundamental departure” because employees are now "paid for the skills they
are capable of using, not for the job they are performing at a particular point
in time" (Ledford, 1991, p.

Milkovich and Wigdor, 1991

Pay structures include definitions of pay averages and

ranges. Within ranges, especially those that are job based, individual
differences in pay are often determined through one or more "pay for
Page | 28
performance" programs such as merit pay, individual incentives, and group
incentives, gain sharing, profit sharing, and ownership.' In describing specific
programs, it may be useful to keep in mind a classification scheme based on
two dimensions (Milkovich and Wigdor , 1991): (a) whether pay changes are
rolled into the base (yes for merit pay, but not for most others), and (b) the
criterion (e.g., organization profits, group output, individual performance
appraisal) on which pay is based. The first dimension has implications for the
long-term accumulation of labor costs.
And the second dimension has consequences for the types of behaviors
encouraged (and by implication. discouraged) under the compensation
system.

Bretz et al.1992
Merit pay ties increases in base pay to individual performance. As a report by
Bretz et al. (1992) indicates, merit pay continues to he widely used in U.S.
companies. As such we give it and related activities such as performance
appraisal considerable attention here. The traditional approach to performance
assessment is often described as having the following features. First, there is a
focus on identifying individual differences in performance. These are
assumed to reflect differences in ability or motivation. By implication system
constraints on performance are not seen as significant. Second, his majority of
information on individual performance is collected from the immediate
supervisor. Peer and subordinate ratings are rare and where they do exist they
tend to receive lessweight than supervisory ratings (Bretz et al.. 1992). Third,
there is a policy of linking pay increases to performance appraisal results
(Bretz et al.. 1992). Fourth, the feedback under such systems tends to occur
infrequently, often once per year at the formal performance review session.
Fifth, the flow of feedback tends to be largely unidirectional, from supervisor
to subordinate.

Page | 29
 CHAPTER 3
DATA ANALYSIS AND INTERPRETATION

Page | 30
3.1 TABLE AND CHART SHOWING WORK EXPERIENCE IN
THE FIRM

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
0-1 Year 2 7%
1-3 Years 4 13%
3-5 Years 9 30%
5 Years & Above 15 50%
Total 30 100%

60%

50%

40%

30%
50%
20%
30%
10%
13%
7%
0%
0-1 Year 1-3 Years 3-5 Years 5 Years &
Above

INTERPRETATION

From the above graph it is analyzed that 50% of

respondents have above 5 years of experience, 30% of respondents have 3-5
years of experience, 13% of respondents have 1-3 years of experience & only
7% of respondents have 1 year of experience. This shows that most of the
employees are experienced.

Page | 31
 3.2 TABLE AND CHART SHOWING SATISFACTION
TOWARDS WORKING CONDITION

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Excellent 8 27%
Good 19 63%
Average 2 7%
Poor 1 3%
Very poor 0 0%
Total 30 100

WORKING CONDITION

1.2 0

1.4

EXCELLENT
GOOD
AVERAGE
3.2 8.2 POOR
VERY POOR

INTERPRETATION
From the above table and graph we can find that 63% of the respondents are
satisfied with the working condition of the organization. The rest 27% of the
employees are extremely satisfied whereas 7% of the respondents are not
satisfied with the working condition of the organization

Page | 32
3.3 TABLE AND CHART SHOWING SATISFACTION WITH
BONUS PROVIDED

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Extremely Satisfied 4 13%
Satisfied 21 70%
Neutral 3 10%
Dissatisfied 2 7%
Extremely Dissatisfied 0 0%
Total 30 100%

80%
70%
60%
50%
40%
70%
30%
20%
10% 13% 10% 7%
0% 0%
Extremely Satisfied Satisfied Neutral DissatisfiedExtremely Dissatisfied

INTERPRETATION

From the above table it is observed that 13% respondents

are extremely satisfied & 70% of respondents‟ are satisfied and 10% of
respondents are neutral, 7% of them are dissatisfied. This shows that most of
the respondents are satisfied.

Page | 33
 3.4 TABLE AND CHART SHOWING OVER TIME JOB

NO.OF
OPTION PERCENTAGE
RESPONDENT

Yes 20 67%
No 3 10%
Sometimes 7 23%
Total 30 100%

OVERTIME JOB

23%

10% YES
NO
SOMETIMES

67%

INTERPRETATION

From the above graph and table it is observed that the

67% of the respondents prefer to work overtime and 10% of the respondents
do not. The rest 23% of the respondents work overtime occasionally. Which
means most of them like to work overtime due to the allowances given to
them.

Page | 34
 3.5 TABLE AND CHART SHOWING TYPES OF
COMPENSATION PAYMENT SYSTEM

NO OF
OPTION PERCENTAGE
RESPONDENT
Fixed Salary 10 33%
Salary Plus Commission 17 57%
Others 3 10%
Total 30 100%

Fixed Salary Salary Plus Commission Others

0%
10%

33%

57%
0%

INTERPRETATION

From the above graph and table it is observed that the

33% of the respondents receives fixed salary and 60% of the respondents
receives salary plus commission whereas 7% of the employees receive
compensation of other types. So we can interpret that majority of them are
receiving salary plus commission for their work.

Page | 35
 3.6 TABLE AND CHART SHOWINGSATISFACTION
TOWARDS COMPENSATION POLICY

OPTIONS NO.OF RESPONDENTS PERCENTAGE

Extremely Satisfied 4 13%
Satisfied 23 77%
Neutral 1 3%
Dissatisfied 2 7%
Extremely Dissatisfied 0 0%
Total 30 100%

90%

80%

70%

60%

50%

40% 77%
30%

20%

10%
13%
3% 7%
0% 0%
Extremely Satisfied Satisfied Neutral DissatisfiedExtremely Dissatisfied

INTERPRETATION

From the above table and diagram it is observed that 13% of

respondents are extremely satisfied and 77% respondents are satisfied
towards the compensation policy of the organization, where as 3% of them
are neutral and 7% are dissatisfied towards the compensation policy.

Page | 36
3.7 TABLE AND CHART SHOWINGF PAYMENT BASED ON
EMPLOYEES SKILLS

NO OF
OPTION PERCENTAGE
RESPONDENTS
Strongly Agree 3 10%
Agree 24 80%
Neutral 2 7%
Disagree 1 3%
Strongly Disagree 0 0%
Total 30 100%

PAYMENT BASED ON EMPLOYEE SKILLS

0%
3%
7% 10%
STRONGLY AGREE

AGREE

NEUTRAL

DISAGREE

STRONGLY DISAGREE
80%

INTERPRETATION

According to the table and graph it is analyzed that 80% of

respondents agree that payment is based on employee skills and meanwhile
7% of the respondents are neutral with the statement, 3% of them disagree
and 10% of respondents strongly agree with that the payment is based on
employee skills.

Page | 37
3.8 TABLE AND CHART SHOWING PAYMENT FOR
OVERTIME DUTY

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Extremely Satisfied 4 13%
Satisfied 20 67%
Neutral 3 10%
Dissatisfied 3 10%
Extremely Dissatisfied 0 0%
Total 30 100%

PAYMENT FOR OVERTIME DUTY

70

60
67%
50

40

30 PERCENTAGE
20 13%
10% 10%
10
0%
0
EXTREMELY SATISFIED NEUTRAL DISSATISFIED EXTREMELY
SATISFIED DISSATISFIED

INTERPRETATION
From the above table and graph it is observed that 67% of
the respondents are satisfied whereas 13% are extremely satisfied, and 10%
of respondents are neutral and dissatisfied towards the payment of overtime
duty. So we can interpret that majority of the respondents are satisfied
towards the payment of overtime duty.

Page | 38
 3.9 TABLE AND CHART SHOWING
COMPENSATION BASED ON EXPERIENCE

NO OF
OPTION PERCENTAGE
RESPONDENTS
Strongly Agree 3 10%
Agree 23 76%
Neutral 2 7%
Disagree 2 7%
Strongly Disagree 0 0%
Total 30 100%

COMPENSATION BASED ON
EXPERIENCE
76%
80%

60% percentage

40%

20% 10% 7% 7%
0%
0%
STRONGLY AGREE NUETRAL DISAGREE STRONGLY
AGREE DISAGREE

INTERPRETATION

The above table and graph indicates that 10% of the

respondents strongly agree that the compensation is based on experience and
76% of them agrees with statement, 7% of the respondents are neutral and
disagrees with the statement. So we can interpret that most of the respondents
agrees towards the compensation based on experience.

Page | 39
3.10 TABLE CHART SHOWING SATISFACTION TOWARDS
SALARY INCREMENT

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Extremely Satisfied 3 10%
Satisfied 24 80%
Neutral 2 7%
Dissatisfied 1 3%
Extremely Dissatisfied 0 0%
Total 30 100%

90%
80%
80%
70%
60%
50%
40%
30%
20%
10%
10% 7%
3%
0%
0%
Extremely Satisfied Neutral Dissatisfied Extremely
Satisfied Dissatisfied

INTERPRETATION

The above graph and table indicates that 80% of the

respondents are satisfied and 10% of respondents are extremely satisfied
towards the salary increment. Whereas 7% of respondents are neutral and 3%
are dissatisfied towards salary increment.

Page | 40
 3.11 TABLE AND CHART SHOWING PAYMENT
OF COMPENSATION ON TIME

NO.OF
OPTION PERCENTAGE
RESPONDENT
Yes 14 47%
No 10 33%
Sometimes 6 20%
Total 30 100%

PAYMENT OF COMPENSATION ON TIME

20%

YES
47%
NO
SOMETIMES
33%

INTERPRETATION

As per indications observed from the graph and table

above 47% of respondents receive compensation on time and 33% do not get
payments on time, whereas 20% of the respondents receive payment
sometimes only.

Page | 41
 3.12 TABLE AND CHART SHOWING SATISFACTION
OF NON-MONETORY BENEFITS
NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Extremely Satisfied 4 13%
Satisfied 23 77%
Neutral 2 7%
Dissatisfied 1 3%
Extremely Dissatisfied 0 0%
Total 30 100%

90%
80% 77%

70%
60%
50%
40%
30%
20% 13%
10% 7%
3%
0%
0%
Extremely Satisfied Neutral Dissatisfied Extremely
Satisfied Dissatisfied

INTERPRETATION

From the table and graph it is observed that the 77% of

the employees feels that they are satisfied towards the non- monetary benefits
and 13% extremely satisfied, whereas 7% of the employees are neutral
towards the statement and 3% are dissatisfied. So we can interpret that
majority of them are satisfied towards the non-monetary benefits of the
organization.

Page | 42
 3.13 TABLE AND CHART SHOWING SALARY
MOTIVATES JOB PERFECTION

NO OF
5OPTION PERCENTAGE
RESPONDENTS
Strongly Agree 3 10%
Agree 24 80%
Neutral 2 7%
Disagree 1 3%
Strongly Disagree 0 0%
Total 30 100%

90%
80%
80%
70%
60%
50%
40%
30%
20%
10%
10% 7%
3%
0%
0%
Strongly Agree Agree Neutral Disagree Strongly
Disagree

INTERPRETATION

From the above table and graph and it is observed that

10% of the respondents strongly agree that salary motivates them to the job
perfection and 80% of respondents agree, meanwhile 7% them are neutral
with the statement and 3% disagree and 0% of respondents strongly disagree
with this statement.

Page | 43
 3.14EFFECT OF COMPENSATION ON THE MORALE
OF EMPLOYEE

NO OF
OPTION PERCENTAGE
RESPONDENTS
Strongly Agree 3 10%
Agree 22 73%
Neutral 2 7%
Disagree 2 7%
Strongly Disagree 1 3%
Total 30 100%

80%

70%

60%

50%

40%
73%
30%

20%

10%
10% 7% 7%
0% 3%
Strongly Agree Agree Neutral Disagree Strongly
Disagree

INTERPRETATION

From the above table and graph it is observed 10% of the

respondents strongly agree towards the effect of compensation on the morale
of employee and 73% agrees on the statement also 7% disagrees and are
neutral towards the statement.3% of respondents strongly disagrees towards
the effect of compensation on the morale of employee.

Page | 44
 3.15 TABLE AND CHART SHOWING SATISFACTION
TOWARDS PROMOTION POLICY

NO.OF
OPTIONS PERCENTAGE
RESPONDENTS
Extremely satisfied
3 10%
Satisfied 21 70%
Neutral 4 13%
Dissatisfied 2 7%
Extremely
Dissatisfied
0 0%
Total 30 100%

0% 0%
0%
7% 10% 0%

13% Extremely satisfied

Satisfied
Neutral
Dissatisfied
Extremely Dissatisfied
70%

INTERPRETATION

From the above table and graph it is observed that 70% of

the respondents are satisfied towards promotion policy of the organization
and 10% are extremely satisfied. Meanwhile 13% of the respondents are
neutral towards the statement, and 7% are dissatisfied.

Page | 45
 3.16 TABLE AND C HART SHOWING EMBARKS ON
PERIODICAL APPRAISAL

NO OF
OPTION PERCENTAGE
RESPONDENTS
Strongly Agree 3 10%
Agree 24 80%
Neutral 2 7%
Disagree 1 3%
Strongly Disagree 0 0%
Total 30 100%

0%
0% 3% 0%
0% 0%
7% 10%
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree

80%

INTERPRETATION

From the above table and graph it is observed that 80% of

the respondents agrees towards the embarks on periodical appraisal of
employees in the organization and 10% strongly agrees on the statement, 7%
of them are neutral and 3% of respondents disagrees on the embarks of
employee on periodical appraisal.

Page | 46
 3.17 TABLE AND CHART SHOWING AFFECT OF
COMPENSATION POLICY ON ATTRITION OF
EMPLOYEES

OPTION NO OF PERCENTAGE
RESPONDENTS
Strongly Agree 2 7%
Agree 25 83%
Neutral 2 7%
Disagree 1 3%
Strongly Disagree 0 0%
Total 30 100%

90%
80%
70%
60%
50%
40% 83%

30%
20%
10%
7% 7% 3%
0% 0%
Strongly Agree Neutral Disagree Strongly
Agree Disagree

INTERPRETATION
From the above table and graph it is observed that 83% of
the respondents agrees towards the effect of compensation policy on attrition
of employees and 7% of them strongly agrees on the statement, also 7% are
neutral too. 3% of the respondents disagree towards the effect of
compensation policy on attrition of employees.

Page | 47
FINDINGS, SUGGESIONS
AND
CONCLUSION

Page | 48
4.1 FINDINGS

The project entitled “EMPLOYEE COMPENSATION WITH SPECIAL

REFERANCE TO MOOPAN AUTOMOBILES, TIRUR” gives a way to
know the Employee Compensation Management system of MOOPAN
AUTOMOBILES and attempted to provide some ways so as to make employee
compensation more effective. In the course of carrying out the study, the
following aspects were observed.

 Most of the employees are experienced in the organization.

 Most of the respondents are satisfied with the bonus provided
in the organisation.
 Majority of respondents are satisfied with the working
condition of organisation.
 Most of the respondents like to work overtime due to the allowances
given to them
 Majority of respondents are receiving salary plus
commission as compensation.
 Most of the respondents are satisfied towards the compensation
policies of the organisation.
 Majority of the respondents agrees that payment is based on
employee skills
 Most of the respondents are satisfied towards the payment of
overtime duty.
 Almost all of the employees agree that compensation is
based on experience.
 Almost all of the employees are satisfied towards the salary increment.
 Half of the employees say that compensation is paid on time.

Page | 49
  Majority of employees are satisfied with the non-monetary benefits.
 It is clear from the study that salary definitely motivates job
perfection.

 Effect of compensation on the morale of employees is positive as
majority agrees to the statement.

 Most of the employees are satisfied with promotion policy of
the organisation.

 Majority of employees agrees to the statement that organisation
embarks on periodical appraisal of employees.

 Chance of employee attrition is not high in the company.

Page | 50
4.2 SUGGESTIONS
 The employee compensation strategies of the organization shall be
revised to meet employee satisfaction.
 The employees shall be provided with required transfer of work.
 The extra allowance such as over time, incentive may be provided to
the good performance of employees.
 The bonus may be enhance so as to improve the level of satisfaction
 Safety at work to all employees should be a necessity.
 Frequent revision of compensation can control attrition to a certain
limit
 There should be an effective channel of communication from top
level management to all employees.
 Progression in job shall be achieved by all employees to
maintain employee progression ratio.
 The performance appraisal system may be conducted for all staff
and it shall be motivated by monetary benefits.

Page | 51
4.3 CONCLUSION

“Well beginning is half done”

We are able to meet our set objectives laid down prior to the study that is
conducted at MOOPAN AUTOMOBILES TIRUR.
In the first phase we had studied there prevailing system. In order to access
the effectiveness we adopted two different techniques via: observation &
questionnaire. Our survey employee compensation is quite effective on
various dimensions via quality of work life, organizational commitment and
employee attitude. Compensation planning is vital in order to procure desired
talented employees. It enables a venture to maintain attrition and thus
employee turnover ratio.
MOOPAN AUTOMOBILES TIRUR has clear organizational structure,
detailed compensation strategy and job description. It provides employees
adequate necessities in terms of compensation. This means that it has
potential to create loyal , committed employees and can maintain a good
figure of employee turnover ratio .
Compensation is a systematic approach to provide
monetary value to employees in exchange for work performed. Compensation
may achieve several purposes assisting in recruitment, job performance, and
job satisfaction. Hence the study helped in understanding various aspects of
employee compensation process in MOOPAN AUTOMOBILES. the
employee compensation strategies are effective and the venture as enough
man force to generate revenue out of hectic hours . The salary revision took
place in the year before. Employees are provided with deserved designations
with regard to their skill and knowledge. The employees of MOOPAN
AUTOMOBILES TIRUR are satisfied by the employee compensation
strategy of the firm.

Page | 52