CHAPTER 1 INTRODUCTION

Objectives of the study

Scope of the study

Need of the study Limitations of the study Research methodology

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INTRODUCTION
The increasing competitiveness of the labor market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in companies. Therefore, the human resources managers and tax experts have to evolve proper compensation planning for High end and qualified employees. The components of compensation have to be devised in such a way that, it focuses on the growing demands of employees while retaining the competitiveness and profitability of the company Management approach of an organization has to be san effective imperative to set paradigms for managing an enterprise and its people so that the human resources functions forms an integral part of corporate policy. Acquire or sharpen capabilities required to perform various functions associated with their present of expected future roles. Develop the general capabilities as individuals exploit their potentials for their own and organizational development purposes. Develop an organizational culture.

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CONCEPT OF COMPENSATION AND BENEFITS

Compensation represents both the intrinsic and extrinsic rewards employees receive for performing their job. Intrinsic compensation reflects the employees psychological mind set result from performing their job. Extrinsic compensation includes both monetary and non monetary rewards. Intrinsic Compensation represents employees critical psychological state that results from performing their job. Job characteristic theory describes these critical psychological states. According to this job theory, employees experience enhanced psychological states (that is intrinsic compensation) when their jobs rate high on five core job dimensions: skill variety, task identity, task significance, autonomy and feedback. Extrinsic Compensation includes both monetary and non monetary rewards. Compensation Professionals establish monetary compensation programs to reward employees according to their job performance levels. Monetary compensation represents Core Compensation. Non-monetary rewards includes protection programs (for example, medical insurance), paid time-off (for example vacations), and services (for example, day care assistance).Nonmonetary rewards are referred as Fringe Compensation. Non-monetary rewards includes protection programs (for example, medical insurance), paid time-off (for example vacations), and services (for example, day care assistance).Non monetary rewards are referred as Employee benefits. Employee Benefits programs include a variety of programs that provide paid time-off, employee services, and protection programs. Benefits are benefits which employees or directors receive from their employment but which are not included in their salary cheque or wages. On the tax return form they are called

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'benefits in kind'. They include such things as company cars, private medical insurance paid for by the employer and cheap or free loans.

Definition
According to Handerson a step by step approach for designing a remuneration system that recognizes job requirements, employee related knowledge and skills and performance related incentives that link individual, work unit and organizational performance Total remuneration also includes a host of benefits that protect and expand the life style and health of workers and their families. 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 workemployee 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 work and responsibilities. Components of compensation system are as follows:

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Fig 1. Components of compensation system

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 organizational productivity.

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.

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Fig 2. Direct compensation

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.

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Fig 3. Indirect Compensation

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OBJECTIVES OF STUDY Job candidate choose to work for particular companies for a number of reasons including career advancement opportunities, training, the companys reputation for being a good place to work, location, and compensation. Companies try to spark job candidates interest by communicating the positive features of core and fringe compensation programs. Companies use compensation to compete for the very best candidates. Goals of compensation professional/HR manager are Identifying jobs and designing their compensation and reward limits. Redesign compensation and reward system when ever required. Ailing the compensation strategy with business and HR strategy. Identifying unneeded jobs and unneeded employees and making a downsizing decisions and thus cost cutting. Identifying jobs that can be outsourced to reduce expenses of the organization or cost cutting. Identifying the quantity and quality of people required in the organization. Determining work to be performed by different units and individual and amount of knowledge and skills required for the jobs.

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SCOPE OF THE STUDY: The study was intended to obtain information about: The compensation structure of an employee. The quality of work in the organization since the quality of work depends on the performance of the employee. The strengths and weaknesses of employees Compensation is the valuation of worth, quality or merit. Compensation structure, also known as remuneration, is a method by which the job performance of an employee is valuated or quantified. It is the most important management tool helpful in attracting and retaining the best employees. People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Therefore, Compensation professional should understand each employees abilities, competencies and relative merit and worth for the organization.

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NEED FOR THE STUDY

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.

RESEARCH METHODOLOGY
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The data was collected from various sources given below. 1. Primary Source: Personal interaction with the employees of VIVIMED. Questionnaire. Conducting interviews.

2. Secondary Source: Company journals and magazines. Various books, magazines, Internet browsing etc.

Sample design Sampling Unit: The study is directed towards Executives only. Sampling Size: Sampling size of 40 is taken in this study. Sampling Method: Convenience sampling Period of Study: Fieldwork done for a period of six weeks. Analysis: Analysis is done by calculating the percentages and depicting them pictorially.

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LIMITATIONS OF THE STUDY The study is however subject to certain limitations: The sample size is 40 only, which may not be sufficient to give the correct results due to the limitation of time. The sample does not cover the entire Employees in the organization due to logistical constrains. It is left to the respondent to take his own time to answer the questions; therefore it cannot be certain that whether the replies given by respondents are manipulated or presented his original thoughts. Heavy reliance is placed on the respondents view, which cannot be verified.

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CHAPTER II REVIEW OF LITERATURE

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COMPENSATION AND BENEFITS Introduction

Compensation and benefits is an emotive area, not only for the organizations but also for the employees. Establishing and managing a reward structure is one of the critical cornerstones of the human resources department. It is extremely important to design the right reward package that supports the business goals. The HR professionals understand the importance of compensation and benefits in such a way that they are able to understand the intricacies, basic reward system, the global trends in compensation & benefits and are able to link pay with performance for better planning. The increasing competitiveness of the labor market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in certain industries. Therefore, the human resources managers and tax experts have to evolve proper compensation planning for High end and qualified employees. The components of compensation have to be devised in such a way that, it focuses on the growing demands of employees while retaining the competitiveness and profitability of the company. The increasing competitiveness of the labor market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in certain industries.

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Evolution of Compensation Todays compensation systems have come from a long way. With the changing organizational structures workers need and compensation systems have also been changing. From the bureaucratic organizations to the participative organizations, employees have started asking for their rights and appropriate compensations. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensation to their employees. Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of the Organization.

Fig 4. Evolution of Compensation Evolution of Compensation Strategic Compensation:

Traditional Compensation Systems

In the traditional organizational structures, employees were expected to work hard and obey the bosses orders. In return they were provided with job security, salary increments and promotions annually. The salary was determined on the basis of the job work and the years of Compensation & Benefits Page 15

experience the employee is holding. Some of the organizations provided for retirement benefits such as, pension plans, for the employees. It was assumed that humans work for money, there was no space for other psychological and social needs of workers. Change in Compensation Systems With the behavioral science theories and evolution of labor and trade unions, employees started asking for their rights. Maslow brought in the need hierarchy for the rights of the employees. He stated that employees do not work only for money but there are other needs too which they want to satisfy from their job, i.e. social needs, psychological needs, safety needs, self-actualization, etc, Now the employees were being treated as human resources. Their performance was being measured and appraised based on the organizational and individual performance. Competition among employees existed. Employees were expected to work hard to have the job security. The compensation system was designed on the basis of job work and related proficiency of the employees.

Todays Modern Compensation Systems

Today the compensation systems are designed aligned to the business goals and strategies. The employees are expected to work and take their own decisions. Authority is being delegated. Employees feel secured and valued in the organization. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. Some of the benefits are special allowances like mobile, companys vehicle; House rent allowances; statutory leaves, etc.

Payroll Management Process

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

Fig 5. Modern Compensation system.

Manual System
Manual payroll system is the traditional payroll system which involves pen and ink, adding machine, spreadsheet, etc instead of computers, software and other computerized aids. The process was very popular when there were no computerized means for payroll processing. Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll. Sometimes the construction industry and manufacturing industry also use the manual payroll systems for the contractual labor, as theses contracts are on daily/weekly basis. Compensation & Benefits Page 17

There is full control in the hands of owner. But the process is tedious, time consuming and risky as it is more prone to errors.

Accountant
Accountant is a professional having a degree/diploma course in finance/accountancy. He/she is responsible for all the activities related to payroll accounting. He/she has the sound knowledge of accounting principles and globally accepted standards. The process adds costs to the organization. It involves paying someone who is responsible for calculating the salaries of others. The financial control regarding salary goes in the hand of accountant.

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

Payroll Outsourcing
Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and deductions. The outsourcing organization is responsible for all the activities of the payroll accounting. It saves time and cost for the organization. If there is more number of

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employees (say more than 900-1000) in the organization, payroll outsourcing would be very much beneficial. The data is provided to the consultants/outsourcing firms. The various payroll functions undertaken by the outsourcing organizations are as follows: Analysis of payroll records; Payroll taxes, medical claim processing Employee Insurance & Provident fund.

Components of compensation:Basic wages/Salaries:These refer to the cash component of the wage structure based on which other elements of compensation may be structured. It is normally a fixed amount which is subject to changes based on annual increments or subject to periodical pay hikes. It is structured based on the position of an individual in the organization and differs from grades to grades.

Dearness allowance:The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labor. The increasing prices reduce the compensation to nothing and the money's worth is coming down based on the level of inflation.

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The payment of dearness allowance, which may be a fixed percentage on the basic wage, enables the employees to face the increasing prices.

Bonus:The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in proportion to the profitability. The Government also prescribes a minimum statutory bonus for all employees and workers. There is also a bonus plan which compensates the Managers and employees based on the sales revenue or Profit margin achieved. Bonus plans can also be based on piece wages but depends upon the productivity of labor.

Commissions:Commission to Managers and employees may be based on the sales revenue or profits of the company. It is always a fixed percentage on the target achieved. For taxation purposes, commission is again a taxable component of compensation. The payment of commission as a component of commission is practiced heavily on target based sales. Depending upon the targets achieved, companies may pay a commission on a monthly or periodical basis.

Mixed plans:-

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Companies may also pay employees and others a combination of pay as well as commissions. This plan is called combination or mixed plan. Apart from the salaries paid, the employees may be eligible for a fixed percentage of commission upon achievement of fixed target of sales or profits or Performance objectives. Nowadays, most of the corporate sector is following this practice. This is also termed as variable component of compensation.

Piece rate wages:Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for each of the Quantity produced by them. The gross earnings of the labor would be equivalent to number of goods produced by them. Piece rate wages improves productivity and is an absolute measurement of productivity to wage structure. The fairness of compensation is totally based on the productivity and not by other qualitative factors. The GANTT productivity planning and Taylor's plan of wages are examples of piece rate wages and the related consequences.

Sign on Bonuses:The latest trend in the compensation planning is the lump sum bonus for the incoming employee. A person, who accepts the offer, is paid a lump sum as a bonus. Even though this practice is not prevalent in most of the industries, Equity research and investment banking companies are paying this to attract the scarce talent.

Profit sharing payments:Compensation & Benefits Page 21

Profit sharing is again a novel concept nowadays. This can be paid through payment of cash or through ESOPS. The structuring of wages may be done in such a way that, it attracts competitiveness and improved productivity. Profit sharing can also be in the form of deferred compensation at the time of retirement. At the time of retirement the employees may be paid a lump sum or retrial benefits.

Fringe benefits:The provision of fringe benefits does not attract any explanation. These include. Company cars Paid vacations Membership of social/cultural clubs Entertainment tickets/allowances. Discounted travel tickets. Family vacation packages.

Reimbursements:Employees, depending upon their gradations in the organization may get reimbursements based on the Expenses incurred and substantiated. Certain expenses are also paid based on expenses incurred during the course of business. In many cases, employers provide advances to the employees for incurring certain expenses that are incurred during the course of the business. Compensation & Benefits Page 22

Some examples are. Travel expenses. Entertainment expenses Out of pocket expenses Refreshments expenses during office routine outside office premises.

Sickness benefits/pregnancy:The increasing social consciousness of corporate had resulted in the payment of sickness benefit to the Employees of companies. This also includes payments during pregnancy of women employees. The expenses incurred due to injury or illness are compensated or reimbursed to the employees. In certain companies, the death of an employee is compensated financially. Companies are also providing supporting financial benefits to the family of the bereaved employees. However, companies covering these cost through appropriate insurance policies like, Medical and life insurance. The whole idea of compensation management can be better understood through the following Pyramid structure.

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Fig 6. Compensation pyramid

Industry driven factors:There are also certain driven factors that are influencing the compensation planning. The compensation Packages of knowledge workers are different from that of manufacturing sector. The employees working in call centers are compensated differently (vs) employees of technology driven companies. Some notable examples are a) Compensation paid in IT/ITES, b) Investment banking/Equity research, c) Software companies, d) High-end industries having high technology content like Bio/Nano technology. e) Private research and related fields.

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CHAPTER III INDUSTRY & COMPANY PROFILE

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INDUSTRY PROFILE INDIAN PHARMACEUTICAL INDUSTRY:

The Indian Pharmaceutical Industry today is in the front rank of Indias sciencebased industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form

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the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

Advantage India
Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available. Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs. Legal & Financial Framework: India has a 53 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community.

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Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology. Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing. Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.

THE GROWTH SCENARIO

India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2002, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn. Steps to strengthen the industry Indian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets. Compensation & Benefits Page 28

Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D. The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements.

COMPANY PROFILE:

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The company was originally promoted by Mr.A.M.Rao and incorporated as Emgi Pharmaceutical & Chemical Private limited on September 22, 1988 with registrar of Companies of Karnataka, Bangalore. On Mr.Raos accidental death the company was put for sale, in 1989 Mr.Santosh Varalwar and Mr.Sandeep Varalwar acquired Emgi Pharmaceutical & Chemical Pvt. Ltd. And commenced manufacturing of bulk drugs in 1991. VIVIMED LABS LIMITED When chemistry and cost matter. Here chemistry and innovation are blended into a formula of value creation and growth. Established in the year 1988, with a motto to be the best in the active pharmaceutical ingredients besides in the year 1995, it migrated to specialty chemicals market. Vivimed today embodies the vision of the top notch player in developing and commercializing product catering to a variety to therapeutic categories into a leading finished dosage manufactures, bulk drugs and specialty chemicals. If chemistry is their cornerstone, innate business sense is their beacon The addition of James Robinson, UK into the vivimed family is a testimony to this attribute. More than just an acquisition, James Robinson is their step towards expanding into large canvas of specialty chemicals, photo-chromatic, photo-graphic and fluorescent chemicals. Vivimed gradually introduced other products and broadened the range of oral care, hair care, and skin care and preservatives products. Vivimeds capacity in synthesis organic chemistry and R & D enables it to become a knowledge partner, to certain large multinational, such as Unilever and LOreal. Compensation & Benefits Page 30

Vivimed is primarily organized into divisions and companies. Divisions are operations, which have grown from the parent company to emerge into their own as independent entities. They have their own teams, markets and plans. The H&PC Actives Division has been a key mover and the driver that has enabled Vivimed Labs builds its international reputation. Known to global manufacturers across the world for its strength in synthetic organic chemistry the H&PC division has under its umbrella five areas

Oral care Sun care Skin care Hair care Preservatives The Specialty Pharma Division of Vivimed Labs is a merged entity of VVS Pharma

and Creative Healthcare. The Specialty Division has its inherent strengths in drug delivery ad drug discovery. They are focused on providing cures in the Oncology space, Arthritis, Syndrome X, Macular degeneration, Psoriasis and Stress. UK Company, James Robinson Ltd, has now been incorporated into the new organization as Vivimed Labs Europe Ltd. It is a leading global supplier of dyes used in a host of personal care and consumer products ranging from hair dye intermediates and photographic developer chemicals to ophthalmic lenses and fluorescent dyes for textiles, inks and coatings.

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US Company, Harmet International, has joined the group as Vivimed Labs USA Inc., as a US hub to increase our global footprint and cut down the time to market for global customers Harmet International becomes a strategic and relevant entity. Positioned to ensure a smooth, seamless distribution and delivery channel Harmet is being evolved to create a perfect alignment between markets and manufacturing.

VIVIMED STRATEGY:
Vivimed has focused on the specialty chemicals and pharmaceuticals for global

markets, with full fledged marketing capabilities the company has been able to market its products in all over 100 countries in Asia, Europe, North-America and Far-East etc., Vivimed has set up an independent REACH compliance Unit in the UK. We have successfully completed the pre-registration of its phase-in substances. This allows uninterrupted business at least until the end of November 2010. By "phase-in" we refer to the formal REACH definition, which includes any substance in the Vivimed portfolio that is either manufactured by Vivimed in the EEA, or directly imported by Vivimed for sales or use in the EEA. REACH is the new European Community regulation governing the Registration, Evaluation, Authorization and Restriction of Chemicals.

VISION, MISSION AND VALUES:

When chemistry costs and matter.. Compensation & Benefits Page 32

..Be friending the future VISION To continually raise the standards of excellence in Specialty Chemical and Pharmaceutical field, achieve and maintain the highest level of customer satisfaction based on proven scientific principles, administered with empathy and insight. MISSION Vivimed mission is to be globally acclaimed pharmaceutical company, meeting the requirements of health care imbibing the philosophy of both commercial and social concerns, driven by research and manufacturing capacities. VALUES Vivimed has always strived to be a value driven organization. The core values influencing Vivimed operations are: Personal Care: We care, respect and show compassion and humanity to all who call on us and are associated with us. We try our best to surpass their expectations. Integrity: We conduct our business fairly with honesty and transparency. Fairness: We are fair, sincere and ethical in all our deals to create an environment of trust and respect. Excellence: We constantly strive to be the quality products provider leveraging technology and delivering the best to the society at large.

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Responsibility: We are sensitive to those who call on us in pain and distress and try our very best to ease them of their stress and tension. Vivimed business practices are guided by the highest ethical standards of truth, integrity and transparency.

Human Resources
Our Company operates in a highly competitive environment vis--vis attracting the best talent for its operations. Therefore, human resources management has assumed vital importance. The key to the success of our Company lies in its people whose skills, expertise, and talent help the Company to achieve and sustain its market position. It is the peoples commitment, technical know-how, innovative ability and performance driven mindset that enable. Vivimed to react swiftly and creatively to the evolving customer and market needs. Our Company provides requisite training at regular intervals to all its employees. Specialized training and business exposure with a focus on building leadership in all areas of the Companys operations was a major initiative taken up during the year. The process of improving organizational and human capability is continued through competencies mapping of managerial positions, development of leadership and building of talent for the future. Cordial relations with the employees prevailed at all Company locations during the year. The total number of employees of Vivimed and its subsidiaries as at March 31, 2009 was around 1060 including those on contract.

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COMPENSATION & BENEFITS IN VIVIMED

The HRM concept has educated and made the organizations to understand and realize, without doubt, that their organizations strength lies in their people. They are one among the other resources like material resource, money resource, machine resources and are equally and sometimes more important than the other resources. Human beings also have a need to grow and develop themselves professionally. Compensation is a method of valuating of employees in the organization including all aspects of job performance and to attract and retain the best employees. The Compensation system of VIVIMED consists of Base pay; House rent allowance (HRA), Dearness allowance, Conveyance, and Others. These are the basic components of salary of Vivimed employees which contributes to their gross salary paid by the organization; it also includes deductions which consist of ESI, Provident fund, Professional Tax, Income tax, etc. Deductions are deducted from the gross and arrived at the Net payable amount to the employee in other word what we call Take home. Net salary= (Base pay + HRA+Conveyance+Others) Deductions. Base pay is 40-50% of gross. 40% for employees of salary greater than Rs. 30,000/-. 50% for employees of salary less than or equal to Rs.30, 000/-. HRA is 20% of gross.

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 Conveyance is 25% of gross. Others are 5-15% of gross. 5% for employees of salary is greater than Rs.30, 000/-. 15% for employees of salary less than or equal to Rs.30, 000/ Deductions include ESI, PF, PT, IT etc.

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CHAPTER IV DATA ANALYSIS AND INTREPRETATION

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1. Are you aware of the Compensation Package in your Organization? a) YES b) NO

S.No. RESPONSE 1 2 YES NO TOTAL

RESPONDENTS 29 11 40

PERCENTAGE (%) 72 28 100

Observation: From the above figure it can be observed that 72% of the total numbers of employees know their compensation Package.

2. Do you agree that compensation commensurate with the work done by you? Compensation & Benefits Page 38

a) Strongly agree b) Agree c) Disagree d) Strongly Agree S.No a. b. c. d. RESPONSE Strongly agree Agree Disagree Strongly disagree Total RESPONDENTS 14 23 3 0 40 PERCENTAGE (%) 35 57 8 0 100

Observation: From above figure it can be observed that 35% of employee's think that their compensation commensurate with the work done by them completely, while 57% of them think that it commensurate to some extent and 8% think that it commensurate to very little extent. 3. Are you aware of your Roles and Responsibilities of your job in the organization?

a) Yes b) No

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S.No. a. b.

RESPONSE YES No Total

RESPONDENTS 40 0 40

PERCENTAGE (%) 100 0 100

Observation: From the above figure it can be observed that all the employees are aware of the roles and responsibilities of their job in the organization.

4. Are you compensated as per your job responsibilities?

a. YES b. No

S.NO. a. B.

RESPONSE YES NO TOTAL

RESPONDENTS 34 6 40

PERCENTAGE (%) 85 15 100 Page 40

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Observation: From the above figure it can be observed that 85% of the employee's think that they are compensated as per their job responsibilities while 15% think that they are not.

5. Do you have autonomy in determining how to perform your job?

a) Yes b) No

S.No a. B.

RESPONSE YES NO TOTAL

RESPONDENTS 29 11 40

PERCENTAGE (%) 72.5 27.5 100

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Observations: From the figure it can be observed that 72% of employees have the autonomy in determining how to perform their job while 28% think that they dont have the autonomy.

6. Does your employer provide you with the feed back regarding your performance?

a) Yes b) No

S.NO. a. b.

RESPONSE YES NO TOTAL

REPONDENTS 34 6 40

PERCENTAGE (%) 85 15 100

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Observation: From the above figure it can be stated that 85% of employees receive feedback from their employer or immediate supervisor while 15% do not receive any kind of feedback.

7. Do you agree this feedback has helped you to improve your key performance? a) Strongly agree c) Disagree b) Agree d) Strongly disagree

S.NO. a. b. c. d.

RESPONSE Strongly agree Agree Disagree Strongly disagree TOTAL

REPONDENTS 14 23 3 0 40

PERCENTAGE (%) 35 57 8 0 100

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Observation: From the above figure it can be stated that 57% of employees believe that the feedback given to them was very helpful in improving their key performance to some extent and 35% thing it was very much helpful to them while 8& think it was only a little help.

8. How many pay revisions had been taken place after your joining? ( a. Less than two b. Between 2 & 5 c. More than 5 d. None S.NO a. b. c. d. RESPONSE Less than two Between 2 & 5 More than 5 None TOTAL RESPONDENTS 5 25 5 5 40

PERCENTAGE (%) 12 62 13 13 100

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Observation: From the figure it is observed that 62% of employees had pay revisions between 2 & 5, 13% of employees had more than 5 times, 13% of employees had less than 2 times & 12 % had no pay revisions.

9. What is the criterion for salary increase? a. Performance b. Seniority c. Performance + Seniority d. Others S.NO a. b. c. d. RESPONSE PERFORMANCE SENIORITY PERFORMANCE+SENIORITY OTHERS TOTAL RESPONDENTS 17 0 17 6 40 PERCENTAGE (%) 42 0 43 15 100

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Observation: From the above figure it can be seen that 43% of employees feel that Performance + seniority is the criteria for salary revision, 42% think that its only performance and 15% think its due to other reasons. No employee feels that seniority is a basis for their pay revision. 10. How far your organization is providing other benefits when compared to similar organizations? a. Excellent b. Very Good c. Good

d. Poor S.NO a. b. c. d. RESPONSE EXCELLECT VERY GOOD GOOD POOR TOTAL RESPONDENTS 0 29 11 0 40 PERCENTAGE (%) 0 72.5 27.5 0 100

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Observation: From the above figure it is clear that 72% of the employees are of the opinion that the benefits provided to them are very good while 28% say they are good.

11. Are you satisfied with benefits provided by your organization?

a. Yes b. No

S.No a. B.

RESPONSE YES NO TOTAL

RESPONDENTS 40 0 40

PERCENTAAGE (%) 100 0 100

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Observation: From the above figure it is clear that the employees are very much satisfied with the benefits provided by the organization.

13. What is your opinion regarding allowances in your organization provided that they are? a. b. c. d. S.NO a. b. c. d. Excellent Very good Good Poor RESPONSE EXCELLECT VERY GOOD GOOD POOR TOTAL RESPONDENTS 0 17 23 0 40 PERCENTAGE (%) 0 42.5 57.5 0 100

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Observation: From the figure it can be stated that 58% of employees feel that the allowances provided to then are good enough while 42% think they are very good.

14. How far the HR Department/Organization had reached regarding your compensation? a. Excellent b. Very good c. Good d. Poor S.NO a. b. c. d. RESPONSE EXCELLECT VERY GOOD GOOD POOR TOTAL RESPONDENTS 6 14 20 0 40 PERCENTAGE (%) 15 35 50 0 100

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Observation: From the figure it can be seen that 50% of employees are of opinion that the HRD is good enough regarding their compensation and 35% feel that its very good while only 15% thing its excellent.

15. What is your opinion regarding compensation package in your organization? a. Excellent b. Very good c. Good d. Poor S.NO a. b. c. d. RESPONSE EXCELLECT VERY GOOD GOOD POOR TOTAL RESPONDENTS 6 14 20 0 40 PERCENTAGE (%) 15 35 50 0 100

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Observation: From figure it can be observed that 50% of employees are of the opinion that the organization if offering them a good compensation package while 35% think that its very good and 15% think that its excellent.

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CHAPTER V FINDINGS, SUGGESTIONS & CONCLUSIONS

FINDINGS:
In this study, I have attempted to reveal various attributes, which help assessing the actual realities of the organization. During the interaction with the employees of the organization through the questionnaire session, the findings that have been made are given below: It has been observed that majority of employees know about their compensation package and feel that they are commensurate with the work done by them.

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 It had been observed that majority of the employees know their job responsibilities and roles and most of them think that they are compensated as per their job roles & responsibilities. It has been observed that majority of employees have autonomy in determining how to perform their job. Majority of employees get feedback from their superiors and only few of them are of opinion that this feedback has helped them to improve their performance and hence management should pay attend to this issue. Majority of employees feel that the pay revisions are based on Performance + seniority. However, many respondents also feel satisfied with the fulfillment of esteem needs such as appreciation letters and certificates, or giving higher responsibilities to handle etc., Many of them are of opinion that the benefits provided to them are good enough and are satisfied with them. Many of them feel that the allowances provided to them are fair enough and are satisfied with them. Majority of them feel that the HRD & Organization is very good regarding their compensation & Benefits. It has been observed that majority of the respondents feel that individual pay for performance plans reduces cooperation and team work. The respondents feel that good work or any contribution by employees in this organization does not go unnoticed. However, many agree to the statement that good work is not being noticed. Hence, management should attend to this issue. Compensation & Benefits Page 53

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SUGGESTIONS:
In VIVIMED, the management could provide transport facility to the employees who travel from distant places by collecting nominal charges for maintenance. The rewards system in the organization is good but it can be improved further to make it effective. The management should take an opportunity to publicly acknowledge and appreciate in front of his peers which builds up the self morale of the employee. The employees feel that the performance system that earns incentives is hard to reach and the management should attend to this issue The employees feel that better cooperation among employees, employees-management will result in greater effectiveness. Thus management can arrange for some team building programs. Setting goals for employees to develop their capabilities necessary for effective performance, individual growth and achieving organizational goals. Promotions or increments should not be based totally on the ratings of the performance Appraisal forms. Performance Appraisal Reports should be revealed to the employees so that they can put their best efforts in their work.

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 There should be a continuous need to educate and train the executives in the organization, as the system is a development tool and aims to strengthen communication between employees and management. A climate of mutuality, openness and trust should prevail in the organization as it contributes to the substantial growth of the employees

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CONCLUSION:
Role clarity is present in right terms in this organization The Flow of communication is effective. The Extents of performance based pay is good and can be improved. Relationship between the management and employees is quite good. Team work is in right manner and the spirit of the team leader and sales executives is in the right form. Slight job satisfaction is prevalent in the mind set of the employee and it may prove harmful to the organization. The output of the compensation and benefits system is taken as the basis for evaluating the job performance of the employees Feedback is given to the employees regarding their performance, without which the reason behind conducting performance appraisal is not met.

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BIBLIOGRAPHY

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REFERENCES
1. Joseph J.Martocchio, 2006, Strategic compensation, Third edition Pearson Education Richard 1. 2. Milkovich & NewMan, 2005, Compensation, Tata McGraw Hill, New Delhi. 3. Bruce R. Ellig, 2004, The Complete guide to Executive Compensation, TMH.

WEBSITES
1. www.vivimedlabs.com 2. http://www.outsource2india.com/kpo/samples/pharmaceutical-industryreport.asp 3. http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-industry/ 4. www.citehr.com

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ANNEXURE

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Questionnaire Vivimed Labs Ltd.

Veernag Towers, Hubisguda, Hyderabad- 500 007 ___________________________________________________________________________ Questionnaire on Compensation and Benefits: Name of the employee: Designation: Date of Joining Experience: Department:

1. Are you aware of the Compensation Package in your Organization? (Yes/No) 2. Do you agree that your compensation commensurate with the work done by you? a. Strongly agree b. Agree c. Disagree

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d. Strongly disagree 3. Are you aware of your Roles and Responsibilities of your job in the organization? (Yes/No) 4. Are you compensated as per your Roles & responsibilities? (Yes/No) 5. Do you have Autonomy in determining how to perform the job? (Yes/No) 6. Does your employer provide you with the Feedback regarding your Performance? (Yes/No)

7. Do you agree this feedback has helped you to improve your Key performance? a. Strongly agree b. Agree c. Disagree d. Strongly disagree 8. How many pay revisions had been taken place after your joining in the organization? ( ) a. Less than two b. Between 2 & 5 c. More than 5

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d. None 9. What is the Criteria for Salary increase? a. Performance b. Seniority c. Performance +Seniority d. Others 10. How far your Organization is providing other benefits when compared to similar organization? a. Excellent b. Very good c. Good d. Poor 11. Are you satisfied with the benefits provided to you by your organization? (Yes/No) 12. If No what are the reasons?

13. What is your opinion regarding allowances in your organization provided that they are? a. Excellent

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b. Very good c. Good d. Poor 14. How far the HR Department has reached regarding your compensation a. Excellent b. Very good c. Good d. Poor 15. What is your opinion regarding compensation Packages in your organization? a. Excellent b. Very good c. Good d. Poor

___________________________________________________________________ Date: Signature of the employee:

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