Compensation & Benefits NHRDN Workshop Pune 17th March 2012


Published on

Session II Facilitator: Parul Mittal, Head – Compensation & Rewards and Human Resource Shared Services, Zensar Technologies

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Compensation & Benefits NHRDN Workshop Pune 17th March 2012

  1. 1. NHRD- C&B Workshop on 17-March-2012• Major Compensation Trends 2012• Generation Based Approach• Impact of Union Budget & Tax Savings Components• Smart ways of restructuring Salaries• Using Quality Tool in HR By Parul Mittal Head C&B;Zensar tech | © Zensar Technologies Ltd. 2012
  2. 2. Major Compensation Trends 2012 Focus areas for C&B Average % increments :  Industry segment wise  Management cadre wise  Economy wise Increment trends Trends on variable pay | © Zensar Technologies Ltd. 2012
  3. 3. Emerging trend on Focus areas for C&B Continued research by employers on effective ways to use C&B as a differentiator against competition Smart benefits receiving more significance than just Cash compensation Car lease policies ,NPS and other tax saving schemes are being reviewed. ESOP may be costly due to IFRS norms Medical benefits : Coverage to extended families, coverage post superannuation, wellness program, leave policies. Increasing take home salary by making C&B structure more tax friendly without increase in overall wage bill C&B structure customized to suit various generations, viz, X, Y and Z | © Zensar Technologies Ltd. 2012
  4. 4. Major Compensation Trends 2012(AON Hewitt) Managerial cadre Expected averageIndustry segment Expected average % increment for % increment for 2012 2012 Entry level 11.8%Pharmaceuticals 13.3% Junior Management 12.3%Engineering and 13% Middle Management 12%design services Senior Management 11.1%Infrastructure 12.9%Heavy engineering 12.4%FMCG 12.4% Nation % Nation %IT 11.9% India 11.9% Australia 4.6%Telecom 11% China 9.5% Hongkong 5%BFSI 10% Japan 2.8% Malaysia 6.2% Philippines 6.9% Singapore 4.8%Critical talent pool 15.1% | © Zensar Technologies Ltd. 2012
  5. 5. Increment Trends 2011 with 12.6% average hike was better than 2010 2012  11.9% average salary hike (IT)  10% (financial institution/auto/gen engineering/BPO)  India has outpaced Asia pacific again with highest salary hikes in the region | © Zensar Technologies Ltd. 2012
  6. 6. Trends on Variable pay Increased use of variable pay with lower fixed salary income Variable pay being introduced or increased at Middle management level Various innovative forms of variable pay introduced to boost performanceA quick snapshot of emerging trend : Earlier NowSr. Management 18% - 20% 25% - 30%Middle Management 10% - 12% 18% - 20%Jr. Management 5% - 8% 10% - 12% | © Zensar Technologies Ltd. 2012
  7. 7. Trends on Variable payPros ConsTo build a performance oriented culture Reduces take home salary which could impact the morale of the associateTo differentiate between various levels Many times, is linked with the associateof performance being on the rolls of the company on a specified dateBuilds flexibility into overall If not properly designed might forcecompensation structure associates to stretch creating stress and affecting morale of the associateTo recognize outstanding performers If it is not objective and transparent might create confusion and suspicion in the minds of the associatesWill help in retention of critical talent A tendency amongst associates to see itand high performers as a deferred pay | © Zensar Technologies Ltd. 2012
  8. 8. Extracts from AON Hewit survey | © Zensar Technologies Ltd. 2012
  9. 9. | © Zensar Technologies Ltd. 2012
  10. 10. | © Zensar Technologies Ltd. 2012
  11. 11. | © Zensar Technologies Ltd. 2012
  12. 12. | © Zensar Technologies Ltd. 2012
  13. 13. Generations based approach | © Zensar Technologies Ltd. 2012
  14. 14. | © Zensar Technologies Ltd. 2012
  15. 15. | © Zensar Technologies Ltd. 2012
  16. 16. Total rewards : Moving back to old world charm in a new digital economy 1990 Low cash High benefits Where are we 2000 moving to : Medium cashFlexible benefits Medium benefits 2010 High cash Valued benefits | © Zensar Technologies Ltd. 2011
  17. 17. Any C&B scheme should make sense to the end user | © Zensar Technologies Ltd. 2012
  18. 18. Any Questions? Thanks | © Zensar Technologies Ltd. 2012
  19. 19. Basics of Tax savingscomponents | © Zensar Technologies Ltd. 2012
  20. 20. Income Tax Slab rates Income tax rates for assessment New Income tax rates for year 2012-13 Men & Women (FY assessment year 2013-14 2011-12) (FY 2012-13) Up to Rs 1,80,000/1,90,000( No tax / Up to Rs No tax / W) exempt 2,00,00 exempt 1,80,001/1,90,000( 2,00,001 to W) to 5,00,000 10% 5,00,000 10% 5,00,001 to 5,00,001 to 8,00,000 20% 10,00,000 20% Above Above 8,00,000 30% 10,00,001 30% Changes- Min Net Savings of Rs 22,000 Deductions of Rs 5,000 for Executive Health Check U/S 80 D over current provisions Deductions of Rs 10,000 on interest earned from savings bank account u/s 80TTA | © Zensar Technologies Ltd. 2012
  21. 21. Budget 2012-13: relevant provisions The senior citizen age has been reduced from 65 to 60 years as declared in union budget as on 16march 2012 .The threshold limit of exemption for them will remain Rs 250000/- and for 80 years and more will remain Rs 5 lacs. Senior citizens are exempted from payment of advance tax. For reporting mechanism in real estate sector ,a rate of 1% shall be deducted if property is> Rs 50 lacs in urban agglomeration and >Rs 20 lacs in any other area TDS on cash sale of bullion and jewellery: Seller of bullion and jewellery shall collect tax@1% of sale consideration from every buyer of bullion and jewellery if sales exceeds Rs 2 lacs and sales is in cash. Under sec 194 j ,tax is required to be deducted on the remuneration paid to a director which is not in the nature of salary at the rate of 10% of the remuneration with effect from July 2012 Wealth tax will not be levied on the residential house alloted by the company to the employee if employee’s income is less than 10 lacs. | © Zensar Technologies Ltd. 2012
  22. 22. As –IS provisions Section 80C: Life insurance Home loan principal payment Employees Provident Fund (EPF) Public Provident Fund (PPF) Tuition fee of your child Section 24 : This is one of the popular sections in the act that allows a home buyer who has taken a housing loan to avail of tax deductions of up to Rs 1.5 lakh on interest paid on that loan 80CCF Introduced last yea, this allows one to invest up to Rs 20,000 in notified infrastructure bonds Section 80D This section deals with deductions you can avail of if you have a mediclaim policy 80E (education loan), 80G (donations to charities), 80DD (medical treatment of a disable person), 80DDB (treatment for specified diseases) which also allow you deductions. | © Zensar Technologies Ltd. 2012
  23. 23. Monetised and Non Monetised Financial Non Financial  Excellence Award &Spot Awards Pay -for role via Fixed salary  Insurance personal and accident insurance policy Pay -for performance via Variable Pay and Increment  Executive Health Check Up ,Birthday Coupons Pay for skills via Skill Allowances  Careers enhancement through Training. Higher edu (PHDs) Pay for Value Proposition  Club Membership  Special Business Plans  Concierge Services  Sales Incentive  Free Parking for Car Pool  Shift allowance/ Over time Allowance/Attendance Incentive for IT/  Mobile Phone reimbursements BPO as applicable  Freedom to select a team  Concept of cash for referrals  Work Life Balance  Loans and Advances  Flexi Hours/Work From Home  Parents Medicare  Business Travel Insurance  Car policy for senior Associates  Spouse Placements when relocating  Creche Facility  Continued Insurance Cover for family in case associates are abroad  Free Doctors and Counselors  Townships, | © Zensar Technologies Ltd. 2012  Corporate Discounts
  24. 24. Flexible Benefits Plan/Bouquet of Benefits Flexi basket is a bouquet of benefits offered to plan for future contingency and save tax -LTA (Leave Travel Assistance) -HRA -Medical Reimbursements -Meal Coupons -Children Education Allowance -Telephone reimbursement -Superannuation -Company Car , Drivers salary & Fuel Allowance | © Zensar Technologies Ltd. 2012
  25. 25. Leave Travel Assistance LTA is taxable twice in a block of four years, current Block Jan 10 to December 13 LTA for Domestic journeys performed through the shortest air amount not exceeding air economy fare of the National Carrier. | © Zensar Technologies Ltd. 2012
  26. 26. House Rent Allowance, Meal & Medical HRA -The maximum entitlement provided per associate is 50 % (Metro)or 40%(Non Metro) Medical -The maximum limit for all associates is Rs.15,000/- per annum. Meal-The meal coupon is a tax saving benefit provided to the associate by the company, the entitlement per associate is Rs. 13200- per annum. | © Zensar Technologies Ltd. 2012
  27. 27. Child Education & Telephone Allowance Child Education allowance-Entitlement per associate per child per annum up to a max of 2 children Telephone Reimbursement-Associates are entitled for reimbursements of expenses for official purpose only | © Zensar Technologies Ltd. 2012
  28. 28. Superannuation 15% of Annual Basic or Rs 1 lacs whichever is less Transferable and Interest is credited Annually Superannuation contribution is a part of compensation | © Zensar Technologies Ltd. 2012
  29. 29. Company Car Policy, Driver & Fuelallowance Company Car-The company provides assistance to associates in buying a car as per grade applicability. Driver Allowance-Company usually provides for driver’s salary. This is an additional benefits the company provides & forms part of Flexi components Fuel Allowance – part of flexi component, extended to associates for fuel expenses. E.g The entitlement per associate is Rs 1800 and 2400 per month depending on the engine capacity. | © Zensar Technologies Ltd. 2012
  30. 30. Smart ways of Restructuring Salariesa) Smart Budgeting and provisioningb) Paying for variable pay annually linked to KRAs; Deferred Bonus -quarterly – linked to BU performancec) Cash Out / Add On Optionsd) Paying through allowances-Skill/Special/Project to keep wage bill in control, and driving competenciese) Deferred Variable- Variable pay to be paid 160% over a period of say 3 yearsf) Strategising increments driving required behaviour through bell curve | © Zensar Technologies Ltd. 2012
  31. 31. Symmetrical Bell Curve HIGHPERFORMERS AVERAGE PERFORMERS PERFORMANCE NEEDS IMPROVEMENT A-15% B-70% C-15% | © Zensar Technologies Ltd. 2012
  32. 32. Skewed Bell CurveHIGHPERFORMERS AVERAGE PERFORMERS PERFORMANCE NEEDS IMP. A- 15% B-65% C-20% | © Zensar Technologies Ltd. 2012
  33. 33. Merit Pay Increase & Variable Payout Performance Pay Variable Band Increase % Payout % Remarks 12% in fixed Increment and Rest 14% over a period 12 Months, 30% A 26 130 Extra Variable pay 12% in fixed Increment B 12 100 and full 100% variable 6% in fixed Increment C 6 70 and 70% variable | © Zensar Technologies Ltd. 2012
  34. 34. Significance of Bell Curve Distribution Bell Curve is quite significant e.g a budget available of Rs 10000 for payout of VP Performance Bell Curve Variable Variable Band Split Increment Pay out % Pay Out 1% increase in B equals 4.6% increase in A 15 A 130 1950 B 70 1% increase 100 7000 C 15 70 1050 Total 10000 | © Zensar Technologies Ltd. 2012
  35. 35. | © Zensar Technologies Ltd. 2012
  36. 36. Using Quality Tools-Taking HRofferings to next level | © Zensar Technologies Ltd. 2012
  37. 37. What is qualityconformance to specificationsWhat is defect Non conformance to specificationsWhat is DPMODefects per million opportunities | © Zensar Technologies Ltd. 2012
  38. 38. What is six sigma The term Six Sigma is widely used to refer to all of the following: A structured method for improving business processes. This method, called DMAIC (Define, Measure, Analyze, Improve, Control), is supported by an assortment of statistical tools. A statistical measurement of how well a business process is performing. A process that performs at Six Sigma produces only 3.4 defects out of every million opportunities to produce a defect. Processes that perform at lower sigma levels (such as one sigma or four sigma) produce more defects per million opportunities. It is possible for a process to perform at an even higher level (and thus have even fewer defects), but Six Sigma has become popular as the standard for excellent process performance. An organizational mindset in which people make decisions based on data, look for root causes of problems, define defects based on customer rather than internal requirements, seek to control variation, track leading indicators of problems to prevent them from happening, etc. | © Zensar Technologies Ltd. 2012
  39. 39.  Sponsor Senior executive who sponsors the overall Six Sigma Initiative. Leader Six Sigma Roles And Responsibilities Senior-level executive who is responsible for implementing Six Sigma within the business. Champion Middle- or senior-level executive who sponsors a specific Six Sigma project, ensuring that resources are available and cross-functional issues are resolved. Black Belt Full-time professional who acts as a team leader on Six Sigma projects. Typically has four to five weeks of classroom training in methods, statistical tools, and (sometimes) team skills. Master Black Belt Highly experienced and successful Black Belt who has managed several projects and is an expert in Six Sigma methods/tools. Responsible for coaching/mentoring/training Black Belts and for helping the Six Sigma leader and Champions keep the initiative on track. Green Belt Part-time professional who participates on a Black Belt project team or leads smaller projects. Typically has two weeks of classroom training in methods and basic statistical tools. Team Member Professional who has general awareness of Six Sigma (through no formal training) and who brings relevant experience or expertise to a particular project. Process Owner | © Zensar Technologies Ltd. 2012
  40. 40.  Establish a clear and significant role of HR for institutionalizing Establish Six Sigma objectives and role in HR Seek customer feedback and identify opportunities for improvement Establish Six Sigma goals for HR function Formulate, prioritize projects and form teams Provide Six Sigma Green Belt training Implement DMAIC for breakthrough solution. SOME Examples of Six Sigma projects that companies’ HR departments have: include reduction in overtime, reduction in time and cost to hire an employee, reduction in employee Attrition, reduction in safety violations, reduction in cost of Employee separation, and HR response to internal inquiries for benefits, payroll, promotion and fairness. | © Zensar Technologies Ltd. 2012
  41. 41. MethodologyDEFINE MEASURE ANALYZE IMPROVE CONTROL• Define the problem• Measure the symptoms/behavior of the problem we’ve defined• Analyze the potential causes (elements of the process design) based on the symptoms uncovered in measure• Improve the process based on the results of the analysis• Control the process at the new level of performance | © Zensar Technologies Ltd. 2012
  42. 42. Benefits – Holding the gains Bandwidth per person for query resolution/month(Hrs) AS per current deploymentBenefits • Major process improvement to save future efforts and increase productivity • Process Standardization. • Improved Customer Satisfaction • Better Utilization of resources Horizontal deployment- • Support functions including HR, Admin, Estate Management Department Technical Infrastructure Management Service(TIMS) | © Zensar Technologies Ltd. 2012
  43. 43. Thank you. | © Zensar Technologies Ltd. 2011