Compensation Management

1.1.0 Introduction:

1.1 INTRODUCTION OF COMPENSATION MANAGEMENT

Compensation Management:

Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.

Compensation management, also known as wage and salary administration, remuneration management, or reward management, is concerned with designing and implementing total compensation package. The traditional concept of wage and salary administration emphasized on only determination of wage and salary structures in organizational settings. However, over the passage of time, many more forms of compensation as discussed earlier, entered the businessfield which necessitated to take wage and salary administration in comprehensive way with a suitable change in its nomenclature. 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"

Components of Compensation system:

The literal meaning of compensation is to counter-balance. In the case of human resource management, compensation is referred to as money and other benefits received by an employee for providing services to his employer. Money and benefits received may be in different forms-base compensation in money form and various benefits, which may be associated with employee's service to the employer like provident fund, gratuity, and insurance scheme, and any other payment which the employee receives or benefits he enjoys in lieu of such payment. Cascio has defined compensation as follows:

"Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity”

Based on above description of compensation, we may identify its various components as follows:

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Wage and Salary:

Wage and salary are the most important component of compensation and these are essential irrespective of the type of organization. Wage is referred to as remuneration to workers particularly, hourly-rated payment. Salary refers to as remuneration paid to white-collar employees including managerial personnel. Wages and salary are paid on the basis of fixed period of time and normally not associated with productivity of an employee at a particular time.

Incentives:

Incentives are the additional payment to employees besides the payment of wages and salaries. Often these are linked with productivity, either in terms of higher production or cost saving or both .These incentives may be given on individual basis or group basis.

Fringe Benefits:Fringe benefits include such benefits which are provided to the employees either having long-term impact like provident fund, gratuity, pension; or occurrence of certain events like medical benefits, accident relief, health and life insurance; or facilitation in performance of job like uniforms, Canteens, recreation, etc.

Perquisites:These are normally provided to managerial personnel either to facilitate their job performance or to retain them in the organization. Such perquisites include company car, club membership, free residential accommodation, paid holiday trips, stock options, etc.

Wages:According to economic theory, wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them. In its actual sense which is prevalent in the practice, wages are paid to workers which include basic wages and other allowances which are linked with the wages like dearness allowances, etc.

The compensation policy and the reward system of an organization are viewed

by the employees as indicators of the management's attitude and concern for them. Traditionally,

pay scales in companies reflected the importance of the work and the responsibility level. Today,

organizations try more to assess the worth of an individual in terms of his performance and

contribution to the organization. These casets discuss the importance of a compensation system

that is competitive and attractive for the employees and at the same time, profitable for the

organization.

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1.2 IMPORTANCE OF WAGE PAYMENT:

1. To worker:

Wage payment is important to all categories of workers. Wage is a matter of life and death to workers/employees. Their life, welfare and even social status depend on wage payment. It is only source of income to large majority of workers. They and their unions always demand higher wages and other monetary benefits. Majority of labour problems and disputes are directly related to wage payment. The efficiency of workers and their interest and involvement in the work depend on wage payment. Even their attitude towards employer depends on wage payment. In brief, wage payment is a matter of greatest importance to workers. Wage problem is the most pressing and persistent problem before the entire labour force.

2. To employer:

Wage payment is equally important to employers as their profit depend on the total wage bill. An employer in general is interested in paying low wages and thereby controls the cost of production. However, low wages are not necessarily economical. In fact they may prove to be too costly to the employer in the long run. E.g. In garment manufacturing company if tailors are not paid properly then it is difficult for the company to retain them. An employer has a moral and social responsibility to pay fair wages to his worker as they are equal partners in the production process. He should give fair wages which will benefit to both the parties. Employees will offer full co-operation to the management when they are paid attractive wages. On the other hand, strikes and disputes are likely to develop when workers are paid low wages or when they are dissatisfied and angry due to low wage rates. It is possible to earn more profit by paying attractive wages to workers. E.g. Reliance, Citi Bank, Motorola are earned huge profits because of their higher pay packages.

3. To government:

Government also give special importance and attention to wages paid to industrial workers as industrial development, productivity, industrial peace and cordial labour- management relation depend on the wage payment to workers. Government desires to give

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protection to the working class and for this minimum wages act and other Acts are made. In India, wages are now link with the cost of living. This is for the protection of workers. Government is the biggest employer in India and the wage rates of government servant and employees of public sector organisations are decided by government only. Revision of pay scale of government employees made for adjusting their wages as per the cost of living. For this, “Pay Commission” is appointed and pay scale is adjusted as per the recommendations made.

In India, wage payment is very critical, controversial and delicate issue for all categories of work force. This is due to poverty, rising prices, mass unemployment and rising population. Wage payment indeed a vexatious problem and needs to be tackled from economic, social and humanistic angles.

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1.1.3 SIGNIFICANCE OF THE STUDY REFERING TO TITLE:

Employee compensation is one of the compensation policy and the reward system of an

organization are viewed by the most determinants of the major determinants of employee

satisfaction in an organization .Money is consider the most important motivation for employees,

though non financial incentives work efficient employees as indicator of the management’s

attitude and concern for them it is not just the compensation but its fairness is perceived by the

employees that determine the success of an compensation management system hence it is very

important for the management to design and to implement compensation system with utmost

care and tact. A good compensation system should be able to attract and retain employees give

them a fair deal, keep the organization competitive and motivate to perform the best.

Traditionally pay scale in compensation reflected the importance of the work

and the responsibility level. Today organization try more to assess the worth of an individualisms

of his performance and contributor to the organization with the growing demands of workforce

and the contribution to the organization to evolve an accurate system for evaluating jobs and

assessing their worth job evaluation helps to determine the relative worth of a job ion an

organization in a systematic ,consistent and accurate manner it also helps in estimating the basic

pay for each job in organization hirerachy,once the basic pay is determined the rewards,

incentives and the benefits attached with the pay position and performance are also determined.

The basic wage, incentives and the rewards and benefits, together form the compensation

package of an employee.

Compensation is what employees receive in exchange for their contribution to

the organization .compensation management helps the organization obtain maintain and retain a

productive workforce.

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1.1.4 NEED FOR THE STUDY

To identify the compensation technique followed in the company.

Organizational complexity towards compensation.

To improve the quality of work standards for the achievement of goals, of each employee

and organization’s through compensation.

Directly or indirectly motivate employees through compensation.

To know how PEPSICO developed the organizational work climate to retrench the

employees.

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1.2.0 Problem Definition:

Every Organization needs to have effective Human Resource Functions, which include

Recruitment, Selection, Placement, and Induction etc, along with this compensation management

is also very important to recruit and retain the employees.. Now this study reveals that how

PepsiCo is managing the employee compensation. As there are different wings in this

organization it becomes difficult to update the information regarding compensation management

The study is all about how to manage compensation and this study was conducted with a

well-structured questionnaire and discussions with higher authorities. After a final analysis was

conducted to elaborate the statement of problem and to give the conclusion about the study.

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1.3.0 Objectives of the Study:

The primary objectives of the Job Evaluation is to determine the relative worth of different jobs

in the organization and provides the basic for the compensation management system.

The following are the objectives:

1. To determine the position such as supervisor, manager, general manager. And place such as

production, qualitative, financing, and marketing of a job in the organizational hierarchy.

2. To clarify the responsibilities and authorities associated with each job.

3. Managing the internal and external consistency in the compensation.

4. Maintaining complete and accurate data, relating to job specification and job description of

different jobs.

5. To ensure employee satisfaction with respect to the compensation.

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1.4.0 Scope of the Study:

Compensation management helps to determine the relative worth of a job in an

organization in a systematic, consistent and in an accurate manner.

Once a merit pay is determined; the rewards, incentives and the benefits attached to the

position and performance is also determined.

The basic, incentives and rewards, and benefits together form the compensation package

of an employee.

PepsiCo asses the worth of each individual employee, in terms of his performance and

contribution to the organization with the growing demand of workforce and constant

challenges in the business environment.

Pepsico follows accurate system for evaluating job and assessing their worth.

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1.5 RESEARCH & METHDOLOGY OF THE STUDY:

Workers compensation is one of the most pressing problems in the any industry today.

Each of the fifty states has a workers’ compensation law there are wide differences in the costs,

benefits and administration of these laws between the states. To accomplish this goal the

research team felt a review of the construction industry was needed to identify best practices and

to use these practices in formulating guidelines for improves workers compensation

management.

The methodology intends to explain the sequence of research steps undertaken in

studying salary administration in PEPSICO It focuses on the following information.

The research team presents several findings of its research efforts plus offer

several recommendations on both workers compensation management practices and other

measures for evaluating employee safety performance.

RESEARCH PROJECT:

There are three types of research projects .They are

1. Exploratory

2. Descriptive

3. Causal

Exploratory method means to gather preliminary data to shed on the nature of the real nature of

the problem and suggest new ideas or hypothesis.

Descriptive method means it designs the name as they describe the phenomena with out

establishing association between factors

The data may be the-

1. Behavioral variables of people under study.

2. Situational variables that existed are forthcoming.

Causal is to test the cause and effect relationship.

The research project under study is Descriptive in nature.

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RESEARCH DESIGN:

Research design is defined as the specification of methods and procedures for acquiring

the information needed. It is a plan of organizing framework for doing the collection of data.

Generally the research designs are three types, viz.. Exploratory, Descriptive and casual.

Now the total study is of Descriptive type because each and every item is clearly

described.

RESEARCH HUMAN RESORURCES:

The Research H.R that is used in this study is Questionnaire. A questionnaire consists of

a set of questions presented to the respondents for their answer. The researcher has used

questionnaire as the instruments of research, to collect the information. A questionnaire consists

of both open ended and closed ended questions and personally administered to the respondents.

METHODOLOGY OF THE STUDY:

1. Sampling method -convenience sampling

2. Sample size -A sample size of 50 respondents has been taken

3. Sampling unit -PepsiCo

4 Sampling elements - employees of PepsiCo

5. Research instrument – structured questionnaire

6. Statistical method -Percentage Method, Bar graph

NOTE-

Percentage Method- No of respondents * 100

Total

RESEARCH INSTRUMENT-There is two research instruments for collecting primary data.

They are:

a) Questionnaire: Contains assets questions presented the respondents for their answers

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b) Mechanical: Mechanical devices like Galvanometer, Tachistoscope, Eyecamara, and

audiometer are used in research.

QUESTIONNAIRE:

The Questionnaire which is used here is structured and closed end one .It is one which there is

definite, concrete and predetermined questions. Liker Scale is used in the questionnaire. It makes

a statement description what ever is being evaluated. The response is then given a scale whose

positions range from “strongly disagree”

SAMPLING PROCEDURE:

The sampling procedure determines how the respondents be chosen. They are two types of

sampling .they are

1. PROBABILITY SAMPLING -probability methods are those in which the population eleme

The various methods of sampling can be grouped under 2 broad heads.

Probability Sampling (Random)

Non-Probability Sampling (non-Random)

Probability Sampling methods are those in which every item in the Universe has a known chance, or probability, of being chosen for sample. This implies that the selection of sample items is independent of the persons making the study that is the sampling operation is controlled, objectively that the items will be chosen strictly at random.

Non- Probability sampling methods are those, which do not provide every item in the

universe with a known chance of being included in the sample. The selection process is, at least,

particularly subjective.

Sampling Methods

Non-probability Samples Probability Samples

Judgment Sampling Stratified Sampling

Quota Sampling Systematic Sampling

Convenience Sampling    Cluster Sampling

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SIMPLE RANDOM SAMPLING:

It refers to those sampling techniques in which each and every unit of the population lies

an equal opportunity of being selected in the sample.

In Simple Random sampling which items get selected in the sample is just a matter of

chance – personal bias of the investigator does not mean haphazard- it rather means that the

selection process is such that the chance only determines which items shall be included in the

sample.

SOURCES OF DATA:

Two types of data can be considered for any research. They are:

Primary Data

Secondary Data

PRIMARY DATA-The primary data are which are collected a fresh and for the first time and

thus to be original in character. This consists of original information gathered for specific

purpose. The normal procedure is to interview people individually and/or on groups to get

required data .Here the data being sought is various reasons for compensation.

The primary data will be collected through questionnaire. These method has been chosen

keeping in view its simplicity and incase of few questions the respondents are free to present

their own views, opinions and suggestions.

SECONDARY DATA-The secondary data are these which have been collected by some one

else and which have already been passed through statistical process.

In case the secondary data will be collected from the reports like H.R manuals of the company

reports of the company name, books of various authors and from web sites of the company and

others. This consists of information that already exists some where, that has been collected

through a structured questionnaire and it collected through various policy documents, manuals

and handouts etc available in the company.

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The researchers available the “SURVEY RESEARCH” type of research is where the researchers

goes to the responded with the questioner and clarifies doubts raised by the respondent and note

the responses. It is a form of personal interviewing of the respondent...

STATISTICAL TOOLS USED :

Percentage Analysis:

In this research various percentage are identified in the Analysis and they are presented

Pictorially by way of Bar Diagrams and Pie charts in order to have a better quality.

DIRECT SCALING SYSTEMS:

o TWO point Scaling system.

o Four point Scaling system.

o Five point Scaling system.

CONTACT METHODS-

The choices in contact methods are mail, telephone or personal interviwes.The personal

interviewing is the most versatile of the three method .The research has used personal

interviewing method.

The researcher went to the respondents, and presented the questionnaire for

their answers.

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1.6 LIMITATIONS OF THE STUDY:

Project duration is limited to 45 days.

As a method adopted is convenience sampling, results may not be accurate.

Most of the employees not responded for our questionnaire during office hours.

Some of the respondents could not spare much time to answer the questionnaire because

of lack of their valuable time.

Complete information has not revealed by the employee for administrative response.

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1.6 REVIEW OF LITERATURE:

Compensation Management is an integral part of the management of the organization.

Compensation is a systematic approach to providing monetary value to employees in exchange

for work performed. Compensation may achieve several purposes assisting in recruitment, job

performance, and job satisfaction. To be effective, the managers must appreciate the value of

competitive pay, their human resources, and have an investment view of payroll costs. It is of

prime importance for an organization to maintain pay levels that attract and retain quality

employees while recognizing the need to manage payroll costs.

The literal meaning of compensation is to counter-balance. In the case of human resource

management, compensation is referred to as money and other

Benefits received by an employee for providing services to his employer. Money and benefits

received may be in different forms-base compensation in money and various benefits, which may

be associated with employee's service to the employer like provident fund, gratuity, and

insurance scheme, and any other payment which the employee receives or benefits he enjoys in

lieu of such payment.

"Compensation includes direct cash payments, indirect payments in the form of employee

benefits and incentives to motivate employees to strive for higher levels of productivity”

Compensation is a tool used by management for a variety of purposes to further the existence

and growth of the company.

Compensation is the remuneration received by an employee in return for his/her contribution to

the organization. It is an organized practice that involves balancing the work-employee relation

by providing monetary and non-monetary benefits to employees.

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Objectives of Compensation management are:

1.Attracting and Retaining Personnel: From organization’s point of view, the compensation

management aims at attracting and retaining right personnel in the Organization Not only they

require persons who are well qualified but they are also retained in the organization. There is no

dirth of personnel at operative levels but the problems come at the managerial and technical

levels

Particularly for growing companies. Not only have they required persons who are well qualified

but they are also retained in the organization. In the present day context, managerial turnover is a

big problem particularly in high knowledgebase Organizations.

2. Motivating Personnel: Compensation management aims at motivating personnel for higher

productivity. Monetary compensation has its own limitations in motivating people for superior

performance.

3. Optimizing Cost of Compensation: Compensation management aims at optimizing cost of

compensation by establishing some kind of linkage with performance and compensation.

4. Consistency in Compensation: Compensation management tries to achieve consistency-both

internal and external-in compensating employees. Internal consistency involves payment on the

basis of criticality of jobs and employees' performance on jobs.

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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 a compensation system are as follows:

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 a compensation system are as follows:

• Job analysis

• Salary structures

• Pay structure

Money is the one of the spark for the motivation of employees. Recruitment and retention of

qualified employees is a common goal shared by many employers. To some extent, the

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availability and cost of qualified applicants for open positions is determined by market factors

beyond the control of the employer. While an employer may set compensation levels for new

hires and advertise those salary ranges, it does so in the context of other employers seeking to

hire from the same applicant pool. Morale and job satisfaction are affected by compensation.

Often there is a balance (equity) that must be reached between the monetary value the employer

is willing to pay and the sentiments of worth felt be the employee. In an attempt to save money,

employers may opt to freeze salaries or salary levels at the expense of satisfaction and morale.

Conversely, an employer wishing to reduce employee turnover may seek to increase salaries and

salary levels.

Compensation may also be used as a reward for exceptional job performance. Examples of such

plans include: bonuses, commissions, stock, and profit sharing, gain sharing. Compensation will

be perceived by employees as fair if based on systematic components. Various compensation

systems have developed to determine the value of positions. These systems utilize many similar

components including job descriptions, salary ranges/structures, and written procedures.

Components of a Compensation system :

Job Descriptions A critical component of both compensation and selection systems, job

descriptions define in writing the responsibilities, requirements, functions, duties,

location, environment, conditions, and other aspects of jobs. Descriptions may be

developed for jobs individually or for entire job families.

Job analysis-The process of analyzing jobs from which job descriptions are developed.

Job analysis techniques include the use of interviews, questionnaires, and observation.

Job evaluation A system for comparing jobs for the purpose of determining appropriate

compensation levels for individual jobs or job elements. There are four main techniques:

ranking, factor comparison and point method.

Pay Structures Useful for standardizing compensation practices. Most pay structures

include several grades with each grade containing a minimum salary/wage and either step

increments or grade range. Step increments are common with union positions where the

pay for each job is pre-determined through collective bargaining.

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Salary Surveys Collections of salary and market data. May include average salaries,

inflation indicators, cost of living indicators, salary budget averages. Companies may

purchase results of surveys conducted by survey vendors or may conduct their own salary

surveys. When purchasing the results of salary surveys conducted by other vendors, note

that surveys may be conducted within a specific industry or across industries as well as

within one geographical region or across different geographical regions. Know which

industry or geographic location the salary results pertain to before comparing the results

to your company.

FACTORS INFLUENCING COMPENSATION SYSTEM:

The organization’s ability to pay:

Wage increases should be given by those organizations which can afford them. Companies that have good sales and therefore high profits tend to pay higher wages than those which are running at a loss or earning low profits because of the high cost of production or low sales. Supply and demand of labour:

If the demand and certain skills are high and the supply is low the result is rise in the price to be paid for these skills. The other alternative is to pay higher wages if the labour supply is scarce and lower wages when it is excessive.

The cost of living:

When the cost of living increases, workers and trade unions demand adjusted wages to offset the erosion of real wages. However when living costs are stable or decline the management does not resort with this argument as a reason for wage reduction.

The living wage:

Employers feel that the level of living prescribed in workers budget is opened to argument since it is based on subjective opinion.

Job requirements:

Jobs are graded according to the relative skill responsibility and job conditions required.

Trade unions bargaining power:

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Trade unions do affect the rate of wages. Generally the stronger and more powerful trade union, higher the wages.

Productivity:

Productivity is another criterion and is measured in terms of output man-hour. It is not due to labour efforts alone. Technological improvements, greater ingenuity and skill by the labour are all responsible for the increase in productivity.

Prevailing market rate:

This is also known as ‘comparable wages’ or ’going wage rate’. Reason behind this is competition demand that competitors adhere to the same relative wage level.

Skill levels available in the market:

With the rapid growth of industries, business trade there is shortage of skilled resources. The technological development, automation has been affecting the skilled levels at a faster rate.

Psychological and social factors:

This determine in a significant measure how hard a person will work for the compensation received or what pressures he will exert to get his compensation increased.

Different types of compensation include:

Base Pay

Commissions

Overtime Pay

Bonuses, Profit Sharing, Merit Pay

Stock Options

Travel/Meal/Housing Allowance

Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes...

Regulations affecting compensation

Compensation is a systematic approach to providing monetary value to employees in

exchange for work performed. Compensation may achieve several purposes assisting in

recruitment, job performance, and job satisfaction.

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Compensation may be used to: Recruit and retain qualified employees. Increase or maintain morale/satisfaction. Reward and encourage peak performance. Achieve internal and external equity. Reduce turnover and encourage company loyalty. Modify (through negotiations) practices of unions.

Recruitment and retention of qualified employees is a common goal shared by many employers. To some extent, the availability and cost of qualified applicants for open positions is determined by market factors beyond the control of the employer. While an employer may set compensation levels for new hires and advertise those salary ranges, it does so in the context of other employers seeking to hire from the same applicant pool. Morale and job satisfaction are affected by compensation. Often there is a balance (equity) that must be reached between the monetary value the employer is willing to pay and the sentiments of worth felt be the employee. In an attempt to save money, employers may opt to freeze salaries or salary levels at the expense of satisfaction and morale. Conversely, an employer wishing to reduce employee turnover may seek to increase salaries and salary level. Compensation may also be used as a reward for exceptional job performance. Examples of such plans include: bonuses, commissions, stock, and profit sharing, gain sharing. Compensation will be perceived by employees as fair if based on systematic components. Various compensation systems have developed to determine the value of positions. These systems utilize many similar components including job descriptions, salary ranges/structures, and written procedures.

Compensation Plans :

Developing a program outline.

Set an objective for the program.

Establish target dates for implementation and completion.

Determine a budget.

Designate an individual to oversee designing the compensation program-.

Determine whether this position will be permanent or temporary.

Determine who will oversee the program once it is established.

Determine the cost of going outside versus looking inside.

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Determine the cost of a consultant's review.

Develop a compensation philosophy-

Form a compensation committee (presumably consisting of officers or at least including

one officer of the company).

Decide what, if any, differences should exist in pay structures for executives, professional

employees, sales employees, and so on (e.g., hourly versus salaried rates, incentive-based

versus no contingent pay).

Determine whether the company should set salaries at, above, or below market.

Decide the extent to which employee benefits should replace or supplement cash

compensation.

Conduct a job analysis of all positions.

Conduct a general task analysis by major departments. What tasks must be accomplished

by whom?

Get input from senior vice presidents of marketing, finance, sales, administration,

production, and other appropriate departments to determine the organizational structure

and primary functions of each.

Interview department managers and key employees, as necessary, to determine their

specific job functions.

Decide which job classifications should be exempt and which should be nonexempt.

Develop model job descriptions for exempt and nonexempt positions and distribute the

models to incumbents for review and comment; adjust job descriptions if necessary.

Develop a final draft of job descriptions.

Meet with department managers, as necessary, to review job descriptions.

Finalize and document all job descriptions.

Evaluate jobs-

Rank the jobs within each senior vice president's and manager's department, and then

rank jobs between and among departments.

Verify ranking by comparing it to industry market data concerning the ranking, and

adjust if necessary.

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Prepare a matrix organizational review.

On the basis of required tasks and forecasted business plans, develop a matrix of jobs

crossing lines and departments.

Compare the matrix with data from both the company structure and the industry wide

market.

Prepare flow charts of all ranks for each department for ease of interpretation and

assessment.

Present data and charts to the compensation committee for review and adjustment.

Determine grades-

Establish the number of levels - senior, junior, intermediate, and beginner - for each job

family and assign a grade to each level.

Determine the number of pay grades, or monetary range of a position at a particular level,

within each department.

Establish grade pricing and salary range-

Establish benchmark (key) jobs.

Review the market price of benchmark jobs within the industry.

Establish a trend line in accordance with company philosophy (i.e., where the company

wants to be in relation to salary ranges in the industry).

Determine an appropriate salary structure-

Determine the difference between each salary step.

Determine a minimum and a maximum percent spread.

Slot the remaining jobs.

Review job descriptions.

Verify the purpose, necessity, or other reasons for maintaining a position.

Meet with the compensation committee for review, adjustments, and approval.

Develop a salary administration policy-

Develop and document the general company policy.

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Develop and document specific policies for selected groups.

Develop and document a strategy for merit raises and other pay increases, such as cost-

of-living adjustments, bonuses, annual reviews, and promotions.

Develop and document procedures to justify the policy (e.g., performance appraisal

forms, a merit raise schedule).

Meet with the compensation committee for review, adjustments, and approval.

Obtain top executives' approval of the basic salary program-

Develop and present cost impact studies that project the expense of bringing the present

staff up to the proposed levels.

Present data to the compensation committee for review, adjustment, and approval.

Present data to the executive operating committee (senior managers and officers) for

review and approval.

Communicate the final program to employees and managers-

Present the plan to the compensation committee for feedback, adjustments, review, and

approval.

Make a presentation to executive staff managers for approval or change, and incorporate

necessary changes.

Develop a plan for communicating the new program to employees, using slide shows or

movies, literature, handouts, etc.

Make presentations to managers and employees. Implement the program.

Design and develop detailed systems, procedures, and forms.

Work with HR information systems staff to establish effective implementation

procedures, to develop appropriate data input forms, and to create effective monitoring

reports for senior managers.

Have the necessary forms printed.

Develop and determine format specifications for all reports.

Execute test runs on the human resources information system.

Execute the program.

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Monitor the program-

Monitor feedback from managers.

Make changes where necessary.

Find flaws or problems in the program and adjust or modify where necessary.

BRIFE PROFILE OF PEPSICO

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PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than

$60 billion and over 285,000 employees.

Mission and Vision At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business.

Our Mission

Our mission is to be the world's premier consumer products company focused on

convenient foods and beverages. We seek to produce financial rewards to investors as we

provide opportunities for growth and enrichment to our employees, our business partners and the

communities in which we operate. And in everything we do, we strive for honesty, fairness and

integrity

Our Vision "PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental

stewardship, activities to benefit society, and a commitment to build shareholder value by

making PepsiCo a truly sustainable company

PepsiCo Values & Philosophy

Our Values & Philosophy are a reflection of the socially and environmentally

responsible company we aspire to be. They are the foundation for every business decision we

make.

Our Mission and Vision PepsiCo Values & Philosophy The PepsiCo Family Our Brands

Our Leadership Board of Directors and Committees Corporate Governance Corporate Officers

Principal Business Units Our History

Our Commitment

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We are committed to delivering sustained growth through empowered people acting responsibly and building trust.

What It Means Sustained Growth is fundamental to motivating and measuring our success. Our quest for sustained growth stimulates innovation, places a value on results, and helps us understand whether today's actions will contribute to our future. It is about the growth of people and company performance. It prioritizes both making a difference and getting things done.

Empowered People means we have the freedom to act and think in ways that we feel will get the job done, while adhering to processes that ensure proper governance and being mindful of company needs beyond our own.

Responsibility and Trust form the foundation for healthy growth. We hold ourselves both personally and corporately accountable for everything we do. We must earn the confidence others place in us as individuals and as a company. By acting as good stewards of the resources entrusted to us, we strengthen that trust by walking the talk and following through on our commitment to succeeding together

Guiding principles

We uphold our commitment with six guiding principles.

We must always strive to:

Care for our customers, our consumers and the world we live in. We are driven by the intense, competitive spirit of the marketplace, but we direct this spirit toward solutions that benefit both our company and our constituents. Our success depends on a thorough understanding of our customers, consumers and communities. To foster this spirit of generosity, we go the extra mile to show we care.

Sell only products we can be proud of. The true test of our standards is our own ability to consume and personally endorse the products we sell. Without reservation. Our confidence helps ensure the quality of our products, from the moment we purchase ingredients to the moment it reaches the consumer's hand.

Speak with truth and candor. We tell the whole story, not just what's convenient to our individual goals. In addition to being clear, honest and accurate, we are responsible for ensuring our communications are understood.

Balance short term and long term. In every decision, we weigh both short-term and long-term risks and benefits. Maintaining this balance helps sustain our growth and ensures our ideas and solutions are relevant both now and in the future.

Win with diversity and inclusion. We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity brings

28

new perspectives into the workplace and encourages innovation, as well as the ability to identify new market opportunities.

Respect others and succeed together. Our mutual success depends on mutual respect, inside and outside the company. It requires people who are capable of working together as part of a team or informal collaboration. While our company is built on individual excellence, we also recognize the importance and value of teamwork in turning our goals into accomplishments

The PepsiCo Family Meet the four major divisions of the PepsiCo family: PepsiCo Americas Beverages, PepsiCo Americas Foods, PepsiCo Europe, PepsiCo Middle East and Africa.PepsiCo Americas Beverages

Pepsi was founded in 1898 by Caleb Bradham, a New Bern, North Carolina, druggist, who first formulated FOODS AND JUICESla.

Today, Brand Pepsi is part of a portfolio of beverage brands that includes carbonated soft drinks, juices and juice drinks, ready-to-drink teas and coffee drinks, isotonic sports drinks, bottled water and enhanced waters. PepsiCo Americas Beverages (PAB) has well known brands such as Mountain Dew, Diet Pepsi, Gatorade, Tropicana Pure Premium, Aquafina water, Sierra Mist, Mug, Tropicana juice drinks, Propel, SoBe, Slice, Dole, Tropicana Twister and Tropicana Season's Best.

In 1992 PAB formed a partnership with Thomas J. Lipton Co. to sell ready-to-drink tea brands in the United States. FOODS AND JUICESla also markets Frappuccino ready-to-drink coffee through a partnership with Starbucks.

Tropicana was founded in 1947 by Anthony Rossi as a Florida fruit packaging business. In 1954 Rossi pioneered a pasteurization process for orange juice. For the first time, consumers could enjoy the fresh taste of pure not-from-concentrate 100% Florida orange juice in a ready-to-serve package. The juice, Tropicana Pure Premium, became the company's flagship product. PepsiCo acquired Tropicana, including the Dole juice business, in August 1998.

SoBe became a part of PAB in 2001. SoBe manufactures and markets an innovative line of beverages including fruit blends, energy drinks, dairy-based drinks, exotic teas and other beverages with herbal ingredients.

Gatorade thirst quencher sport drinks, was acquired by The Quaker Oats Company in 1983 and became a part of PepsiCo with the merger in 2001. Gatorade world's first isotonic sports drink as is backed by 40 years of science. Created in 1965 by researchers at the University of Florida for the school's football team, "The Gators," Gatorade is now the world's leading sport's drink.

Pepsi Beverages Company

29

On February 26th, 2010, PepsiCSSSo completed its mergers with PAS and PBG to strengthen its North American beverage business. The North American bottling operations of PAS and PBG are now an operating unit of PepsiCo known as Pepsi Beverages Company. PBC operates in the United States, Canada and Mexico and encompasses approximately 75 percent of PepsiCo's North American beverage volume. PBC's diverse portfolio includes some of the world's most widely recognized beverage brands, including Pepsi, Mountain Dew, Sierra Mist, Aquafina, Gatorade, SoBe, Lipton, and Amp Energy. PBC also manufactures and distributes third-party brands in key local markets such as Dr Pepper, Crush, Rock Star and Muscle Milk. The operating unit is headquartered in Westchester County, New York.

Our brands

PepsiPepsi

Pepsi Max

Pepsi Max Cease Fire

Pepsi Natural

Pepsi One

Pepsi Throwback

Pepsi Wild Cherry

Caffeine Free Pepsi

Diet Pepsi

Diet Pepsi Wild Cherry

Caffeine Free Diet Pepsi

Sierra MistSierra Mist

Diet Sierra Mist

Sierra Mist Cranberry Splash

Diet Sierra Mist Cranberry Splash

30

Diet Sierra Mist Ruby Splash

Slice Slice - Diet Orange

Slice - Grape

Slice - Orange

Slice - Peach

Slice - Strawberry

Tropicana Tropicana Fruit Punch

Tropicana Lemonade

Tropicana Light - Lemonade

Tropicana Light - Orangeade

Tropicana Orangeade

Tropicana Pink Lemonade

Tropicana Strawberry Melon

Tropicana Twister Soda - Diet Orange

Tropicana Twister Soda - Grape

Tropicana Twister Soda - Orange

Tropicana Twister Soda - Strawberry

Ocean Spray (License) Ocean Spray Apple Juice

Ocean Spray Blueberry Juice Cocktail

Ocean Spray Cranberry Juice Cocktail

Ocean Spray Cran-Grape Drink

Ocean Spray Cran-Pomegranate Juice Drink

Ocean Spray Orange Juice

Ocean Spray Pineapple Peach Mango Juice Blend

Ocean Spray Ruby Red Grapefrui Juice Drink

Ocean Spray Strawberry Kiwi Juice Drink

More Fiesta Mirinda Mango

Fiesta Mirinda Pina

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Mountain Dew

Mountain Dew

Mountain Dew Code Red

Mountain Dew Distortion

Aquafina

Aquafina FlavorSplash - Grape

Aquafina FlavorSplash - Peach Mango

Aquafina FlavorSplash - Raspberry

Aquafina FlavorSplash - Strawberry Kiwi

International Brands Fiesta Mirinda Mango

Fiesta Mirinda Pina

Manzanita Sol

Kas Mas

Aquafina FlavorSplash

Jazzing up the PepsiCo hydration portfolio, Aquafina FlavorSplash is a refreshing, full-flavored water, sweetened with Splenda and ACE-K. Multipacks of FlavorSplash use 5% less shrink wrap and come with Aquafina's new, lighter PET plastic bottles. These bottles use 20% less PET plastic, which saves twenty million pounds of waste.

Board of Directors and Committees

PepsiCo's business strategy and affairs are overseen by our Board of Directors, which is comprised of one executive director and eleven independent outside directors. Only independent outside directors make up our three standing Board Committees, 1) Nominating and Corporate Governance, 2) Audit, and 3) Compensation

32

Corporate Governance: PepsiCo has adopted strict corporate standards that govern our operations and ensures accountability for our actions. Learn more about the processes and policies guiding our business.

Amended and Restated Articles of Incorporation

PepsiCo's Articles of Incorporation provide a legal declaration of our structure and purpose as a corporation as mandated by North Carolina law.

Audit Committee Charter

The Audit Committee is comprised of independent directors with the financial literacy to provide oversight of PepsiCo accounting policies and financial reporting.

By-Laws

PepsiCo's By-Laws spell out the rules and procedures by which we operate as well as the rights and powers of company shareholders, directors, and officers.

Compensation Committee Charter

The Compensation Committee is composed entirely of independent directors responsible for overseeing policies on executive compensation.

Corporate Governance Guidelines

Our Corporate Governance Principles were adopted to establish a common set of expectations to assist the Board and its committees in performing their duties in compliance with applicable requirements.

Disclosure Committee Charter

PepsiCo's Disclosure Committee oversees the timely delivery and accurate portrayal of our financial condition in all company communications to shareholders and investors.

Nominating and Corporate Governance Committee Charter

The Nominating and Corporate Governance Committee is responsible for nominating new members to the Board and providing policy recommendations regarding corporate governance.

Policy for Audit, Audit-Related and Non-Audit Services

PepsiCo has adopted guidelines regarding non-audit and tax services provided by an independent auditor.

Worldwide Code of Conduct Policies

33

PepsiCo's Code of Conduct applies to every employee, officer and director of PepsiCo, its divisions and subsidiaries and every business transaction we make worldwide.

Contact the Board of Directors/Audit Committee

Registered Agent

Speak Up

The Speak Up Hotline serves a confidential line of communication for employees to report violations of federal, state and local laws as well as our Code of Conduct.

Our Worldwide Code of Conduct:PepsiCo is committed to "Performance with Purpose". Simply put, this means doing

business the right way: operating responsibly with integrity and with high ethical standards.

Our Worldwide Code of Conduct embodies those principles. It is PepsiCo's statement of how we expect our employees to do business. The Code of Conduct provides guidance for dealing with other employees, customers, suppliers, our shareholders, the public and our competitors in an ethical and appropriate manner.

The Code of Conduct, by its very nature, cannot describe every possible situation that our employees may experience. What it does provide foundation for the Purpose behind our Performance.Our Worldwide Code of Conduct is available is 34 languages.

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About PepsiCo India

PepsiCo entered India in 1989 and has grown to become one of the country’s leading

food and beverage companies .one of the largest multinational investors in the country, PepsiCo

has established a business which aims to serve the long term dynamic needs of consumers in

India.

PepsiCo India and its partners have invested more than U.S. $1 billion since the

company was established in the country .PepsiCo provides direct and indirect employment to

150,000 people including supplier sand distributors.

PepsiCo nourishes consumers with a range of products from treats to healthy eats that

deliver joy as well as nutrition and always ,good taste. Pepsi India’s expansive portfolio includes

iconic refreshment beverages pepsi, 7up, mirinda and mountain Dew, in addition to low calorie

options such as Diet pepsi , hydrating and nutritional beverages such as Aquafina drinking

water , isotonic sports drinks – Gatorade , Tropicana 100%fruit juices and juice based drinks –

Tropicana Nectars ,Tropicana Twister and Slice . Local brands Lehar Evervess Soda, Dukes

Lemonade and Mangola ass to the diverse range of brands.

PepsiCo ‘s foods company Frito –lay ,is the leader in the branded salty snack market and

all Frito lay products are free of trans –fat and MSG it manufactures lay’s potato chips ,cheetos

extruded snacks ,uncle chipps and traditional snacks under the kurkure and Lehar brands .the

company’s high fibre breakfast cereal ,Quaker oats ,and low fat and roasted snack options

enhance the healthful choices available to consumers . Frito lays core products, lay’s, kurkure,

uncle chipps and cheetos are cooked in rice bran oil to significantly reduce saturated fats and all

of its products contain voluntary nutritional labeling on their packets.

The group has built an expansive beverage and foods business. to support its operations ,Pepsi co

has 36 bottling plants in India of which 13 are company owned and 23 are franchisee owned and

5 co paker units .in addition to this PepsiCo’s Frito lay foods division has 3 state –of –the-art

plants. PepsiCo’s business is based on it s sustainability vision of making tomorrow better than

35

today .PepsiCo’s commitment to living by this vision every day is visible in its contribution to

the country ,consumers and farmers.

OUR PRODUCTS

PepsiCo entered India in 1989 and in a span of almost 2 decades, has built an expansive

beverage, snack food and export business.

To support the operations are the groups 36 bottling plants in India , of which 13 are company

owned and 23 are franchisee owned and 5 co packer units.

PepsiCo stays committed to providing its consumers with top quality beverages.

Its diverse portfolio of brands includes:

The flagship cola brand –PepsiCo

Diet Pepsi

7up

Mirinda

Mountain dew

Slice fruit drink

Tropicana brand fruit juices in various flavours

Aquafina packaged drinking water

Gatorade

36

Lehar evervess soda

Dukes Lemonade

Mangola

BUSINESS OVERVIEW

The bottling operation at this plant covers manufacture of carbonated soft drinks, juice

based drink, packaged drinking water and handling of out sourced products.

Carbonated beverages are manufactured after suitably treating and processing the various

raw materials that i.e. water, carbon dioxide, sugar, flavour and salts; and ensuring proportionate

mixing of the above before filling in clean sanitized bottles and sealing with either crowns or

plastic caps. The above process is followed for the manufacture of brands viz. Pepsi, Mirinda

orange , mirinda lemon , 7up, & Mountain diew . The process with minor modification (without

CO2) leads to the bottling operation of juice under brand name slice .the process with minor

modification (withoutsyrup/flavour/COI20 )leads to the bottling operation of packaged drinking

water under brand name Aquafina.

Besides the operation also includes handling of all other PepsiCo products not

manufactured at the pant the outsourced product (in different SKU’s) includes:

1. carbonated soft drinks in “cans”

2. Juice based drinks in Tetra pak

Sangareddy plant under the umbrella of PepsiCo India Business region is the biggest plant in

India which comes under Africa & Middle East Asia (AMEA)region.

37

PERFORMANCE WITH PURPOSE

At PepsiCo we’re committed to achieving business and financial success while leaving

appositive imprint on society – delivering what we call performance with purpose.

We believe our financial success –performance –must go hand-in-hand with our social

and environmental responsibilities –purpose. we bring that purpose to every aspect of our

business.

Our approach to superior financial performance is straightforward –drive shareholder

value. By integrating a commitment to social and environmental performance in to all of our

business, we‘re able to manufacture our products more efficiently and economically, attract even

more of the world’s best talent, and sharpen our competitive edge in markets allover the world.

Our performance with purpose agenda is comprised of three platforms:

Human Sustainability

Nourish consumers with a broad range of convenient, great-tasting foods and drinks –

from treats and simple refreshments to positive nutrition; make the healthy choice an easier

choice to make.

Environmental Sustainability

Conserve our natural resources; operate in a way minimizes our environmental footprint

with the goal of reaching a net – neutral impact.

OUR COMMITMENT

Our values reflect aspirations –the kind of company we want PepsiCo to be. We express

our value s in the form of a commitment .our commitment is:

Sustained growth

Is fundamental to motivating and measuring our success. Our quest for sustained

growth stimulates innovation, places a value on results, and helps us understand whether today’s

actions will contribute to our future. It is about growth of people and company performance. It

prioritizes making a difference and getting things done.

38

Empowered people

Means we have the freedom to act and think in ways that we feel will get the job done ,

while being consistent with the process that ensure proper governance and being mindful of the

rest of the company’s needs.

Responsibility and trust

From the foundation for healthy growth. It’s about earning the confidence that other

people place in us as individuals and as a company .our responsibility means we take personal

and corporate ownership for all we do, to be good stewards of the resources entrusted to us. We

build trust between ourselves and others by walking the talk and being committed to succeeding

together.

Guiding principles:

This is how we carry out our commitment .we must always strive to:

Care for customers, consumers and the world we live in.

We are driven by an intense , competitive spirit in the market place ,but we direct this spirit

towards solutions that achieve a win for each of our constituents as well as a win for the

corporation .our success depends on a through the extra mile .essentially ,this is a spirit of

growing rather than taking.

Sell only products we can be proud of.

The test of our standards is that we must be able to personally endorse our products

without reservation and consume them ourselves . this principle extends to every part of the

business, from the purchasing of ingredients to the point where our product reach the consumer’s

hands.

Speak with truth and candor. we speak up,

Telling the whole picture, not just what is convenient to achieving individual goals . in

addition to being clear, honest and accurate ,we take responsibility to ensure our communications

are understood.

Balance short term and long term.

We make decisions that hold both short-term and long-term risks and benefits in bane

over time .without this balance; we cannot achieve the goal of sustainable growth.

39

Win with diversity and inclusion.

We leverage a work environment that embraces people with diverse background ,

trits and different ways of thinking .this leads to innovation ,the ability to identify new market

opportunities , all of which helps develop new products and drives our ability to sustain our

commitments to growth through empowered people.

Respect others and succeed together.

This company is built on individual excellence and personal accountability, but no

one can achieve our goals by acting alone .we need great people who also have the capability of

working together, whether in structured teams or informal collaboration. Mutual success is

absolutely dependent on treating every one who touches the business with respect, inside and out

side the company .a spirit of fun, our respect for others and the value we put on team work make

up a company people enjoy being part of, and this enables us to deliver world-class performance.

Role and scope of HR at PepsiCo

Mission

To facilitate the processes which create an environment where each member of PepsiCo family is

able to contribute their best.

All HR processes are linked to Core Competency Model which was launched for PepsiCo

in 2005

Assessment Centers are launched for promoting staff into management cadre.

HRIS (Human Resource Information System) launched to empower employees of

Godfrey Phillips.

Six-Sigma project is undertaken to create a robust performance management system.

Annual training calendar is introduced which is based on the PepsiCo competency model.

Internal Recruitment is encouraged through IJP process to fill vacant positions.

Each management staff is entitled to training and development intervention of at least 12

days.

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360-degree feedback is initiated.

Variable income plan was launched in 2005 to attract the organization to raise their

performance bar.

PepsiCo believes in Total Employee Involvement. This is done through small group

activity including all employees in teams, whereby identified problems are resolved and

presented to management. The HR department is the central point which initiates, monitors and

follows up on the processes. It coordinates the task force activities of the factory. There are at

present 11 task forces in the factory

There is a micro site that has been created called ELIVE to generate the awareness

among the employees about the concept and its benefits. Each manager should therefore evolve

his or her people strategy aligned to the business strategy of the organisation

AFJP-SANGAREDDY PLANT

41

This plant belongs to Koshla (inaugurated by former pm of India Indira Gandhi) and

converted to beverage manufacturing facilities under the name chairman bottling company ltd in

1996 by jaipuria group.

Charminar Bottling Company Ltd (CBCL), sangareddy was an erstwhile franchisee

owned bottling operation taken over by PepsiCo on 26th march 2006 and named as Aradhana

Foods and Juices pvt ltd. it is located 45 kms from the city of Hyderabad and services the entire

Andhra Pradesh and parts of Karnataka located at pothireddypalli village, Sanger eddy mandal

Dist: medak covering around 32 acres. We manufacture the world wide popular carbonated soft

drinks viz Pepsi, 7up, Mirinda, mountain Dew, Lemon flavoured Nimbooz & Fruit Juices drink

Slice aswellas the packaged water brand “Aquafina” .

It has following 8manufacturing lines viz,

1. Sasib : 600 BPM-CSD GRB

2. Hilden : 550 BPM -CSD GRB,

3. Slice : 400 BPM Juice GRB,

5. Hot fill : 600bjpm-JuicePET

6. Aquafina packaged drinking water line : 400BPM

7. Corbonated Soft Drinks in PET bottles : 400BPM

8. CSD : 600BPM

Since take over from Charminar Bottling Company LTD., Company invested approximately 250

Crores in setting up state of the art, technology by setting up high speed Aquafina 400BPM, Hot

fill 600BPM, CSD-PET400 BPM, CSD-PET 600BPM.Sangareddy plant emerged as the Asia’s

biggest plant with the expansion and will scale up its capacity further to become a 2crore

cases/annum plant by the year 2010.

42

COMPENSATION MANAGEMENT IN PEPSICO

43

PepsiCo follows COST TO COMPANY (CTC) rule. The contents of the salary for employees

Gross salary

+

Bonus

+

Provident Fund

+

Employee State Insurance

+

Leave Travel Allowances

Note: The gross salary for the employees is calculated as follows

Gross salary= Salary per annum/12

8.33% to 20% is calculated on basic.

EARNINGS & DEDUCTIONS:

In salaries of employees earnings and deductions are as follows

EARNINGS:

Gross salary is calculated as:

Basic – Gross/50% + HRA + Conveyance Allowance (CA) + Educational

allowance + Medical Allowance + Special Allowance + FDA + VDA + Food Allowance +

Washing Allowance + Attendance Allowance

Note: special allowance can be calculated as

Special allowance (Basic + HRA + C.A + Medical Allowances + Educational

Allowances)

DEDUCTIONS:

Provident fund = Basic * 12%

ESI = Gross * 1.75% (up to 15000)

Provisional tax = 200

Note: Provisional tax can calculated foe the employees on the basis of salary

5001 – 6000 = 60

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6001 – 10000= 80

10001 – 15000 = 100

15001 – 20000 = 150

20001 – 500000 = 200

Net salary is calculated as = Gross Earnings – deductions

ESI (Employee State Insurance):

ESI is been calculated on the gross salary per month. And the ceiling is rupees 15000 per

month, beyond that one would be exempted from ESI Act.

The contribution is 1.75%of gross salary per month, whereas employer contribution is 4.75% of

the same.

ESI is 2 types:

1. Non ESI Structure 2. General ESI Structure

a. Provident Fund a. Provident Fund

b. Professional Tax b. Professional Tax

c. ESI

Non ESI Structure: The Employees who are earning more than Rupees 15000 are not eligible

to ESI.

General Structure: The Employees who are earning below Rupees 15000 are eligible to ESI.

Employee Provident Fund:

The term provident fund means it is a future fund for seek of employees and as well as

their family members and dependants.

The contributions are from both sides (employer+employee). General the employee

contribution is less than the employer contribution.

The contributions are given below:

Employer : 12%

Employee : 12% (again the contribution of employee is classified into Pension Fund -8.33%

+Provident Fund 3.67).

BONUS: Bonus is taxable on receipt basis and is included in the gross salary in the year in

which the bonus is received basis. Bonus is taxable in the year in which it is received.

45

The dictionary meaning of ‘bonus’ is an extra payment to the workers beyond the normal

wage. According to bonus Act, 1965, bonus is payable only annually and it cannot be directed to

be paid on half yearly.

Voluntary Retirement Fund (VRF): It can be calculated 25% on Provident Fund.

Gratuity: As per payment of Gratuity Act 1972, any employee become eligible for the gratuity

when he has completed 5 years service. The employee who has worked for 240 days in a year,

then a year is treated a completer year.

Leaves: There are 3 types of leaves.

1. Casual Leaves

2. Sick Leaves

3. Earned leaves

Casual leaves: All employees are eligible.

Sick leaves: Employees who are under ESI.

Earned leaves: The employees eligible for earning leaves they should work for at least 1 year

under the company.

Physical, Medical Holidays (except week hours holidays).

Employee should work compulsory for240 days.

46

DATA ANALYSIS & INTERPRETATION

1. Responce on compensation system

TBLE 1:

S.NO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Fixed pay system 1 2

2 Variable pay system 45 90

3 Both 4 8

Total 50 100

GRAPH 1:

Interpretation- from the above graph it is interpreted that 90% of the respondents have agreed that the organization is having variable pay system, 2% are saying that they are having fixed pay system and 8% are saying that they are having both.

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2. Measure on the organization to retain Employees.

TABLE-2

SlNO RESPONSE NO OF RESPONDENTS

PERCENTAGE

1 Yes 40 80

2 No 10 40

Total 50 100

GRAPH-2

40

10

80

40

0

10

20

30

40

50

60

70

80

90

Yes No

NO OFRESPONDENTS

PERCENTAGE

Interpretation- from the above graph it is interpreted that 80% of the respondents have agreed that the organization is retaining the employees by providing adequate Compensation .while rests of them are opposed.

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3. Response on value based pay

TABLE-3

SLNO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Yes 30 60

2 No 20 40

TOTAL 50 100

GRAPH-3

30

20

60

40

0

10

20

30

40

50

60

70

Yes No

NO OFRESPONDANTS

PERCENTAGE

Interpretation- from the above graph 60% of respondents are satisfied with paying paid to them according to work while remaining are opposed to them.

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4.Perk/fringe benefits to senior level employees

TABLE-4

SLNO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Yes 40 80

2 No 10 20

TOTAL 50 100

GRAPH-4

15

3530

70

0

10

20

30

40

50

60

70

80

Yes No

NO OFRESPONDANTS

PERCENTAGE

Interpretation- from the above graph it is interpreted 15% of respondents receives the

Perk benefits provided by the organization and rest of them are oppose to it.

50

5. Feed back on Bonus plan.

TABLE-5

SLNO RESPONSE NO OF RESPONDENTS PERCENTAGE

1 YES 48 96

2 NO 2 4

TOTAL 50 100

GRAPH-5

Interpretation- from the above graph 96% of the employees said that they were getting bonus annually and 4% of employees were not responded to bonus.

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6. Response on rewards provided based on performance..

TABLE-6

SLNO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Yes 35 70

2 No 15 30

TOTAL 50 100

GRAPH-6

35

15

70

30

0

10

20

30

40

50

60

70

80

Yes No

NO OFRESPONDANTS

PERCENTAGE

Interpretation- from the above graph 70% of the employees said that the organization will Reward the people who perform their job well and 30% of the people are opposed to it.

52

7. Response on ‘how often is the employee rewarded’

TABLE-7

GRAPH-7

Interpretation- from the above graph 96% of the employees said that the organization will Reward the people monthly and 4% are saying that the organization rewarded quarterly.

53

1 Monthly 48 96

2 Quarterly 2 4

3 Half yearly 0 0

4 Yearly 0 0

Total 50 100

8. Response on ‘are all the employees eligible for the reward as per your company policy’

TABLE-8

S.NO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Yes 42 84

2 No 8 16

Total 50 100

GRAPH-8

Interpretation- from the above graph 84% of the employees are saying that all the employees are eligible for the reward as per company policy and 16% are opposing it.

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9. Response ontype of reward system in the organization.

TABLE-9

SLNO RESPONSE NO OF RESPONDENTS

PERCENTAGE

1 Monetary 2 4

2 Non monetary 0 0

3 Both 48 96

Total 50 100

SLNO RESPONSE NO OF

RESPONDENTSPERCENTAGE

1 Monetary 2 4

2 Non monetary 0 0

3 Both 48 96

Total 50 100

SLNO RESPONSE NO OF RESPONDENTS

PERCENTAGE

1 Monetary 2 4

2 Non monetary 0 0

3 Both 48 96

Total 50 100

GRAPH-9

55

Interpretation- from the above graph 96% of the employees are saying that both reward systems are there and 4% are saying that reward system is monetary.

56

10. Allowance structure analysis.

TABLE-10

SlNO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Leave travel allowances

0 0

2 Educational allowances

0 0

3 Medical allowances 0 0

4 All 50 100

TOTAL 50 100

GRAPH-10

Interpretation- from the above graph it is interpreted that all employees responded that they are receiving all Allowances in their organization.

57

11. Response on benefits

TABLE-11

S.NO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Medical insurance 0 0

2 Vacation leaves 0 0

3 Medical care 0 0

4 Sick leaves 0 0

5 All 50 100

Total 50 100

GRAPH-11

Interpretation- from the above graph it is interpreted that all employees responded that they are receiving all benefits in their organization.

58

12. Response on general increase in compensation in a year

TABLE-12

S.NO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 Yes 48 96

2 No 2 4

Total 50 100

GRAPH-12

Interpretation- from the above graph it is interpreted that 96% are saying that there is a general increase in compensation in a year and 4% are opposing it.

59

13. . Response on whether “employee receives any organization’s monetary benefits in addition to annual increment”.

TABLE-13

SLNO RESPONSE NO OF

RESPONDANTSPERCENTAGE

1 Yes 10 20

2 No 40 80

TOTAL 50 100

GRAPH-13

10

40

20

80

0

10

20

30

40

50

60

70

80

90

Yes No

NO OFRESPONDANTS

PERCENTAGE

Interpretation- from the above graph it is interpreted that 20% of respondents are Satisfied with the monetary Benefits provided by the organization and 80%of employees are opposing to it.

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14. Consideration of advances in case of emergency pay. .

TABLE-14

SLNO RESPONSE NO OF

RESPONDANTSPERCENTAGE

1 Yes 10 20

2 No 40 80

TOTAL 50 100

GRAPH-14

10

40

20

80

0

10

20

30

40

50

60

70

80

90

Yes No

NO OFRESPONDANTS

PERCENTAGE

Interpretation-from the above graph it is interpreted 10 % of the respondents in the organization are satisfied with the advance pay in case of emergency and remaining are opposed to it.

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15. Response on satisfaction on the compensation system practiced in the company

TABLE-15

S.NO RESPONSE NO OF RESPONDANTS

PERCENTAGE

1 S.A 1 2

2 A 40 80

3 S.D 0 0

4 D 9 18

5 S.D 0 0

GRAPH-15

Interpretation-from the above graph it is interpreted 80 % of the respondents in the organization are agreed with the compensation system in that company and 18% are opposing it. Remaining 2% are strongly aggraded

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FINDINGS:

From the survey in PEPSICO it is found that the majority of the employee opined that the

organization culture plays the vital element that provides with compensation.

It is also found that the jobs they are doing are challenging with less stress at the work

place they are highly satisfied with the level of income in which they are earning.

It is also found that working hours are satisfactory and the benefits and allowances that

are provided for them are feasible.

Encouragement of workers participation in management, the casuals leaves taking system

in the organization, recruitment process and salary administrations are the key factors.

When asked what contributes to compensation, majority of the respondents opined that

job security, the job benefits like medical benefits, medical insurance, and medical care

provided by the organization, good communication network, accurate working hours,

utilization of the knowledge of employee’s at all the levels.

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SUGGESTIONS:

Loan facilities like Medical, Educational should be provided.

The management has to look after the perfect administration format properly. They

have to follow the administration format which will be beneficial to all the employees

in the organization.

The company should examine the various credit policies. The company has to choose

best among the profitable results.

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CONCLUSION

By Hard working of all the above issues of my research, I would like to conclude that

compensation management is at most important in any organization. It is the basic and very

important function should be carried out by the Human Resource Development .The worth of

each employee in terms of his performance and contribution to the organization and

effectiveness with the growing demand of workforce and constant challenges in the business

environment is to be estimated. Needless to say for identification of standard of employee

performance is his greater efficiency. Compensation is the key role in salary in estimating getting

their benefits.

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QuestionnaireCompany name: PepsiCo

Project title: Compensation management

Dear Sir/madam, Its my privilege that to interact with you and incorporate the kind inputs given by you in my effort to study the compensation system at PepsicoI would be very thankful to you if you would fill up the following questionnaire and obliged me with appropriate responses.

1. Does the company have, ( ) a. Fixed pay system

b.Variable pay systemc.Both

2. Does the compensation paid by your company allow to attract and retain the best employees a .Yes b .No c .Can’t say

3. Is your organization providing equal pay for work of equal value? ( ) a. yes b. No 4. Whether your organization is providing any perk/fringe benefits to senior level employees a. yes b. no ( ) 5. Does your company have a bonus plan? ( ) a. yes b. no If yes what type of bonus is provided? a. Annual bonus b. half year bonus c. interim bonus

6. Does your organization reward the people who perform their job well? ( ) a. yes b. no 7. How often is the employee rewarded? a.Monthly b.Quarterly c. Half yearly d. yearly d.Occansionally&based on extraordinary accomplishments 8. Are all the employees eligible for the reward as per your company policy? ( ) a.Yes b.No 9. Is the Reward system in your organization a. Monetary b. Non monetary c. Both ( ) 10. Whether your organization is providing any of the below mentioned allowances? ( ) a. leave travel allowances b. educational allowances

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c. medical allowances d. all 11. Whether your organization is providing any of the following benefits? ( ) a. medical insurance b. vacation leaves c. medical care d. sick leaves

12. Does your company give a general increase in compensation in a year? ( ) [ ] Yes [ ] No If yes, on what basis?

(a) Fixed percentage (b) Performance rating

13. Do they performed employee receive any organization’s monetary benefits in addition to annual increment ( ) a. yes b. No 14. Does your organization consider advances in case of emergency ( ) a. yes b. no

15. Are you satisfied about the compensation system practiced in your company ( ) a. S.A b. A c. S.D d. D e. S.D

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BIBLIOGRAPHY

TEXT BOOKS-

HUMAN RESOURCE AND PERSONAL - K.ASHWATHAPPA

MANAGEMENT

HUMAN RESOURCE MANAGEMENT - V.SUBBA RAO PERSONAL

MANAGEMENT E.DWIN B LIPPO PERSONAL MANAGEMENT

- C.B MAMORIA HUMAN RESOURCE MANAGEMENT -

ROBBIN&DECENZO

WEB-SITES -WWW.GOOGLE.COM

WWW.PEPSICO.COM

WWW.HRGUIDE

ask.com

WWW.CITEHR.COM

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