4. COMPENSATION
Employee compensation refers to all forms of pay or
rewards going to employees and arising from their
employment i.e. compensation is what employees
receive in exchange for their contribution to the
organization.
Employees exchange their physical and mental
efforts for compensation, but compensation means
more than wage and salaries. It may include
incentives that motivate employees and relate labor
costs to productivity.
5. Challenges Affecting
Compensation
Even the most rational methods of
determining pay must be tempered by
good judgment when challenges arise.
The implications of these demands may
cause analysts to make further
adjustments to compensate. The
challenges are:
6. Challenges Affecting
Compensation
1. Strategic Challenges:
Compensation management is not limited to
internal and external equity. It also can be
used to further employer’s strategy.
Employee compensation might have been
initially anchored by the relative worth of
jobs and the prevailing wage rates in the
local labor market. Strategies may be “pay-
for-skill” and “pay-for-knowledge”: the more
skills or knowledge, the higher the pay.
7. 2. Prevailing wage rates:
Market forces may cause some jobs to
be paid more than their relative worth.
Demographic shifts and relative supply
and demand relationships affect
compensation.
Challenges Affecting
Compensation
8. Challenges Affecting
Compensation
3) Union power:
When unions represent a portion of the
workforce, they may be able to obtain wage
rates that are out of proportion to the relative
worth of the jobs. Sometimes the union
controls most or all of a particular skills and
this enables the union to raise the prevailing
rate for those jobs
9. Challenges Affecting
Compensation
4. Government constraints:
Organization must follow the laws that are
enforced by the government. Government
sets minimum wage, overtime pay, equal pat,
child labor, and record keeping requirements.
The minimum wage and overtime provisions
require employers to pay at least a minimum
hourly rate regardless of the worth of the job.
10. 5) Comparable worth and equal pay:
Beyond” equal pay for equal work” is the
idea of "comparable pay for comparable
work,” called comparable worth. It requires
employers to pay equal wages for jobs of
comparable value. Comparable worth is
used to eliminate the historical gap between
the incomes of men and women.
Challenges Affecting
Compensation
11. Challenges Affecting
Compensation
6. Compensation Strategies and
Adjustments:
Most organizations have compensation
strategies and policies that cause wages and
salaries to be adjusted. A common strategy is
to give nonunion workers the same raises
that are given to unionized employees; this
often is done to prevent further unionization.
Strategies or policies that increase employee
compensation move the wage-trend line
upward. Compensation strategies are further
complicated by international challenges.
12. Challenges Affecting
Compensation
7) International Compensation Challenges:
The globalization of business affects compensation
management. Compensation analysts must focus not
only on equity but on competitiveness too. Firms that
compete globally may find that using local area salary
surveys in the home country- even for compensating
home-country employees -may ensure equity in the
home labor market, but benchmarking wages and
salaries among home-country competitors-especially if
they are all in a developed nation -may lead to labor
costs that are too high to compete with foreign
operations that have lower compensation costs. Jobs
may have to be restructured to use less expensive
labor, be automated, or be moved to lower-cost
countries for the organization to survive.
13. Challenges Affecting
Compensation
8) Productivity and Costs:
Regardless of company or social policies,
employers must make a profit to survive.
Without profits, they cannot attract enough
investors to remain competitive. Therefore, a
company cannot pay its workers more than the
workers give back to the firm through their
productivity. However, if this should happen
(because of labor scarcity or union power), the
company must redesign those jobs, train new
workers to increase the supply, automate,
innovate, or go out of business.
14. Objectives Of Compensation
Management
1) Acquire qualified personnel:
Compensation needs to be high enough to
attract applicants. Pay levels must respond to
the supply and demand of workers in the
labor market since employers compete for
workers. Premium wages are sometimes
needed to attract applicants already working
for others.
15. Objectives Of Compensation
Management
2) Retain current employees:
Employees may quit when compensation
levels are not competitive, resulting in higher
turnover
3) Ensure equity:
Compensation management strives for
internal and external equity. Internal equity
requires that pay be related to the relative
worth of a job so that similar jobs get similar
pay. External equity means paying workers
what comparable workers are paid by other
firms in the labor market.
16. 4) Reward desired behavior:
Pay should reinforce desired behaviors and act as an
incentive for those behaviors to occur in the future.
Effective compensation plans reward performance,
loyalty, experience, responsibility, and other behaviors.
5) Control costs:
A rational compensation system helps the organization
obtain and retain workers at a reasonable cost. Without
effective compensation management, workers could be
overpaid or underpaid.
Objectives Of
Compensation Management
17. 6) Comply with legal regulations:
A sound wage and salary system considers the legal
challenges imposed by the government and ensures the
employer's compliance.
7) Facilitate understanding:
The compensation management system should be easily
understood by human resource specialists, operating
managers, and employees.
8) Further administrative efficiency:
Wage and salary programs should be designed to be
managed efficiently, making optimal use of the HR1S,
although this objective should be a secondary
consideration compared with other objectives.
Objectives Of
Compensation Management
18. Current Issues in
Compensation Management
1. The issue of comparable worth:
Comparable worth is the concept by which women who is
usually paid less than men can claim that men in
comparable rather than strictly equal jobs are paid more.
2. The issue of salary compression:
Salary compression, a result of inflation, means that longer-
term employees’ salaries are lower than those for workers
entering the firm today. Its symptoms include (1) high
starting salaries compared to current employees’ salaries;
and/or (2) unionized hourly pay increases that overtake
supervisory and nonunion hourly rates.
19. Current Issues in Compensation
Management
3. The cost-of-living differentials:
Cost of living differences between cities
can cause serious compensation
problem. For example, a family of four
might live in Comilla is less costly while
the same family’s annual expenditure in
Dhaka.
20. Components of
compensation
Compensation has two main components.
These are:
Direct financial payments in the form of wages,
salaries, incentives, commissions, and bonuses.
Indirect payments in the form of financial benefits
like employer-paid insurance and vacations.
21. Contents of compensation
management
Financial contents
Wages and salaries
Incentives and gain sharing
Non financial contents
Benefits and services
Security, safety, and health
23. Establishing Pay Rates
The process of establishing pay rates while ensuring
external and internal equity takes five stages:
Stage1: conduct a salary survey of what other
employers are paying for comparable jobs
Stage 2: Determine the worth of each job through
job evaluation
Stage 3: group similar jobs into pay grades
Stage4: price each pay grade by using wage
curves
Stage 5: fine-tune pay rates
24. Stage 1: Conduct the Salary Survey:
Salary survey means a survey aimed at
determining prevailing wage rates. A good
salary survey provides specific wage rates for
specific jobs. Formal written questionnaire
surveys are the most comprehensive, but
telephone surveys and newspaper ads are
also source of information.
Establishing Pay
Rates
25. Ways of using salary survey
Employers use salary surveys in three ways.
First, survey data are used to price. A survey aimed
at determining benchmark jobs that anchor the
employer's pay scale and around which its other jobs
are slotted, based on their relative worth to the firm.
Second, more of the employer's positions are
usually priced directly in the marketplace, based on a
formal or informal survey of what comparable firms
are paying for comparable jobs.
Finally, surveys also collect data on benefits like in
surance, sick leave, and vacation time to provide a
basis for decisions regarding employee benefits.
26. Establishing Pay Rates
Stage 2: determine the worth of each
job: job evaluation
Job evaluation is aimed at determining a job’s
relative worth. It is a formal and systematic
comparison of jobs to determine the worth of
one job relative to another eventually results
m a wage or salary hierarchy. The basic
procedure is to compare the content of jobs
in relation to one another in terms of their
effort, responsibility, and skills.
27. Method of job evaluation
a) Job ranking:
The simplest and least precise method of lob evaluation
is job ranking. Specialists review the job analysis
information and then rank each job subjectively ac
cording to its relative importance in comparison with
other jobs in the firm. These are overall rankings,
although raters may consider individual factors such as
the responsibility, skill, effort, and working conditions
involved in each job. Subjectively determined global
rankings mean that important elements of some jobs
may be overlooked while unimportant items are
weighted too heavily. Even more damaging, these
rankings do not differentiate between jobs in terms of
their relative importance.
28. b) Job Grading
Job grading, or job classification, is slightly more
sophisticated than job ranking but still not very
precise. It works by having each job assigned to a
grade by matching standard descriptions with each
job's description. More important jobs are paid more,
but the lack of precision can lead to inaccurate pay
levels
Method of job
evaluation
29. Method of job evaluation
c) Factor Comparison:
With the factor comparison method, the job
evaluation committee compares critical or
compensable job factors. These compensable factors
are the job elements common to all the jobs being
evaluated, such as responsibility, skill, mental effort,
physical effort, and working conditions. Each factor is
compared, one at a time, with the same factor for
other key jobs, and then the separate evaluations are
combined by the committee to determine the relative
importance of each job.
30. Analysts must first decide which factors
are common and important in a broad
range of jobs. The critical factors
shown in the figure are the ones most
commonly used.
Step 1: Determine the critical factors
Steps of Factor Comparison
31. Job grade with standard description
Job
Grade
Standard Description
1 Work is simple and highly repetitive, done under close supervision,
requiring minimal training and little responsibility or initiative.
2 Work is simple and repetitive, done under close supervision, requiring
some training or skill. Employee is expected to assume responsibility or
exhibit initiative only rarely.
3 Work is simple, with little variation, done under general supervision.
Training or skill required. Employee has minimum responsibilities and
must take some initiative to perform satisfactorily.
4 Work is moderately complex, with some variation, done under general
supervision. High level of skill required.
5 Work is complex, varied, done under general supervision. Advanced skill
level required. Employee is responsible for equipment and safety; shows
high degree of initiative.
32. Step 2: Determine key jobs:
Key jobs are jobs that are commonly found throughout the organization
and in the employer's labor market. Common jobs are selected
because it is easier to discover the market rate for them. Ideally, these
benchmark jobs should be widely held and accepted by employees as
key jobs and should encompass a wide variety of critical factors.
Step 3: Apportion current wages for key jobs:
The job evaluation committee then allocates a part of each key job's
current wage rate to each critical factor: responsibility, skill, mental
effort, physical effort, working conditions. The proportion of each wage
assigned to the different compensable factors depends on the
importance of the individual factor.
Steps of Factor Comparison
33. Step 4: Place key jobs on a factor comparison
chart:
Once the compensable factors of each key job have been
assigned a proportion of the wage rate, this information is
transferred to a factor comparison chart. Key jobs are
placed in the columns according to the amount of wages
assigned to each critical factor.
Step 5: Evaluate other jobs:
The titles of key jobs in each column in factor comparison
chart serve as benchmarks. Other, non key jobs are then
evaluated by being fitted on the scale in each column
Steps of Factor
Comparison
34. Method of job evaluation
d) Point System
This system evaluates the compensable factors of
each job, but instead of using wages as the factor
comparison method does, it uses points. Although
more difficult to develop initially, the point system is
more precise than the factor comparison method
because it can handle critical, compensable factors in
more detail. This system requires six steps and is
usually implemented by a job evaluation committee
or an individual analyst.
35. Step 1: Determine critical factors:
The point system can use the same factors used in
the factor comparison method, but it generally adds
more detail by breaking down those factors into sub
factors. For example; the factor of responsibility can
be broken down into (a) safety at others, (b)
equipment and materials, c) assisting trainees, and
(d) product and service quality.
Steps of Point System
36. Steps of Point System
Step 2: Determine the levels of factors:
Since the amount of responsibility or other
factors may vary from job to job, the point
system creates several levels- minimum, low,
moderate, high associated with each factor.
These levels help analysts reward different
degrees of responsibility, skills, and other
critical factors.
37. Steps of Point System
Step 3: Allocate points to sub
factors:
With the factors listed down one side of
factor comparison chart and the levels
placed across the top, the result is a point
system matrix. Starting with level- high, the
job evaluation committee subjectively
assigns the maximum possible points to
each sub factor.
38. Steps of Point System
Step 4: Allocate points to levels:
Once the maximum total points for each job
element are assigned under level-high,
analysts allocate points across each row to
reflect the importance of the different levels.
For simplicity, equal point differences
usually are assigned between levels.
Alternatively, point differences between
levels can be variable. Both approaches are
used, depending on the importance of each
level of each sub factor.
39. Step 5: Develop the point manual:
Analysts then develop a point manual that
contains a written explanation of each job
element. It also defines what is expected for the
four levels of each sub factor. This information is
needed to assign jobs to the appropriate level.
Steps of Point System
40. Steps of Point System
Step 6: Apply the point system:
When the point matrix and manual are ready, the
relative value of each job can be determined. This
process is subjective, requiring specialist to
compare job description with the standard point
manual description for each sub factor. The match
between the job description and the point manual
statement reveals the levels and point for each sub
factor of every job. The points for each sub factor
are added to find the total number of points for the
job.
41. Stage 3: Group similar jobs into pay grades:
Once a job evaluation method has been used to determine
the relative worth of each job, the committee can turn to the
task of assigning pay rates to each job, but it will usually want
to first group jobs into pay grades. If the committee used the
ranking, point, or factor comparison method, it could assign
pay rates to each individual job. But for a larger employer
such a pay plan would be difficult to administer, since there
might be different pay rates for hundreds or even thousands
of jobs. And even in smaller organizations there's a tendency
to try to simplify wage and salary structures as much as
possible. Therefore, the committee will probably want to
group similar jobs (in terms of their ranking or number of
points, for instance) into grades for pay purposes
Establishing Pay Rates
42. Stage 4: Price Each Pay Grade – Wage
Curves:
Assigning pay rates to each pay grade (or to each job) is
usually accomplished with a wage curve. The wage curve
depicts graphically the pay rates currently being paid for
jobs in each pay grade, relative to the points or rankings
assigned to each job or grade by the job evaluation. Note
that pay rates are shown on the vertical axis, and the pay
grades (in terms of points) are shown along the horizontal
axis. The purpose of the wage curve is to show the
relationship between ( I ) the value of the job as determined
by one of the job evaluation methods and (2) the current
average pay rates for individual grades.
Establishing Pay Rates
43. There are several steps in pricing
jobs with a wage curve.
First, find the average pay for each pay grade,
since each of the pay grades consists of several
jobs.
Second, plot the pay rates for each pay grade.
Third, fit a line, called a wage line through the
points just plotted. This can be done either
freehand or by using a statistical method.
Finally, price jobs. Wages along the wage line
are the target wages or salary rates for the jobs
in each pay grade.
44. Establishing Pay Rates
Stage 5: Fine- Tune Pay Rates:
Fine-tuning involves correcting out-of-line rates and (usually)
developing rate ranges. Here rate ranges is a series of levels within
a pay grade, usually based upon years of service.
There are several benefits to using rate ranges for each pay grade.
1)The employer can take a more flexible stance with respect to the
labor market.
2)Rate ranges allow individuals to provide for performance
differences between employees within the same grade or between
those with different seniorities.
46. Incentive Systems
Piecework
Piecework is an incentive system that
compensates the worker for each unit of
output. Daily or weekly pay is determined by
multiplying the output in units times the rate
per unit. For example, in agricultural labor,
workers are often paid a specific amount per
bushel of produce picked
47. Maturity Curves
That happens when technical or scientific employees reach the top
of their rate range "broad banding," which widens the rate range to
accommodate senior or top performers.'' Another approach is
Maturity curves, which are adjustments to the top of the rate range
for selected jobs. Employees are rated on productivity and
experience. Outstanding contributors are assigned to the top
curve. Good but less outstanding performers are placed on the
curve next to the top. Through this technique, highperforming
professionals continue to be rewarded for their efforts above the
top of their jobs' rate ranges without being required to seek a
management position or switch jobs to increase their earnings.
Incentive Systems
48. Incentive Systems
Merit Raises
Merit raises are pay increases given after an
evaluation of performance. These raises are
usually decided by the employee's immediate
supervisor, often in conjunction with superiors.
Although merit raises reward aboveaverage
performance, they are seldom tied to any specific
payout standard. This lack of clear standards
causes some companies to rely on a man
agement by objectives (MBO) approach that sets
standards against which merit raises can be
given.
49. Pay-for-Knowledge/Pay-for-
Skills
Compensation:
Payforknowledge and payforskill compensation
systems reward employees with higher pay as an
incentive for the increased knowledge or skills they
acquire. Most organizations have traditionally
designed their compensation systems around
specific jobs. The wage and salary structure of these
systems has typically been based on job analyses
and evaluations: this process determines a job's worth
and salary range
Incentive Systems
50. Incentive Systems
Non monetary Incentives
Incentives usually mean money, but performance incentives
also come in other forms.
For example, many companies have recognition programs in
which employees receive plaques, novelty items, certificates,
time off, vacations, and other non cash incentives for job
performance, suggestions, and even community service.
Executive Incentives
Incentive-especially executive incentives need to achieve a
balance between short-term results and long-term
performance. In some companies, this short-term orientation
may lead to reductions in product quality and cuts in research
and development, advertising, new capital equipment, employee
development.
51. International Incentives
To attract, retain, and motivate international
executives and key employees, many global
companies are setting up foreign allowances that
are incentives for international employees. Some
companies find it advantageous to pay foreign,
housing and transportation costs and taxes directly
rather than give allowances and incentives to work
overseas.'' Other companies prefer to use pay-for-
performance
Incentive Systems
52. Gain sharing Approaches
Employee ownership
Perhaps the ultimate gain sharing approach is for
employees to own the company. Many companies
have stock purchase plans that allow workers to buy
shares in the company, thus "owning" a fractional part
of the firm and sharing its success. A revolutionary
approach by which employees may own their company
is called an employee stock ownership plan (ESOP).
Production-Sharing Plans
Production sharing plans allow groups or workers to
receive bonuses for exceeding predetermined levels
of output. The plans tend to be short-range and
related to very specific production goals. For
example, a team may get a bonus for a specific goal.
53. Profit-Sharing Plans
Profit-sharing plans share profits with the employees. When these
plans work well, they create trust and a feeling of a common fate
among workers and management. Usually profit plans reserve a
percentage of the firm's overall profits or a percentage above a
threshold and distribute those monies to employees. The distribution
formulas vary, though many give a flat bonus to each employee
based on the employee's job category or tenure.
Cost reduction plans
The aim of cost reduction plans is to reward workers for something
they can control labor cost. To reduce cost, some companies form an
employee committee to facilitate the communication of new ideas and
employee involvement in the firm’s day to day operation, usually
through periodic meeting.
Gain sharing Approaches
55. Insurance Benefits to
employees
1. Health-Related Insurance
To reduce risks, some health related
insurance are taken for the
employees. These are as follows:
Medical insurance
Dental insurance
Mental health insurance
56. Insurance Benefits to
employees
2. Life insurance
Life insurance often goes beyond merely helping
with funeral expenses. Although some firms provide a
flat amount for all workers, the majority pay a multiple
of the employee's salary. Unlike health insurance,
employer-provided life insurance is not typically
extended to the worker's family members. Most HR
managers and benefits experts reason that life
insurance is meant to protect the family from the loss
of the worker's income.
57. Insurance Benefits to
employees
3. Disability Insurance
When a worker is unable to work for a
prolonged period, most companies provide
some form of long-term disability (LTD)
insurance. LTD policies generally have an
extended waiting period, usually six months.
They pay the employee only a fraction
(usually 50 to 60 percent) of his or her
wages or salaries and usually end within a
few years unless the insured is unable to
perform any type of work.
58. Employee Security
Benefits:
Employment Income Security:
Severance pay benefits- entitle the worker to a lump-sum
payment at the time of separation from the company.
Golden parachutes- are agreements by a company to
compensate executives with bonuses and benefits it they are
displaced by a merger or acquisition
Layoffs- may be eased by accrued vacation pay. A few
companies go so far as to provide a guaranteed annual wage
(GAW). These plans ensure that the worker receives a minimum
amount of work or pay.
supplemental unemployment benefits (SUB)- When
employees are out of work, their state unemployment benefits
are supplemented by the employer from moneys previously paid
to the SUB fund.
59. Employee Security
Benefits:
Retirement Security:
Retirement is the exit from an organizational position.
Retirement plans originally were designed to reward
long-service employees. Through employer
generosity and union pressures, retirement plans
have generally grown in scope and coverage. Every
organization tries to provide economic assistance to
its employees who serve the organization for a long
period. Generally employees feel economic insecurity
after their retirement from their workplace. That is
why organization provides lump-sum amount of
money so that the retired employees can do initially
with that money.
60. Time-off benefits:
Some benefits called “Time-off benefits” provided by the
organization are as follows:
On-the-Job Breaks- Rest breaks, meal breaks, and wash-up
time.
Sick days and well pay- Absence for illness and payment
for unused leave (well pay).
Holidays and vacations- One-day in a week an vacations
usually are based on the employees length of service.
Leave of absence- Often granted for pregnancy, extended
illness, accidents and other reasons specified in a company’s
HR policies.
61. Work scheduling benefits:
The nature of the typical workweek has changed
significantly since the early days of the industrial
revolution. Several new approaches to scheduling
work have gained popularity:
Shorter work times
Flextime- Employees are allowed to report to work
at any time during a range of hours.
Job sharing- . Job sharing involves one or more
employees doing the same job but working different
hours, days, or even weeks.
62. Employee Services
Some companies go beyond pay and traditional
benefits and provide services for their employees.
The most common ones are-
Educational- programs partially or completely
reimburse employees for furthering their education
but may be limited to courses that are related to an
employee's job.
Financial- programs, which are common among
retail stores and consumer goods manufacturers,
allow workers to buy products from the company at a
discount.
Social programs- social services are provided by
employers as they adapt to a changing and diverse
workforce.
64. Financial Security
Workers in developed nations are financially
dependent on a paycheck. Anything that
keeps them from earning a paycheck
threatens their financial security. Because
retirement, disability, layoffs, and injuries limit
the earning power of many citizens,
government has intervened with social
security, unemployment compensation, and
workers' compensation acts.
65. Financial Security
Social Security:
Social security is more than a compulsory retirement
plan, although it does provide an income for life upon
retirement. Other aspects of social security provisions
give covered workers and their families’ disability,
death, survivor, and health insurance benefits.
Unemployment Compensation:
Unemployment compensation represents payments
to those who lose their jobs. Benefits do not continue
indefinitely. An unemployed worker receives benefits
only for a specified period or until a new job is found
during periods of severe unemployment.
66. Financial Security
Workers' Compensation:
Another threat to the financial security of employees
consists of work-related accidents and illnesses.
Worker could get compensation for an industrial
accident or illness only by suing the employer. With
the cost of medical treatment, the loss of income, and
the loss of a wage earner, many workers and their
families found it financially impossible to bring such
suits. The result was a severe burden on society in
general and on the affected workers and their
families in particular.
67. Physical security:
Physical security program attempts to
compensate employees for accidents and
illness that have already occurred. For this
reason a comprehensive law-“Occupational
Safety and Health Act” has been invented.
The purpose of OSHA is to assure so far as
possible every working man and woman in
the nation safe and healthful working
conditions and to preserve our human
resources.
69. Compensation practices in
Bangladesh
1. Method o f payment:
Theoretically the methods of payment may be either piece-
rate or time-based. Under piece-rate basis, the pay is
computed by the number of units produced times the rate
per unit in taka. The monetary value of each piece is set by
time study or past experience. This payment method is
simple to calculate, easy to understand, appears equitable,
and motivates performance. The main problem of this
method is that, when quality is equally important it does not
provide better result. Under time rate basis, the pay is
determined by multiplying the number of hours worked and
the rate per hour. This method is preferred by the workers,
because it does not penalize the average or less-than-
average workers. But the major disadvantage of this method
is its lack of motivation when high production is desired.
But here, in the sample firms, a combination of the two
methods is followed. Although all the firms pay their
workers at the end of the month, the amount of payment is
calculated on hourly wage rate basis or daily wage rate
basis.
70. Compensation practices in
Bangladesh
2. Factors determining pay:
In determining pay several factors should be taken into
account. These factors can be classified into four broad
groups, viz. external factors, organizational factors, job
factors, and individual factors. But in most of the cases
among all the factors only a few are given importance. The
single most important external factor is demand for and
supply of labor. Most of the industry there is union. But
union's role in the pay determination does not arise.
However, the workers also reported that the urban workers
are getting more than those of the rural workers. The small
and medium sized firms tend to follow the larger firms in
determining the wage of the workers. The size and
profitability of the firms have little influence on pay. All the
firms emphasize greatly on the skill of the workers. But
workers are not paid for having variety of skills. Most of the
firms take into account the performance or the productivity
of the workers.
71. Compensation practices in
Bangladesh
3. Pay level of the workers:
The pay that the workers get in the firms is approximately equal to the
per capita income of our country--a very small amount of money to
support even a small family adequately, which is below the subsistence
level. Most of the workers are living from hand to mouth.
4. Financial incentives:
To motivate the workers, the firms give financial incentives in some
cases, but depending on different bases. There is little room for merit
evaluation. The nature of work is more or less monotonous and also
has no provision in applying merit. Even the firms do not follow the
piece rate incentive system and also incentives are not given to the
workers if they contribute significantly in the form of valuable
suggestions. No profit sharing plan or employee stock ownership plan
has been introduced by the sample firms.
5. Festival allowances:
In the firms, the workers are given two festival allowances in two Eids in
a year. The amount paid as allowances is equal to basic pay in all the
firms.
72. Compensation practices
in Bangladesh
6. Other benefits:
(a) Maternity leave: Most of the firms have provisions for maternity
leave up to two months with pay. If it exceeds two months, leave is
granted without pay. However, the worker may return to job after the
leave.
(b) Accidental benefits: The firms do not give long-term financial
security to the workers if they become disabled.
(c) Leaves and holidays: There is no standard rule in the firms about
leaves and holidays. Some firms do not grant the workers sick leave or
weekly holiday or even government holiday.
(d) Workers' services: It is impracticable to find the firms that provide
educational facilities to the kids of the workers, provide day care facility
for the children of the workers, and provide canteen services, uniform,
transportation facilities, housing, counseling or legal assistance to the
workers.
(e) Workers' pension: There is no pension plan for the workers in the
private firms.
73. Recommendations:
1. Compensation should be sufficient enough, so that
the workers can lead their lives at the subsistence
level.
2. Workers should be given the freedom to form union,
so that they can place their demand through the
union unitedly.
3. The owners of the firms should look into the problems
of job security and working conditions.
4. As the money wages are very low, the owners can
increase the real wages through providing free or
subsidized accommodations, clothing, medical
facilities etc.
74. Recommendations:
5. Education and training of the workers can increase
the owners' productivity and profitability and can help
the workers improve their lot and standard of living
and also understand their rights. So employers
should provide the facilities for education and
training; employees should take every opportunity of
such facilities and above all the government should
take steps in helping the workers of such an
important industry to educate and train them properly.
6. Government should enact proper rules and
regulations to safeguard the interest of the workers.
