1.0 Introduction Money is no longer the key determinant. Issues such as a motivational work environment, a compatible work culture and an appropriate work/life balance are more important than money. If the 90’s was the decade of the customer, the next 10 years are seeing a growing focus on employees. Leading companies are recognizing that their business goals and the personal needs of their employees need to coincide and that jobs must deliver value to employees beyond pay and monetary benefits. Thus, as our course requirement we will try to analyze the strategies that are implemented in a small firm. As a part of our research, we have considered an international apparel sourcing company named as ALZ Textile Limited – a Turkish based Bangladesh production office. 1.1 Scope The scope of our study was wide as we have to research on a wide area regarding compensation strategies, though here it is said about only ALZ Textile Limited. The data was collected strictly for academic purposes only. 1.2 Sources • For conducting our survey, we followed the Sample Survey method and used a structured questionnaire to collect the data. The data collected was primary in nature. • Some secondary data also we have collected for the research purpose. 1
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1.0 Introduction
Money is no longer the key determinant. Issues such as a motivational work environment, a
compatible work culture and an appropriate work/life balance are more important than money.
If the 90’s was the decade of the customer, the next 10 years are seeing a growing focus on
employees. Leading companies are recognizing that their business goals and the personal needs
of their employees need to coincide and that jobs must deliver value to employees beyond pay
and monetary benefits. Thus, as our course requirement we will try to analyze the strategies that
are implemented in a small firm. As a part of our research, we have considered an international
apparel sourcing company named as ALZ Textile Limited – a Turkish based Bangladesh
production office.
1.1 Scope
The scope of our study was wide as we have to research on a wide area regarding compensation
strategies, though here it is said about only ALZ Textile Limited. The data was collected strictly
for academic purposes only.
1.2 Sources
• For conducting our survey, we followed the Sample Survey method and used a structured
questionnaire to collect the data. The data collected was primary in nature.
• Some secondary data also we have collected for the research purpose.
• From internet, books & newspaper we collect a lot of data which helps a lot to conduct this
research.
• Again our teacher also helps us to provide a lot of valuable information during lectures.
1.3 Limitations
The biggest constraint that we faced was however, the allocation of time and resources to best
meet our needs. Yet we had managed to conduct physical survey at the company for several
times. We had to talk over phone who are presently working at ALZ Textile. However, they
were not willing to provide internal information about their company which is a strong limitation
of our research.
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1.4 Methodology
The study primarily used quantitative tools with qualitative information. For quantitative results,
the research design involved causal research by using survey method. The sample size used for
the project is 7 respondents. Data was collected from those respondents who are service holders
in this company at various positions. The collected data was then statistically analyzed for
generating results.
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2.1 Compensation system
The compensation system results from the allocation, conversion and transfer of a portion of the
income of an organization to its employees for their monetary and in kind claims on goods and
services. Compensation basically is a monetary reward for an employee like salary, wages, and
bonuses. Also backed by non monetary benefits like allowances, insurance and medical services
etc.
Monetary claims on goods and services are wages and salaries paid to an employee in the form
of money or any other form that is quickly and easily transferable to money at the favoritism of
the employee. As medium of exchange, money enables an employee to purchase certain kinds
and amounts of goods and services available in the marketplace. The value of any in kind
payment to a specific employee depends directly on employee perception of it worth.
Compensation management provides step by step approach for designing remuneration system
that recognizes job requirements: employee related knowledge and skill and performance related
incentives that individual, team and work unit and organization performance. Total remuneration
also includes a host of benefits that protect and expend the lifestyle and health of workers and
their families. The total of these contributions by organization represent its labor cost. On the
other hand these costs should contribute to improved employee performance and on the other
hand expended productivity so that an organization can be competitive, as well as profitable in
providing its goods and services within global economy.
2.2 The Reward System
The reward system of an organization includes anything that an employee may value and desire
that the employer is able or willing to offer in exchange for employee contribution. Reward can
be compensation component and non compensation as well. Monetary payments can be the form
of coins paper money or in the less tangible form of checks or credit cards.
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2.3 Rewarding employees
Reward should be given on the basis of difference between standard goal and actual job performance.
Reward system should be equal for the same level of job position and employee performances.
To reward employee need motivation. For motivation, need performance appraisal system. Performance Management is the integration of performance appraisal systems with broader human resource systems as means of aligning employees’ work behaviors with organization’s goals. Without motivation, no employee feels interest to do the job.
Performance Management should be an ongoing, interactive process that is deigned to enhance employee capability and facilitate productivity.
Organization should have a standard goal of job performance. It can be setup by production measures, personal activities, performance, targets activities etc. And standard job has to be clear to every employee. They will try to achieve that standard goal.
There salary and compensations structure should be more improved to match with present macroeconomics situation of our country. And they can maintain a better living standard.
Before developing the salary structure, organization should consider individual equity, internal equity and external equity, Authority should give some power to employees; so that they motivate, inspire and responsible of some decision making for betterment of the organization.
If they had to work forcefully or all decisions comes from top level; at that time they will not get enjoy doing that work.
Authority should think employee’s career progression goal and feed back.
2.4 Compensation in a knowledge based global Economy
The rise of the global markets over the last two decades of the twentieth century and into the
twenty first century has placed greater stress on organizations regarding their ability to compete
and be profitable. The need to be competitive is critical to all organizations like profit and non
profit, privately owned or government oriented. To be successful, these organizations must
provide high quality goods and services to their clients in a cost effective manner. A major cost
for all organization in providing goods and services is their labor costs. In competitive global
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economy, all organization must be able to focus on the effective and efficient delivery of the
products they designed to offer. A key factor in promoting effective delivery essential goods and
services in the provision of a performance based remuneration system for all workers. Thus,
today compensation is big factor which needs to be externally competitive and again fair to
employees. It must succeed to attract and retain the potentials, which will drive the organization.
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3.1 Company Background
ALZ Textile Limited which is a liaison office or production office in Bangladesh for its parent
company ALZ Tekstil SAN TiC AS, a famous Turkish fashion retailers who owns stores like
Collezione, Herry, Zero and Into Sportswear. ALZ Textile Limited is like local garments buying
houses but they are distinct as they buy for themselves. Currently employs 45 number of
employees in various position like country manger, merchandisers, quality controller,
compliance officer etc. The parent company has history 55 years in the field of textile &
clothing. Where as , the ALZ Textile Limited operating in Bangladesh for last 7 years and
collaborating with local manufacturers. They offer various products in knitwear, woven and
sweaters. They consider Zara, Mango, Bershka as competitors who are famous Spanish fashion
companies.
3.2 Pay Model Policy Decisions at ALZ Textile Limited
Internal Alignment
Internal alignment, often called internal equity, refers to the relationships between jobs, skills
and competencies within an organization. In other words, jobs and people’s skills are compared
in terms of their relative contributions to the organization’s business objectives.
According to our findings, ALZ Textile maintains internal alignment and provides their
employees the reason to stay in the organization by paying them equitably and handsomely.
Posts Criteria Monthly Basic Pay (Tk.)
Country Manager At least 10 years satisfactory
and continuous services as
Country Manger/ Director in
foreign fashion company.
3,50,000
General Manager At least 5 years satisfactory
and continuous services as
General Manager
1,20,000
Merchandising Manger At least 5 years satisfactory 85,000
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and continuous services as
Merchandising Manager
Senior Merchandisers At least 3 years satisfactory
and continuous services as
Merchandisers.
45,000
Assistant Merchandisers Graduates / Master Degree
Holders in relative industry
15,000
Quality Controller At least 5 years satisfactory
and continuous services as
quality controller.
25,000
Receptionist Direct Recruitment 7,000
Tea Boy Direct Recruitment 4,500
Illustration: Pay relationship among different jobs/skills/competencies of ALZ TEXTILE LTD.
External Competitiveness
It refers to pay comparisons with competitors. In order to set an externally competitive
compensation system, an organization must the deal the following questions:
What forms of compensation should we use?
How should total compensation be positioned against our competitors?
We have sought out the external competitiveness of ALZ Textile Limited in the perspective
of these questions.
Employees of ALZ Textile Limited get a competitive salary with a wide range of fringe benefits.
In order to sustain the employee’s performance on the job, employers of the organization
provide different facilities of modern life house rent allowances, medical allowance, transport
allowance, house utility bills. The company also gives various festive bonuses as well as other
bonuses like performance bonus, security bonus etc. The following figure illustrates the forms of
compensations that it provides:
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Forms of Compensation
Paid Holidays
Loan Facilities
Performance Bonuses and Other
Bonuses
Medical Facilities and Health Insurance
Allowances
Employee Contributions
It is concerned with providing emphasis on employee’s contribution as it directly affects
employee’s behavior and attitude. ALZ Textile basically recognizes employee contribution based
on both seniority and individual performance.
For example, at ALZ Textile, promotion cannot be claimed as a matter of right and all promotions
shall be made on the basis of merit and seniority as per promotion criteria laid down in the following
07 Adverse Service Record in the Feeder Grade Minus
marks if any
Total Marks 100
Minimum requirement for eligibility 60
Management
A policy regarding management of the pay system is essential to ensure that right people is
getting the right pay for achieving the right objective in the right way.
ALZ Textile manages pay as part of the business mission. The elements of its mission
highlighting the importance of human resource retention through competitive compensation
packages are as follows:
Attract and retain quality human resources.
Extending competitive compensation packages to the employees.
To support these elements of the business mission, ALZ Textile maintains proper documentation
about employee’s performance at each level. And based on the evaluation criteria, they evaluate
employees and reward them according to their contribution towards the business objective.
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The company gives utmost importance for making continuous investment in Research and
Development (R&D) and Training to achieve operational efficiency in the competitive global
banking scenario. The objectives of designing all training programs are to bridge the gap
between present level of competence and the required level of competence. Therefore, the pay of
each employee meets increments with more advanced trainings throughout their careers.
3.3 Compensation Dimensions
There are eight compensation dimensions and ALZ Textile uses all the dimensions. The eight
compensation dimensions are-
I. Pay for work and performance: Pay for work and performance includes money that is
provide in the short term like weekly, monthly and annual bonuses/awards and that permits
employees to pay for and contract for the payment of desired goods and services. ALZ Textile’s
amount of money payments provides to employees normally depends on specific job
requirements. They pay their employee the component like base pay, premiums and differentials,
short-term bonuses, merit pay and certain allowances.
II. Pay for time not worked: The number of hours worked per week and the number of days
worked per year have decreased. Workers have enjoyed more day off with pay for holidays,
longer paid vacations and paid time off for a wide variety of personal reasons. ALZ pays the
employees for time not worked.
III. Loss of job income continuation: Job security is and always has been the primary
consideration for most workers. ALZ Textile assures the employees about their jobs and the
income derived from working will continue until they are ready to retire. ALZ Textile not only
assures them about accident and sickness problem but also assures about personal problems or
interpersonal dynamics problems.
IV. Disability income continuation: The possibility always exists that a worker will incur
health or accident disability because of these disabilities employees are frequently unable to
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perform their assignment. ALZ Textile gives the facility to their employees by providing
expense continue medical, surgical and hospital bills.
V. Deferred income: Most employees depend on some kind of employer-provided program for
income continuation after retirement. ALZ Textile provides various kinds of program like social
security, employer-provided pension plans, annuities and supplemental income plans provide
income after retirements.
VI. Spouse income continuation: Most employees with family obligations are concerned with
what might happen if they are no longer able to provide money that will allow their families to
maintain a particular standard of living. The employees get the facilities from ALZ Textiles too.
VII. Health, Accident and liability protection: when a health problem occurs, ALZ Textile not
only provides income continuation but also pays for goods and services required in overcoming
the illness or disability. They provide a wide variety of insurance plan to assist in paying for this
goods and services.
VIII. Income Equivalent payment: A final set of compensation components may be grouped
under the title of income equivalent payment. Employees usually find them highly desirable and
both employer and employees find certain tax benefit in them. ALZ Textile also maintain the
dimension.
3.4 Non-Compensation System
The other major part of the reward system consists of non-compensation rewards. Non-
compensation rewards are all the situation related reward not included in the compensation
package. ALZ Textile also uses the non-compensation packages. There are six non-
compensation packages. These are:
I. Enhance dignity and satisfaction from work performed: Possibly the least costly and one
of the most powerful rewards an organization can offer to employees is to recognize the person
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as a useful and valuable contributor. ALZ Textile provides this kind of recognition so that
employees have the feelings of self-worth and pride in making a contribution.
II. Enhance physiological health, intellectual and growth and emotional maturity: ALZ
Textile uses the system by considering the number of hours the employee spends on the jobs, on
travel to and from the work site and off the job in attempting to resolve problems. They give
medical facilities to the employees. They have a good working environment and all the
equipment they use is safe.
III. Promote constructive social relationship with coworkers: An old adage states that “One
man is no man”. There are even more reminders that one human alone is weak. ALZ Textile has
such a worth place environment where trust, fellowship, loyalty and love emanate from the top
level of management to the lower levels of the organization promotes the kinds of social
interaction most people need in order to thrive.
IV. Design jobs that require adequate attention and effort: ALZ Textile gives special
attention to focus on scientific management efforts to specialize work assignments. They design
the job such a way that workers could be taught quickly how to perform a few highly repetitive
tasks. They give main focus on the employees so that the employees never become bored and
dissatisfaction because it hampers their productivity.
V. Allocation sufficient resources to perform work assignments: ALZ gives sufficient
resources to perform work assignments. They produce certain kinds and qualities of output
within a specific time. They know that resources are available to help them meet these demands.
To give the employee available resource and meet their demand the organization must place a
win-win situation.
VI. Offer supportive leadership and management: Supportive leadership and management are
very important for an organization. ALZ Textile focuses on the system. Their followers have
faith in and abide by the actions taken by their leaders. Employees have the faith and trust in
management assist in establishing a workplace environment where job security becomes
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accepted. They have leaders who have sufficiently flexible with policies, rules and regulations so
that the employee can meet job and no job responsibilities without infringing on the rights and
the opportunities of other employees.
4.1 Point Method – Job Evaluation
Prelude
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In Point Method, a set of compensable factors are identified for determining the worth of jobs.
Each factor is then divided into levels or degrees which are then assigned points. Each job is
rated using the job evaluation instrument. The points for each factor are summed to form a total
point score for the job. Jobs are then grouped by total point score and assigned to wage/salary
grades so that similarly rated jobs would be placed in the same wage/salary grade.
Methodology
To create point method job evaluation form, firstly we did the Job Analysis at Eastern Overseas
Limited for the position of Executive Director. From the job analysis we got Job Description &
Job Specification.
With the help of the generated Job description & Job Specification, we determined the
following:
Compensable Factor
Factor degrees with numerical scale
Weight reflecting the relative importance of each factors
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FACTOR SCALING
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FOCUSING FACTOR – DENOTING DEGREE
1st Degree denotes – the Basic Requirements
2nd Degree denotes – The accustomed requirements
3rd Degree denotes- The unique requirements
4th Degree Denotes- The Sophisticated requirements
FOCUSING FACTOR – DENOTING DEGREE
1st Degree denotes – the Basic Requirements
2nd Degree denotes – The accustomed requirements
3rd Degree denotes- The unique requirements
4th Degree Denotes- The Sophisticated requirements
1. Skill (Weight = 10%+5%+5% = 20%)
Degree Level Ability Knowledge & Education
Experience
1st Degree Ability to work with general software like, MS Office, SPSS for making report and presentation
Ability to prioritize and multitask
Ability to plan and coordinate the work of staff
Thorough knowledge of Upper Hudson Library System policies and procedures
Master’s degree from any reputed university with no second class at any level of education
Three years of relevant professional experience
2nd Degree Ability to develop and implement effective system-wide policies, goals and objectives
Ability to implement and enforce system policies and procedures;
Knowledge of System organization, procedures, policies, goals and services;
Knowledge of modern library administrative practices
Special training is required about logistic procedure and policy in Bangladesh
Eight years of relevant professional experience
3rd Degree Ability to accurately evaluate services and programs
Ability to effectively communicate
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and work with other staff members and maintain effective working relationships with staff and others
4th Degree Ability to exercise leadership and motivate staff
Ability to use sound judgment and take initiative in making recommendations for improvements in, and/or planning and developing new services, programs and policies
2. Responsibilities (Weight = 25%+25% = 50%)
Degree Level Functional Supervisory1st Degree Formulates and
recommends system-wide policies, goals, and objectives
Supervises the preparation and administration of the annual budget and oversees the fiscal management of the system
2nd Degree Administers personnel policy and procedures
Implements and ensures the effectiveness of
Directs the planning and organization of all programs and services for System members and evaluates the
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approved policies, procedures and goals, etc.
effectiveness of System services
3rd Degree Establishes and maintains effective working relationships with Directors, customers and with legislators (both Malaysia & Bangladesh) and government agencies
Keeps informed of developments in the field through active participation in professional meetings and conferences, professional journals and staff interaction
Directs and oversees the maintenance of the System building and all physical holdings
4th Degree Serves as consultant to the Board and meets with the full Board and committees
Performs other duties as assigned
Supervises all staff either directly or indirectly; oversees and/or conducts personnel performance evaluations
3. Effort (Weight = 10%+5% = 15%)
Degree Level Mental Physical1st Degree Planning and
organizing as a team player
Work requires no unusual demand for physical effort
2nd Degree Maintaining diplomacy and rapport
3rd Degree Analyzing current situation and potential situations
4th Degree Conceptualizing the
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organization as a total system
Viewing the organization holistically to make strategic decisions
4. Working Conditions (Weight = 5%+5%+5% = 15%)
Degree Level Environment Hazards Weather1st Degree Work
environment involves everyday risks or discomforts
Requires normal safety precautions typical of such places as offices or meetings and training rooms
E.g., use of safe work place practices with office equipment, avoidance of trips and falls, and observance of fire regulations
Involves working in moderate outdoor weather conditions
2nd Degree
3rd Degree
4th Degree
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JOB EVALUATION FORM
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FOCUSING FACTOR- ASSIGNING WEIGHTS &
DETERMINE THE SIGNIFICANCE OF THE POSITION
Weights of each sub factor are subjective in nature.
FOCUSING FACTOR- ASSIGNING WEIGHTS &
DETERMINE THE SIGNIFICANCE OF THE POSITION
Weights of each sub factor are subjective in nature.
COMPENSABLE FACTOR
Skill (20%): Ability
Knowledge & Education
Experience Responsibilities (50%):
Functional Supervisory
Effort (15%):
Mental Physical
Working Conditions(15% ) : Environment
Hazards Weather
DEGREE × WEIGHT = TOTAL
10% 40
5% 10
5% 10
25% 100
25% 100
10% 40
5% 5
5% 5
5% 5
5% 5
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1 2 3 4
x
x
320
Job: General Manager
Check one: Administrative
Technical
Figure- JOB EVALUATION FORM
1 2 3 4
x
x
x
1 2 3 4
x
x
1 2 3 4
x
x
Descriptive Brief:
Every organization has a hierarchy of jobs, and each job lies in a certain position in the
hierarchy. Each and every job of the organization needs to be analyzed in order to be
evaluated. Job Evaluation is basically the process of systematically determining the relative
worth of jobs, in order to create a job structure for the organization. In the figure drawn in the
previous page, we have shown the Job Evaluation of General Manager. This job evaluation
has been primed using the Point Method. This method basically has three common