“Compensation System Development” Executive MBA/MBA program School of Business _______________ https://www.facebook.com/engr.mirza.ce/

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NORTH SOUTH UNIVERSITY BANGLADESH
Subject : ( EMB 602) Human Resources Management.
Assignment report : group project submission Spring 2019.
Term Project on:
“Compensation System Development”
Submitted to :
Prof. Dr.Mohsin Ul Islam
Honorable Faculty Member
Human Resource Management (Course code: EMB 602) School of Business Economics North
South University
Submitted by :
Mohammad Imdadul Hoque ID: 1815182090
(Semester-3, Spring- 2019
Executive MBA/MBA program
School of Business
North South University

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North South University
Term Project on:
“Compensation System Development”
Submitted to
Prof. Dr.Mohsin Ul Islam
Honorable Faculty Member
Human Resource Management (Course code: EMB 602) School of Business Economics
North South University
Submitted by
Engr.Mirza Shaman Hasan ID: 1835206690
Group-3 (Semester-3, Spring- 2019
Executive MBA/MBA program
School of Business
North South University
Date of Submission: April 26, 2019
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Acknowledgement
The successful accomplishment of this Term Project Report is the outcome of the contribution
and involvement of a number of people, especially those who took the time to share their
thoughtful guidance and suggestions to improve the report. It’s difficult for us to thank all of
those people who have contributed something to this report. There are some special people who
cannot go without mention.
First of all, we would like to thank our honorable academic supervisor Prof. Mohsin Ul Islam,
North South University. We are thankful to him for his continuous support and supervision,
suggestions and providing us with valuable information that was very much needed for the
completion of this presentation.
Then, we express our sincere gratitude to those employees of several organizations who
responded a number of questionnaire on compensation that they are availing from their
organizations.
We owe all of them beyond measure.

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Executive Summary:
Compensation-An exchange the employee provides knowledge, skills and abilities desired
by the organization to meet its goal in return for money, goods and services.
The system uses an organization uses to reward employees can play an important role in the
organization’s effort to gain a competitive advantage and to achieve its major objective.
In this report, we have discussed compensation theory through which we determine problem
finding and ultimately advise a recommendation.
In this report we conduct a survey on four companies: Argon Denims Limited, Tehno Tex
Engineers, Shanghai Electric limited and Sun Shine Accessories Manufacturing Co.Bd.Ltd
.A total 60 people covers of this survey which include a number of questionnaire pertain to
satisfaction, benefits many factors related to motivation issues in compensation design, internal,
external and individual equity, issue of comparable worth.

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Table of Contents
SL. No Contents
Pag
e I
No.
Letter of Transmittal i
Acknowledgement ii
Approval Certificate iii
Executive Summary iv
Chapter -01 Introduction
1.1 Introduction 9
1.2 Objective 10
1.3 Methodology 11
Chapter-02 About Organization 13-14
2.1 Organization Profile 15
Chapter-03 THEORY 17-20
Chapter-04 Analysis
4.1 Personal Analysis 22-25
4.2 General Analysis 26-28
4.3 Compensation analysis 29-37
4.4 Findings 37
4.5 Recommendations 38
Conclusion

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Chapter-01
1.1 Introduction:
Compensation system important to attract the types of specialized talent. Considering this point
of view compensation system develop a flexible market based system to keep salary
competitive. Traditionally, pay plans evaluate jobs in terms of knowledge, skills and abilities
and then group similar position together in a ranges. Employees are assigned a range and move
up within that classification. As employee gain experience they progress to higher range
requiring greater skills. In thinking through compensation, you feel the traditional system are too
bureaucratic and are not consistent with the flexibility needed to employee assignment to
innovative organization. As a result of this, key jobs at innovative organization are identified
and salaries to these jobs are pegged to those of other high tech firms. People establish market
pay rates considering several surveys that should be authentic.
[Compensation system important to attract the types of specialized talent. Considering this point of view compensation system develop a
flexible market based system to keep salary competitive. Traditionally, pay plans evaluate jobs in terms of knowledge, skills and abilities
and then group similar position together in a ranges. Employees are assigned a range and move up within that classification. As employee
gain experience they progress to higher range requiring greater skills. In thinking through compensation, you feel the traditional system
are too bureaucratic and are not consistent with]
An organization exists to accomplish specific goals and objectives. The individuals hired by the
organization have their own needs. One is for money which enables employees to purchase a
wide variety of goods and service available in the market place. Hence there is a basis for an
exchange: The employee provides knowledge, skills and abilities desired by the organization to
meet its goals in return for money, goods, and services. Taken together the money, goods and
services the employer provides for employees, constitute the compensation.
The system an organization uses to reward employees can play an important role in the
organization’s efforts to gain a competitive advantage and to achieve its major objectives.
Ideally, a reward system should align individual objectives with important strategic goals of the
organization, but for most organization the really falls far short of this ideal. The design and
implementation of a compensation system constitute one of the most complex activities for
which human managers are responsible.
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10. 1.2 Objective
Compensation system should do the following:

Signal to employee (and others) the major objective of the organization ---such things
as quality, customer focus, framework, and other goals---by emphasizing these through
compensation.


Attract and retain the talent an organization needs.



Encourage employee to develop the skills and abilities the organization needs.



Motivate employee to perform effectively.



Support the type of culture (e.g entrepreneurial) the company seeks to engender.

1.3 Methodology
In this report, we have conducted a survey on compensation practice of four particular
organization each of which 15 employees i.e total 60 employees participated and they are given
a questionnaire to respond in the form mostly of agree /not agree. Every employee is
distributed the same questionnaire separately so that their insight view reflect in this survey.
Afterwards the data is analyzed in the light of compensation theory.
Steps in survey:
Selecting organization
Collecting date
Analysis data
Source of Date:

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Primary source ,
Secondary source ,
Primary source – Survey with employee.
Secondary source- Group discussion, studying books of Human Resource Management,
chapter-Compensation System Development.
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Chapter-02
2.0 ORGANIZATION
This report has been prepared basing three organization, Such as :
A. Argon Denims Limited
B. Sunshine Accessories Manufacturing Co.bd. Limited
C. Techno Tex Engineers
D. Shanghai Electric
Argon denims limited was incorporated as a private limited company on 13 July, 2006 under
the companies act 1994 with a paid up capital taka 0.40 million . In course of time the paid up
capital was increased and as of 2018 it was to taka1199.77 million. The factory is situated at
sreepur in Gazipur district of Bangladesh .The commercial operation of the company started in
the march 2008 at a total cost of taka 51.35 crore .During starting of the project capacity was
less then step by step the company evolved a full capacity adding required resources. The
factory produce high quality fabric in 100% cotton , Cotton stretch , Cotton polyester and cotton
polyester stretch which are made in optics like slub , cross-hatch mixed count and regular with
various weave –Plain ,twill , broken twill and herringbone .These are offered in different
finishes like : pre-shrunk ,flat ,over dyed and coated .The fabric produced at the factory are sold
different export oriented RMG factories through the nominated of ultimate foreign buyers of
finished garments .Advance production equipment , strict quality control system , robust sample
development capability and well established design and marketing network contribute to
growing reputation of Argon Denims Limited .More and more branded enterprises appear in our
customer list .

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Sunshine interlining is one of the biggest interlining manufacturing company in china. The
company was founded in 1987 with the nearly 30 years of hard working , our group has now
been developed into a professional enterprise specialized in interlining .We occupy 65% in our
local markets . We sell to America ,HK, Bangladesh ,Bahrain , Turkey ,Tunisia and Vietnam
HCMC etc.From the weaving to coating all these are completed by ourselves , which save a lot
of intermediate links ,gurantee the quality of product .And also ensure the very stable quality
and very reasonable price to our customers .Relying on the advanced production equipment ,
comprehensive testing machine ,and the strict management , we ensure the technical data up to
the international standard .
Techno Tex Engineers limited is a great industry that can make huge differences to the quality
of people’s lives .Our goal is to a high performing design ,services engineering , construction
,property and facilities management business .We want to do that by working collaboratively
and forming strong alliances with our clients and supply chain partners so they want to work
with us again and again .Operating responsibility and sustainability are core component of the
way we work and our goal is to have a net positive impact on society .
Shanghai Electric is the single largest Chinese enterprise engaged in the design, manufacture,
and sale and after service; the group can provide system equipment and general contract
projects. Its Products cover more than ten industries and range over Power Generation
Equipment Division, Power Transmission and Distribution Equipment, Electromechanical
integration Equipment, Transport Equipment, Environmental Protection. Among these products,
the fossil fuel power generation equipment, elevators, air condition, package and print
machinery possess no.1 marketing share in China and boast good reputation in world market.

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2.1 Organization Profile
Organization Profile:
Argon Denims Limited
Techno Tex Engineers Ltd
Sun Shine Accessories Manufacturing .Co.bd.Ltd.
Shanghai Electric
Particulars
Argon Denims Techno Tex Sun Shine accessories Shanghai
Limited Engineers Ltd Manufacturing.co.bd.ltd Electric
100% export
BANGLADESH
35% export
Type of company oriented Denim Construction equipment and
MANUFACTURER
industry service
Production
capacity(Unit 18 million 20 million 5.6million yards per year 11.3 Billion
volume/Yr)
Total export Tk
3,381.45
59,272.08 million
2,684,220
million million
Gross profit Tk 687.31 million 50 million 17,781.12 million
540,288
million
Total assets Tk
4,981.47
7008 million 51,478 million
17,774.4
million billion
Total no of
700 30 88 33000
employee

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Chapter-3
5.1Compensation Theory :( Equity theory)
-This equity theory suggest that individual determine whether they are being treated fairly by
comparing their own outcomes/input ratio with the outcomes/input ratio of someone else this
other person for group of people may be in the same job or other jobs in company or outside the
company ,in the same industry or outside the industry . A sense of inequity arise when the
comparison process uncover an imbalance between input and outcome of the employee
compared with other.
Person Comparison other
My rewards (outcomes) Other’s reward
___________________ = _____________ Equity
My contribution (inputs) Other’s contribution
My rewards (outcomes) Other’s reward
___________________ > _____________ in equity (over reward)
My contribution (inputs) Other’s contribution
My rewards (outcomes) Other’s reward
___________________ < _____________ in equity (under reward)
My contribution (inputs) Other’s contribution
The compensation system involves a multifaceted package that are shown as follows:

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Protection
program.
● Medical
Insurance
● Life
insurance
●Disability
income
●Pension
●Social
security
Ind.Compen Direct. Com.
Base pay Merit Pay
Salary Wage
Pay for time Service and Incentive pay Deferred pay
Not Worked Perquisites
●Bonus ●Savings plan
●Vacation ●Recreation ●Commission ●Stock
●Holidays ●Facilities ●Piece rate purchase
●Sick leave Car ●Profit sharing ●Annuity
●Jury duty ●Financial ●Stock option
●planning ●Shift
differential●Low-cost or
●Free meals

Types of equity :

●Equity –Inputs tojob in forms of education, experience, special skills, efforts, times, etc.
Com. System

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Outputs fromjob in forms of pay, benefits, incentives-financial & non-financial, etc.
●Internal Equity-Pay equity among jobs based on hierarchical order within single
organization.
●External Equity-Pay equity among the organizations within single industry.
●Individual Equity-Pay equity among the same positions.
●Procedural Equity –Perceived fairness of procedure used for pay allocation.

Establishing Pay Structure

●Internal Equity
Through job evaluation
Methods: I)Qualitative -Ranking, Classification
II)Quantitative –Point method: Four steps
II)Quantitative –Point method: Four steps:
Compensable factor (Values of jobs to organization,
skill , effort , responsibility & working condition
Scaling the factor(Degree of importance)
Assign weight to the degree (Job evaluation
committee)
Application to jobs
Through skills and competencies
Types: I) Skill base-
Through skills and competencie
Types: I) Skill base-

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Skill analysis
Skill block
Skill certification
Skill base pay structure
II) competencybase-Core competency→ Competency set→ Behavior descriptor→ Competency
based pay structure
External Equity through market survey
Pay related survey among organizations within industry.
Steps in survey: Identify key jobs→ selecting organizations→ Collecting data→ Analyzing data.

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Chapter-4
Compensation Survey
ON
Argon Denims Limited, Techno Tex Engineers, Shanghai Electric and Sun Shine Accessories
Manufacturing Co.bd
Section A: General Information
4.1-Personal:
Qualification:
Section-A:General Information :
Personal
Organization
Qualification
Argon Techno
Sunshine
TotalDenims Tex Shanghai
Accessories
Engineers Electric
Manufacturing.co.bd
Limited Limited
Above graduate 4 3 5 4 16
Graduate 7 7 10 11 35
Bellow
4 5 9
Graduate
Your area of specialization: .………………………….

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Name of the company
Sunshine
pecializatio
Argon Techno Shanghai Accessorie
Denims tex Electric s Total
Limited Engineers Limited manufact
uring
Co.Bd.ltd
Productio
n &
11 3 3
Maintena
nce
HR,Admin 2 2 1
Technical
4
centre
Finance &
1
Account
Ware house 1
Your designation:
Organization
Designation
Argon Techno
Sunshine
TotalDenims Tex Shanghai
Accessories
Engineers Electric
Manufacturing.co.bd
Limited Limited
Above Manager 2 1 5 8
Manager 3 2 2 3 10
Bellow
10 12 13 7 42
Manager

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Date of joining the current organization: From analysis D.O.J is as follows :
……………………………………
Organization
Sunshine
Argon
Techno Accessorie
Tex Shanghai s
DOJ Denims Total
Engineers Electric Manufact
Limited
Limited uring.co.b
d
Before 2000 0
2000-2010 6 15 4 10 35
Total corporate experience: ………………………….
Organization
Argon Techno
Total Denims Tex Sunshine
corporate Engineers Shanghai Accessories
experience Limited Limited Electric Manufacturing.co.bd Total
0-5 6 12 10 3 31
5-10 4 3 5 7 19
10-20 4 5 9
20+ 1 1

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Age:
Organization
Sunshine
Argon
Techno Accessorie
Group Tex Shanghai s Total
Denims
Engineers Electric Manufact
Limited
Limited uring.co.b
d
20-30 6 12 8 26
30-35 4 2 8 3 17
35-45 4 7 1 12
Gender: male Female 1743
Marital status: Married 38 Single 22
Pay Level/ Grade:
Organization
Techno
Sunshine
Accessori
Argon Tex
Pay level Shanghai es Total
Denims Engineer Electric Manufact
Limited s uring.co.
Limited
bd
50k-above 7 1 1 8 17
25K-50K 5 4 12 4 25
0-25k 3 10 2 3 18

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4.2-General (Organization)
Name of Company:
There are four organization:
Argon Denims Limited
Techno Tex Engineers Limited
Shanghai Electric
Sun Shine Accessories Manufacturing Co.Bd.Limited
Nature of Company:
Name of the organization Nature
Argon Denims Limited Private
Techno Tex engineers Limited
Private
Shanghai Electric
Public
Sunshine Accessories Manufacturing.co.bd
Private
No. Of Employees:
Name of the organization
Sunshine
Argon
Techno Accessorie
Tex Shanghai s Total
Denims
Engineers Electric Manufact
Limited
Limited uring.co.b
d
Private Private Pablic Private

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Turnover Rate:
Argon
Techno
SEC Sunshine
Tex
3% 6% 5% 4%
Production Volume/ Deposit mobilization: 2013-2017
Name of the organization
Production
Argon Techno
volume/Deposite Sunshine
Denims Tex Shanghai
mobilization in Accessories
Engineers Electric
million (2013- Manufacturing.co.bd
Limited Limited
2017)
2013 10.3
2014 12.2
2015 13.9 72
2016 16.2 74
2017 18.3 75
Total
71 - - 221
Average
14.18 44.20

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Sales Volume/ Deposit Utilization :2013-2017
sales
Techno Sunshine
volume/Deposite Argon
Tex Shanghai Accessories
utilization in Denims
Engineers Electric Manufacturing.co.b
million (2013- Limited
Limited d
2017)
2013 27.5
2014 31.6
2015 34.5 73.08
2016 37.3 218.4
2017 40.9 420
Total 186.9 0 0 711.48
Average 37 974,400 142.296
Profit: 2013-2017
Name of the organization
Profit in
Argon Techno
million Sunshine
Denims Tex Shanghai Total
(2013- Accessories
Engineers Electric
2017) Manufacturing.co.bd
Limited Limited
2013 4
2014 5
2015 6 50.6
2016 6 126
2017 6 252
Total 26
5,468,400
429
Average 5
1,093,680
86

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Section B
4.3-Compensation:
1. What is your monthly income range:
0-50,000 Tk
50,000 – 100,000 Tk
100,000 – 150,000 Tk
150,000 – 200,000 Tk
200,000 – 250,000 Tk
250,000 Tk +
Name of the organization
Monthly Argon Techno
Sunshine
Income Denims Tex Shanghai
Accessories
range Engineers Electric
Manufacturing.co.bd
Limited Limited
0-50K 9 14 6
50k-
3 3
100k
100K-
3 1 2
150K
150K-
13 2
200K
200K+ 2 2
15 15 15 15
2. Does your company utilize a traditional salary grade system? - Yes 60 No
3. How is progression in job grade determine d? - Time on job 15 Merit 45
Others______

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4. How often is the salary structure reviewed? 15 Every year Every 2 Years 45 No
fixed cycle
5. When was the last time it was reviewed? In survey it is found that all were reviewed in 2018
6. Are you under any performance bonus/Incentive scheme? 45 Yes 15 No
7. What your incentive/bonus target based on? 30 Individual performance 30 Company
performance
8. How is the bonus amount calculated? 30 Fixed percentage of salary 30 Lumpsum

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Benefits (Please place “x” in the fields to all that applies):
9. Which of the following benefits does your company offer to you-
Bellow table reflected survey of 60 employees conducted on four organizations:
9.Benefits(Please place 'X'in the fields to all that applies) Emp %
Family medical coverage 60 59 43 39 24 24 15 15 15 15 12 4 3 2 0 0 0 0 0
Wellness benefit X X 0 0 0
Gratuity X 2 12 3
Foreign trips X 3 18 5
Car allowance/Car scheme X 4 24 7
Pool car /Transport allowance X 12 72 20
Pension fund X 15 90 25
Home loan X 15 90 25
Leave fare assistant X 15 90 25
Education assistance X 15 90 25
Maternity leave X 24 144 40
Medical Benefit X 24 144 40
Mobile device reimbursement X 39 234 65
Profident fund X 43 258 72
Paid time off X 59 354 98
Lunch X 60 360 100
Table of insufficient benefit

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Insuff ben
TTL % Score %
Family medical coverage 0 0 0 360 100
Wellness benefit 0 0 0 360 100
Gratuity 2 12 3 348 97
Foreign trips 3 18 5 342 95
Car allowance/Car scheme 4 24 7 336 93
Pool car /Transport allowance 12 72 20 288 80
Pension fund 15 90 25 270 75
Home loan 15 90 25 270 75

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Satisfaction ( Place 'X' on yourpreferred rating , 1=Strongly dis-agree
,6 =strongly agree
1 2 3 4 5 6 TTL Emp
I am satisfied with my compensation
9 12 13 15 9 2 189 60
package
I am confident that my package is fair
3 5 14 18 14 6 233 60
for my position and performance
I don't think external equity was
8 11 11 8 16 6 211 60
ensured in my compensation package
There is internal equity among grades
4 5 3 7 15 26 282 60
in my company
My salary is roughly at par with
3 15 7 14 19 2 217 60
market benchmark
My organization is transparent with
14 13 12 12 5 4 173 60
compensation decision
I deserve higher compensation for my
2 5 16 16 13 8 237 60
performance
My opinion is taken into consideration
18 10 12 10 6 4 168 60
before my salary review
Our salary review /merit process is
7 12 7 10 16 8 220 60
ambiguous and subjective
I will consider switching jobs If I get
12 15 5 5 8 15 207 60
marginally better package
There is geneder base pay gap in my
41 10 4 1 3 1 98 60
organization .
My salary is not equitable with my
15 10 8 12 6 9 191 60
peers in the company

32. My salary is not equitable with my
11 17 12 11 6 3 173 60
peers in the company in other industry

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Satisfaction: (Place “X” on your preferred rating. 1 = Strongly Disagree; 6
Strongly Agree)
Reflects dis-satisfaction on integrated data from surveyed
Satisfaction ( Place 'X' on yourpreferred rating , 1=Strongly di
Score %
There is geneder base pay gap in my
organization . 267 74
My organization is transparent with
compensation decision 227 63
My opinion is taken into consideration before
my salary review 195 54
My salary is not equitable with my peers in the
company in other industry 193 54
My salary is not equitable with my peers in the
company 173 48
I am satisfied with my compensation package 172 48
I will consider switching jobs If I get marginally
better package 158 44
I don't think external equity was ensured in my
compensation package 152 42
My salary is roughly at par with market
benchmark 145 40
Our salary review /merit process is ambiguous
and subjective 144 40
I deserve higher compensation for my
performance 136 38
I am confident that my package is fair for my
position and performance 129 36

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Refelect satisfaction on integrated data from surveyed

36. 36
Questionnaire Score %
There is internal equity among
279 78
grades in my company
I am confident that my package is
fair for my position and 231 64
performance
I deserve higher compensation
224 62
for my performance
Our salary review /merit process
216 60
is ambiguous and subjective
My salary is roughly at par with
215 60
market benchmark
I don't think external equity was
ensured in my compensation 208 58
package
I will consider switching jobs If I
202 56
get marginally better package
I am satisfied with my
188 52
compensation package
My salary is not equitable with
187 52
my peers in the company
My salary is not equitable with
my peers in the company in other 167 46
industry
My opinion is taken into
consideration before my salary 165 46
review
My organization is transparent
133 37
with compensation decision
There is geneder base pay gap in
93 26
my organization .

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4.4. Problem Identified in the analysis:
Through integrated data analysis following problem is clearly identified:
There is 74% of gender base pay gap.
63% employees responded that their compensation are not fair.
54% employees are dis-satisfied as their salary is not equitable with their peers in
the company of other industry.
48% employees are not also satisfied as their salary is not equitable with their peers in
the company with the same industry.
48% employees are not satisfied with their compensation package.
44% employees’ employees are demotivated as they will switch if they get
marginally better pacakage.
4.5. Recommendation:
I recommend to incorporate and implement equal gender right policy to solve gender
gaps.
By practicing structured in HR in the organaization, unfair compensation
can be avoided almost.
By applying equity theory under equitable and over equitable issue of salary can be
solved.
To review compensation package for creating competitive advantage which will help to
add values to the firms by exploiting employee’s abilities, experience & knowledge. It
Important to note that people have no basic or intrinsic need for money. It enables people
to satisfy other needs. So Benefits are more important to solve above problems.
To provide unmet need employees who wish to switch the job can be convinced to stay.

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Conclusion:
Albeit there are many challenges of including federal and state regulations has to comply and if
failed would be very costly for the organization. Besides goal of compensation is to motivate
employees, yet there is tremendous variation in the value different individual attach to a specific
reward or package of compensation. Compensation is crucial for everyone although there are
some aspect like training, career management, appraisal system and quality of work life program
are important to some people. However, Employee compensation is a major cost of doing
business can determine the competitiveness of a firm’s products or services

40. 39
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