INTRODUCTION

Company Background
Tenaga Nasional Berhad (200866-W) is the largest electricity utility in Malaysia. With
their core business of providing electricity to the country’s businesses, homes and industries,
they are a key contributor to Nation building. Their activities represent the entire electricity
production and supply value chain.

In recent years, TNB have also embarked on the sustainability agenda through efforts
such as Renewable Energy and other environmental as well as social initiatives as we seek to
add value to all our stakeholders. TNB believe these activities will not only take them into the
future, but also continue to grow their business in the long-term.

With 69 years of existence, TNB pride themselves as Malaysia’s leading electricity

utility with a presence throughout Peninsular Malaysia, Sabah and Labuan. TNB have also
established a name for themselves in the region, making TNB one of the largest electricity
companies in Asiahey as t transform themselves into a Domestic and Regional Champion.
It is also the largest power company in Southeast Asia. Listed on the Main Board of Bursa
Malaysia with almost RM87 billion in assets, the company’s more than 35,000 employees
serve an estimated 8.3 million customers in Peninsular Malaysia, Sabah and Labuan. TNB’s
core businesses are in the generation, transmission and distribution of electricity.

In Peninsular Malaysia, the company supplies households and industry with electricity
generated from six thermal stations and three major hydroelectric schemes. It also manages
and operates the National Grid, which links TNB power stations and IPPs to the distribution
network. The grid is connected to Thailand’s transmission system in the north and
Singapore’s transmission system in the south. In East Malaysia, TNB has an 80% equity in
Sabah Electricity Sdn Bhd (SESB). The current president of TNB starting April 2019 is Datuk
Seri Amir Hamzah Azizan.

TNB VISION
“To Be Among the Leading Corporations in Energy and Related Businesses Globally”
 TNB MISSION
“We Are Committed to Excellence in Our Products and Services”
Compensation And Benefits

Compensation and benefits refer to the compensation or salary and other financial and
non-financial incentives provided by the firm. It is important and vital role in the aspect of
human resource management as it helps to keep the workforce motivated and increasing the
business performance along with individual performance.

Benefits and Rewards are the importance of attracting and retaining the best people. In
addition to competitive salaries, TNB offer several benefits as well as incentives aimed at
recognising and rewarding high performance. TNB also support aspiring employees through
development programs and opportunities - whether by moving up through the company, or by
expanding their skills and experience. With so much going on, TNB also recognise the need
for balance so they offer a range of services and benefits that help their employees get the
most out of working at TNB. Other than that, TNB also provide the legal and non-legal
benefit which include marriage leave, study leave, medical coverage for staff and family,
healthcare that contain generalist outpatient, specialist consultation, dental, maternity benefit
and hospitalization with surgical benefit, holiday accommodation, annual increment, and
bonuses.

Employee welfare includes everything, such as facilities, benefits, and services that an
employer provides or does to ensure comfort of the employees. Good welfare helps to
motivate employees and ensure increased productivity. Tenaga Nasional Berhad provide
welfare facilities to their employees to keep their motivation levels high. For heavy industry,
mostly their welfare for the staff is more to safety and health. When this kind of welfare is
being provided, the staff will feel safer at work because of all the facilities. In order to achieve
the organization goals, Tenaga Nasional Berhad has built a high-quality motivational program
process which has involved several of their staffs that really need to improve their skills and
ability at the workplace. Every well-organized motivational program for employees are made
in almost all organization nationwide including the Tenaga Nasional Berhad, therefore the
organization can achieve the competence to develop good organizational culture.

Employee performance is the process of creating a shared workforce understanding of

what is to be achieved at the organizational level. It focuses on aligning organizational
objectives and objectives with the skills, competencies, development plans and delivery of
employee outcomes.
TNB are aligning the compensation with the employee’s performance to achieve their
mission which is to provide total financial solutions in accordance with cooperative values
and principles for business growth. Moreover, TNB also wish to aspire towards further
business expansion through teamwork, cohesiveness, and professionalism among the
employees against all challenges which make them produce employees that are up to
challenges and ready to be out of their comfort zone. TNB will ensure that hard-working
employees are rewarded fairly and in the most cost-effective way for the company to motivate
employees to sustain their performance.

HR Team Managing Compensation And Benefits

Internal Allignment

Pay structure is the array of pay rates for different work or skills within a single
organization. The number of levels, the differentials in pay between the levels, and the criteria
used to determine those differences describe the structure. (Milkovich, Newman and Gerhart,
2014). Tenaga Nasional Berhad determine their salary by following the Malaysian Employee
Federation. They will set their salary not too high and not to low, that means the salary
average according to the market.
TNB salary divided into two category of salary scale which is for executives and non-
executives. Non-executives are for clerical work, technician, driver and the salary pay
depends on the designation and qualification while executives for professional work or task
like engineer, HR Manager and the qualification required is degree and above. The salary
scale of the executive is confidential. However, tables below show the salary scale of non-
executive employee and their grade in TNB. TNB determine their employee’s salary by
experience and qualification.
a) Salary scheme for employees in the Technical Scheme of Service

b) Salary scheme for employees in the Driver/Crane Operator Scheme Service

c) Salary scheme for employees in the Administration and Management Service

Minimum Salary Maximum Salary

Grade (RM) (RM)
 Most of the researches and studies have proved that money and payments are
important to employees relative to other motivators as earning a lot of money is an advantage
for pushing toward motivation. It clarifies that when employees are satisfied financially, they
motivate at work and work hard. Shaw and Denny (2013) argued that financial aspects like
payments, allowances, salaries and bounces increase and affect employee’s productivity
positively as a result of a that have concluded that introducing of individual pay, increase
productivity rate from percent to 17 percent. Also, analysis on motivation programs and
productivity, found that financial aspects and payments are the largest effect on employee’s
productivity.

Motivation can be defined as the procedure or steps that initiates guides so Tenaga
Nasional Berhad will used regarding on sustaining goal-achieving behaviors. For example,
incentives are given to encourage and motivate the employees to meet their own goals and the
goals set by the organization. It is an inducement or supplemental reward that serves as a
motivational device for a desired action or behavior. Tenaga Nasional also offer intrinsic
rewards to its employees, these are internal award workers give themselves such as self-
esteem which is sense of accomplishment and the feeling of growth or development of special
skills and talent. At the same time, their employees should perform well in their task so that
the management will not hesitate to reward them.

In the other hand, a person-based structure shifts the focus to the employee skills,
knowledge or competencies the employee possesses, whether or not they are used in the
employee’s particular job. TNB evaluate their employees by their competencies. Table 2
below show different competencies between non- executives and executives. Executives have
more competencies that will be evaluated in order to increase their salary. Therefore,
executives’ pay is more than non-executives.

COMPETENCIES
Manager and above Non-executives
1. Communication 1. Communication
2. Teamwork 2. Teamwork
3. Motivating 3. Initiative
4. Drive & Resilience 4. Leadership
5. Creativity 5. Emotional Stability
6. Leadership 6. Cultural Sensitivity
7. Implementing 7. Business Awareness
8. Decision Making 8. Problem Solving
9. Technical Competence
10. Strategic Orientation
11. Commercial Awareness
12. Organizational Savvy/Know How
13. Broad Scanning/Information Seeking
14. Relationship Building And Network
15. Negotiation/Deal Making
16. Cultural Sensitivity
17. Emotional Stability
Table 2: Differences competencies between executives and non-executives
PAY-FOR-PERFORMANCE
Percentage of Increment Given to Staff
Salary increment are often expressed as a percentage of an employee’s overall
base pay. An increment usually represents a portion of what the employee earns per
year and employers use increments to increase or decrease base salaries or to award
bonuses to their employee. TNB is not exceptional from doing the salary increment as
a reward for their employee due to their performance and length of services
throughout the year.
The increment salary of TNB employees will be determined by the performance of
the company and also the KPIs of the employees. It is also subject to the approval of TNB
Board Members. This increase is according to the percentage of salary of each employee
according to grade. Besides, TNB also offered their staff with Long Term Incentive Plan
(LTIP) depends on company’s profit and the employees who are eligible to receive it must
score a KPI of 75% and above. The performance appraisal score is based on the skills and
competencies added with performance, attendance, and teamwork. It helps to identify those
who are performing their assigned task well and those who are not and the reasons for such
performance.

Pay-For-Performance for Performance Improvement

TNB also urge their employee to perform better if they want to increase their
salary increment and not just looking at the seniority and length of service. If they can
reach their Key Performance Indicator (KPI), chances to get a pay raise is high. TNB
do encourage the employee to challenge themselves instead of be in their comfort
zone in order for them to have their increment because mostly, employee are
motivated due to financial reward rather than non-financial reward. By doing the
salary or wages paid system based on positioning the individual, or team, on their
band according to how well they perform, is absolutely can help the employee for
performance improvement.

Design for Pay-For-Performance

TNB are using the Individual Performance Contract (IPC) for the design of pay-for-
performance. IPC is a written employee performance agreement for the employee and
employer that enable the employees to align their responsibilities to the company’s goals. It
will include the details of the employee and employer which are name, title, and position of
the employee. TNB using the IPC to make sure that employee are able to set their own goals
and desire statement for certain period using the SMART goals to make it clear and easy to
achieve. The IPC is quite similar with the point method where they have an objective to
achieve, the weightage according to the scale factor, performance indicator, standard of
performance, date of achieving the objective and rating for the objective.
The design that TNB has choose for pay-for-performance helps in establishing
expectations and accountability for better work performance. It also helps the
employee to see at what level they are in terms of performance to improve more in the
future and execute the goal that have been set in the IPC.
EMPLOYEE BENEFITS

Legal benefits are the types of coverage that employee will be received as
their compensation. Legal benefits are offered by employers to employees. In TNB,
all employees are eligible to get the benefits based on their grade and their right as
stated in Employment Act 1955.

Monetary advances
Monetary advances to employees shall not exceed the aggregate amount of wages which the
employee earned in the preceding month unless such advance is made to the employee to
enable him to purchase a house or to build or improve house, land, livestock, motorcar, a
motorcycle or a bicycle and shares of the employer’s business offered for sale by the
employer.

Healthcare
 •Generalist Outpatient – An employee, one legal spouse and their dependent children are
eligible to receive medical attention and treatment from company panel doctors. If employee
chooses to obtain necessary care and treatment from a non-panel doctor, pay first and claim
in accordance with the Health Plan Policy. 

• Specialist Consultation – For Specialist Consultation, a referral letter from company panel
doctor or In-Plant visiting doctor to a specialist is required. The Company will cover the
Specialist Consultation in accordance with the Health Plan Policy. 

• Dental / Optical Subsidy – An employee shall be entitled for dental treatment including
medication that covers extraction, scaling, root canal and filing only.

  • Maternity benefit – Employees/spouse are entitled for Maternity (pre/post-natal visits and
delivery cost) in accordance with the Health Plan Policy.
  • Hospitalization & Surgical benefit – Employees, one legal spouse and their dependent
children are eligible for Hospitalization & Surgical benefits in accordance with the Health
Plan Policy.

Sick Leave
An employee shall also entitled for paid sick leave if certified by a registered medical
practitioner other than those mentioned above only in emergency case.
a) 20 days in the aggregate in each calendar year if the employee has been employed for
less than 5 years.
b) 35 days in the aggregate in each calendar year if the employee has been employed for
5 years or more.
c) 45 days in the aggregate in each calendar year if the over 50 years of age.
Where hospitalization is necessary, as may be certified by such medical practitioner or
medical officer:
a) 90 days in the aggregate in each calendar year if the employee has been employed for
5 years or more.

Annual Leave
Annual leave eligibility for employees with less than 5 years services is 16 days. For 5 years
and above but less than 10 years is 18 days. For 10 years or more, the employees entitled to
get 20 days per year. Annual leave shall not include rest days, off days, gazette public
holidays, sick leave or any paid leave.

Maternity Protection
Every female employee shall be entitled to maternity leave for a period of 90 consecutive
days. Maternity leave with full pay is only for a female employee who at the time of
confinement has less than 5 surviving children.

Retirement Fund, Social Security And Insurance

Under Malaysian labour law, there are few important benefits you must provide once you
start getting people to work for you and earned their salary, this benefit can be automatically
deducted from employee salary and also the contribution by the employer. Employee will
gets the benefits through Employees Provident Fund (EPF), Social Security Organisation
(SOCSO) and Medical insurance. These benefits must be clearly understood and written in
the appointment letter to your employee.

Non- legal benefits are not required by law, but are provided as an inducement to

work for the employer. For TNB, all employees are entitled to get these benefits from the
employer.
Study Leave
The company may grant examination leave to an Employee subject to the Company’s
prevailing policies maximum 14 days.

Special Leave
The company shall grant paid leave for the following occasions:
a) For death of family member (including parents and parent in-laws, brothers and
sisters of the Employee) up to maximum of two working days.
b) For the birth of a child by a named wife/wives up to maximum three days
c) To attend to a disaster such as flood, fire or land slide up to a maximum two days at
any one time.
d) For marriage of an Employee (restricted to one marriage in his whole service) up to
maximum 3days.

Funeral Expenses / Death Benefit

Funeral expenses of RM3,500 shall be paid by the company to an employee’s next-of-kin in
the event of the death of the Employee. For death benefits, will be made to his nect-of-kin or
trustee as which is 36 x Last Drawn Salary.

Holidays and Vacation

Employees are eligible for most benefits programs on the first day of employment. Company
provide hotel and condominium facilities in each selected state for employees.
COMPENSATION FOR SPECIAL GROUP

Benefits and Salary for Special Group

There are many addition benefits that the company provide to this special
group. Executive typically receive higher benefits than most other exempt employees.
Many executives receive additional benefits such as medical, telephone subsidy, fuel
and petrol allowance and additional salary. One of the benefits are medical benefits.
Moreover, the other benefits that the organization provide to the special group such as
an executive employee is telephone subsidy. The provision for the telephone subsidy
to an executive employee is based on their grade minimum amount RM150 per two
years. As we see here, there are the different amount of telephone subsidy as a benefit
to the special group.

Lastly, the benefits that the organization provide to the special group is fuel
and petrol allowance. TNB provide RM600 for fuel allowance to the special group.
Only the special group for example the “M” level group of employee in the
organization entitled to this benefits. The salary for the special group is depending on
the meeting with Board of Director. If the BOD decided to give addition increase
salary to the special group, they are entitled to the amount salary.
CONCLUSION AND RECOMMENDATIONS

In order to implement pay-for-performance, one thing that TNB worried about

is the cooperation between employees with one another especially in group work.
This is because employees will tend to restrict and limit any information that they
have to not to share with others as the information will make them perform better and
hence, it will make the other employees to get better reward than themselves. TNB are
still searching and developing the method to solve all of these challenges to
improving the quality and efficiency of overall organization performance.

According to all the employees, they agreed that the organization has a better
pay scheme compared to other companies and happy to be attached with the company
longer. Recognition and rewards has also been a critical factor to employee
motivation. They feel they are appreciated and it gives a feel of ownership and boost
the spirit of the employees to perform even better. The trend show that there is
improvement in the individual employee performance ratings scores of all the
employees involved in the interview. It clearly shows employee engagement has
significant impact in improving employee engagement. Researcher also understand
that, benefits, work-life balance, praises from the immediate and management, and
management style has always been as significant as pay and rewards in improving the
motivation level of the employees. Employees are very much engaged to the
organization and willing to go extra mile to help the organization achieve the business
goals and objectives. Ensuring proper work allocation with, encouraging work life
balance, promoting employee wellness and implementing a positive work culture are
approaches that increase employee motivation. Overall, employee engagement is very
critical for an organization to keep the employees engaged with the organization and
increases the motivation level of the employees which will help the organization to
meet the business goals and objective.