Analysis Public And Private Sectors.docx

A PROJECT REPORT ON COMPENSATION ANALYSIS BETWEEN PUBLIC AND PRIVATE SECTORS Project submitted in partial fulfillment for the Award of the degree of MASTER OF BUSINESS ADMINISTRATION Submitted By AAQILA ZAINAB RAZVI H.T.No: 1402-17-672-113 Under the Guidance of Dr. Naiymunnisa (ASSOCIATE PROFESSOR)

AMJAD ALI KHAN COLLEGE OF BUSINESS ADMINISTRATION

Affiliated to Osmania University - Hyderabad (2017-2019)

CERTIFICATION

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This is to certify that the project work entitled “A PROJECT REPORT ON COMPENSATION ANALYSIS BETWEEN PUBLIC AND PRIVATE SECTORS” is being submitted in partial fulfillment for the award of degree of Master of Business Administration to Osmania University, a record of bonafide is carried out by Aaqila zainab razvi, bearing HT.NO 1402-17-672-113. The result in this report has not been submitted to any other University or Institution for award of any degree or diploma.

PROF. SHEBAZ AHMED DIRECTOR

CERTIFICATION This is to certify that the Project Report title “A PROJECT REPORT ON COMPENSATION ANALYSIS BETWEEN PUBLIC AND PRIVATE SECTORS” submitted in partial fulfilment for the award of MBA Programme of Department of Business Management, O.U. Hyderabad, was carried out by Aaqila zainab razvi, under my guidance. This has not been submitted to any other University or Institution for the award of any degree/diploma/certificate.

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Dr NAIYMUNNISA Associate Professor Internal Guide

Signature of the Guide

DECLARATION I hereby declare that this Project Report titled “A PROJECT REPORT ON COMPENSATION ANALYSIS BETWEEN PUBLIC AND PRIVATE SECTORS” submitted by me to the Department of Business Management, O.U., Hyderabad, is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.

AAQILA ZAINAB RAZVI HT.No: 1402-17-672-113

ZAINAB RAZVI

Signature of the Student

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ACKNOWLEDGEMENT It is great pleasure to acknowledge the kind of help & suggestions given by various individuals the persons during my project work. I express my deep sense of gratitude to Prof. Shehbaz Ahmed, Director, Amjad Ali Khan College of Business Administration, for extending his support. I would like to thank my project guide dr. naiymunnisa, Associate Professor, Amjad Ali Khan College of Business Administration for his valuable guidance & enthusiastic encouragement in motivating me to take up the project by providing valuable ideas & suggestions to carry the project in this endeavor. I would like to thank one & all, who directly & indirectly extended their valuable support in completing this project. I take this opportunity to express my deep felt gratitude to my family members for being a source of strength & moral support throughout the course of my study.

AAQILA ZAINAB RAZVI HT.No: 1402-17-672-113

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SNO.

CHAPTER NAME

PAGE NO.

1.

Abstract

1

2.

Introduction

3

3.

Review of literature

10

4.

Company profile Public Sector

15

5.

Data analysis

18

6.

Objective 1

28

7.

Objective 2

35

8.

Findings

39

9.

Suggestions

40

10.

Conclusion

41

11.

Bibliography

42

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Abstract

ABSTRACT: The paper consists the study is to identify and analyze the factors influencing the customer adoption of technology in banking services in the twin cities. The impact of technology on

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banking operations. Also,a comparative study of banks in different regions to analyze ATM, Internet banking, Telephone banking, Mobile banking services used between users and problems of technology usage in that bank. The Paper is basically concernedand the customer aspect of technology in banking searching for customer satisfaction level and adoptions of banks are analyzed between using Statistical Tools through R-Programming. This is a comparative study of Public sector banks and Private Sector banks and finds out the majority of which kind of transaction in banks in Twin cities. Key words: ATM, Internet banking, Telephone banking, Mobile banking.

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Chapter 1: Introduction

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Topic : A comparative study on annual compensation and benefits of Indian public and private sectors. Introduction: Compensation is a systematic approach which provides monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance and job satisfaction. It also refers to the policies and procedures for managing all forms of financial returns and tangible services and benefits that employees receive as a part of an employment relationship. Better compensation management facilities to attract the employees towards the organisation. Objectives: 1.To understand the key compensation and benefits trends across sectors in the Indian market. 2. Comparison between the compensation and benefits given in public and private sectors. Scope: To analyse the structure of compensation and benefits in public and private sector firms and also explore the role of the performance model. Limitations: Since the project is based on the information collected only for a year, there might be changes in the trends that might not be taken into account for the study. Methodology: The methodology adopted for this project is secondary data. The secondary data are those which have already been collected by someone else and which have already been passed through the statistical process.

Meaning: Compensation is the direct and indirect monetary and nonmonetary rewards given to employees on the basis of the value of the job, their personal contributions, and their performance. While making these payments one should be alive to the governing legal regulations. The compensation and benefits processes belong to most important HR processes, which are critical for the Zainab Razvi

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organization and modern HR organization. The compensation and benefits is about managing the personnel expenses budget, setting the performance standards, setting the transparent compensation policies and introducing the competitive benefits for employees. The organization with effective compensation and benefits drives its personnel costs, manages the performance of employees and rewards the extraordinary performance. The high performance corporate culture and the high performance. Human Resources organization have to be supported by the compensation strategy, which is designed to be business driven strategy and with the right compensation tools, which motivate employees to go the extra mile and rewarding the real successes.

Main Compensation Goals: The compensation strategy has to set the main compensation goals of the organization and they have to be kept as the main target for Human Resources to be achieved. The compensation goals have to be set in accordance with the business strategy and they have to visible in the HR Strategy. The top management and Human Resources have to decide, what the goals are of the compensation schemes in the organization. The compensation goals should be aligned with the corporate culture and the general long-term expectations of the employees, when the organization does not implement a huge change in the corporate culture. Main compensation goal is about the role of the compensation in the organization. Each organization pay salaries, but the role of the compensation has to be balanced with the other aspects of the overall motivation scheme applied in the organization. The organization has to choose to pay higher salaries and offer less development or career opportunities or it can offer lower salaries and better career opportunities to keep the motivation system balanced. When the organization defines its basic compensation goals, it can continue with structuring the main compensation decisions formulated in the compensation strategy.

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Objectives: -

To attract and retain competent and productive staff from the appropriate national, regional, local labour market.

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To identify different levels of responsibility and accountability and to establish salaries accordingly.

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The financial compensation system forms as an effective motivator and increases performance to give a feeling that the remuneration is fair and that no favouritism has been shown in its payment.

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To maintain satisfaction of human resources, reducing voluntary separations and complaints and grievances stemming from inadequate or inequitable wages as perceived by the employees. Importance: The compensation strategy allows smooth and efficient operation of other HR Processes like the recruitment and staffing, performance management, proper KPI and goal setting process, performance appraisals. As the other HR Processes can run smoothly and they are not blocked by the wrongly set compensation strategy, the main compensation decisions have to be included in the compensation strategy and the top management and Human Resources have to be aligned in the understanding to the main compensation decisions.

Role of Compensation in Human Resources: The compensation is a part of the complex HR processes, policies and procedures. The top management and Human Resources have to decide, what will be the primary role of compensation in the organization. Some organizations prefer the supplementary role of the compensation and other organizations prefer the dominant role of the compensation. This compensation decision is extremely important as it sets the general framework for the compensation components, if they will exist in the organization or they will be the part of the other HR policy. The compensation strategy definitely includes the description of the role of the compensation in the organization.

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Components of a compensation system: -

Job description

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Job analysis

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Job evaluation

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Pay structures

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Salary service Constitutes of compensation: - Wage and salary - Incentives - Fringe benefits - Perquisites

Public sector: The public sector is that portion of an economic system that is controlled by national, state or provincial, and local governments.It consists of national and local governments, their agencies, and their chartered bodies. Public sector compensation is a difficult and complex issue often characterized by straw men and generalizations.Public employee compensation is a matter of policy debate and political controversy in states and cities around the country. Yet discussions of public sector pay are rarely informed by hard data. Many public employees are under the impression that they could earn higher pay and benefits “on the outside.” And many private sector workers admire public sector pay and benefits, without recognizing that the average public employee is often more educated and experienced than the average worker outside government. Government employees typically have a significant portion of their salaries in benefits including health insurance and pension benefits. Employees in public sector enterprises have enjoyed job security, which is often not the case in private sector. Also, there is no denial that they have traditionally enjoyed a range of benefits and perquisites that cannot be easily monetised.The PSUs remuneration and human resource policies have to fitinto India's socioeconomic reality, which is a country that is stillpre-dominantly poor with lot of social and economic inequities.To give equal opportunities and uplift people from certainsections, the

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government has reserved posts in PSUs forscheduled castes and scheduled tribes. Most PSUs also have mandated to develop broader infrastructure facilities in areas adjoining their facilities.The junior and middle management employees are, however, better off in PSUs than those in the private sector because of these fringe benefits and more equal distribution of compensation in PSUs.

Private sector: The private sector encompasses all for-profit businesses that are not owned or operated by the government. the private sector is the segment of a national economy owned, controlled and managed by private individuals or enterprises. The private sector has a goal of making money and employs more workers than the public sector. The private sector in India have demonstrated its potential of growth and offered tremendous opportunities of employment. Compensations become global in nature for similar or equivalent skill sets, however, the growth levels in compensation differed market to market. HR organisations have made attempts to understand the linkage and influencing factors of salary escalation levels as a part of their routine exercise and projected short term trends for different sectors/ industry. In the private sector, top management has to constantly strive to reach higher operational targets, which will involve a certain degree of risk and an employee has to be rewarded suitably.the high salaries in the private sector are often granted only to a miniscule number of employees who hail from the top-end management schools, and their remuneration, at times, are not reflective of the industry average.

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Limitations: 1. Compensation management involves a wider range. So, the present study examines it from identified and selected dimensions only. However, it is possible that there may be other factors which might not have been covered in this study 2. In this study, compensation analysis has been limited only to banking sector. 3. This interpretation being based on percentage method is not definite. This study is not conclusive 4. The responses of the study have been taken only from one bank from each sector. The perceptions and expectations of the bank employees and officers may vary from those of the rest of India 5. Any study which is based on the primary data collected through the pre-designed questionnaire suffers from the basic limitation of possibility of difference between what is recorded and what is true because the people may not deliberately report their true opinion due to some reasons or other service related issues, no matter how carefully the interviews have been conducted.

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Chapter 2: Review of Literature

Wage Differentials Between The Public And The Private Sector: How Comparable Are The Workers? - Journal of Business & Economics Research, May 2006. This paper’s purpose is to examine the importance of controlling for the comparability of the units in a sample when examining wage differentials of various types. We use U.S. CPS data for the period 1992-2000 to compare estimated wage differentials between public and

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private sector workers obtained using two different methodologies: Lee’s two-step method that controls for the selection bias resulting from the non-randomness of the sample, and the propensity score matching method that controls also for the comparability of the workers. Lee’s method suggests that federal workers are paid a premium, while state and local workers are underpaid compared to private sector workers. However the matching method indicates that this data is too heterogeneous to be used to compare wages across sectors. We conclude that, when the outcome under study is not only affected by some sort of selection but also requires comparable groups, the traditional methodology may not be enough. This study approaches the public/ private wage comparison issue by comparing the results obtained from the application of two different methodologies that focus on correcting the selection bias problems that result from the nonrandom allocation of workers across sectors. We show that accounting for the endogeneity of the sector of employment does not ensure that the groups are comparable. If in addition the analysis assumes that the workers from different sectors are similar to each other, we also need to find reliable counterparts. Comparing Public and Private Sector Compensation over 20 Years - Keith A. Bender and John S. Heywood, 2010. The current recession and the resulting fiscal difficulties faced by state and local governments have renewed interest in the compensation of the public workforce in regard to pay, pensions, and other benefits. In this report we examine the extent to which state and local government compensation in the United States is comparable to compensation in the private sector Levels of compensation help determine both the competence and the efficiency of governmental services. Excessive levels waste resources, depriving governments of the opportunity to address other costly objectives or to reduce burdens to taxpayers. Insufficient levels make it difficult, if not impossible, to attract workers of the quality needed to provide the services demanded by citizens. Comparability with the private sector is the most generally accepted standard by which economists and compensation specialists judge whether the processes for determining compensation in the public sector are working. In this report we use publicly available data from the U.S. Bureau of Labor Statistics, along with an established methodology used by researchers since the 1970s, to compare worker earnings across and between private, state, and local sectors. We analyze differences in pay between each sector as reported for the last several decades, up to and including the latest estimates. Zainab Razvi

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We also estimate the variation of these trends across some of the largest states. Next, to compare overall compensation across public and private sectors, we describe benefit levels and composition in public and private sectors. The earnings–comparability estimates are adjusted to include benefits Unequal Pay: Public vs. Private Sector Compensation - Yankee Staff, Oct 2015. Public employee compensation should be set at the level necessary to attract and retain required employees. Appropriate compensation levels for government employees can be approximated by analyzing how workers with similar levels of education, experience and other earnings-related attributes are paid in the private sector. Rising budgetary costs for public employee pensions and health programs have caused public employee compensation to be a matter of policy debate and public concern. Connecticut is ranked second in the nation for the ratio of combined public debt and unfunded pension and retiree health liabilities to state GDP. This study compares the salaries and benefits of Connecticut state government employees in non-public safety positions to those of private sector workers with similar education, experience and other earnings-related characteristics. The main data sources used for this analysis are the U.S. Census’ American Community Survey, the Bureau of Labor Statistics National Compensation Survey, and actuarial valuations of state pension and health programs.• Pensions and health coverage are the greatest budgetary burdens of public employee compensation, as well as the elements of compensation that are most generous relative to the private sector. Were the Connecticut state government to pay employees at market levels, it would save between $1.4 billion and $2.5 billion in annual compensation costs. Thus, it seems appropriate that policy reforms focus on making public employee health, pension and retiree health plans fiscally sustainable and competitive with the private sector. Two Different Worlds: Public vs. Private Sector Compensation - PJ Austin, December, 2012 Despite the popular belief that federal employees are underpaid public servants, the data tells a very different story. When all of the factors that affect compensation are accounted for,

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there is significant evidence that federal employees make considerably more than their private sector counterparts. The gaps in the (The Federal Salary Council)FSC’s analysis are exposed by a January

30, 2012 Congressional Budget Office (CBO) report. The CBO compared federal civilian employees with private sector employees who had comparable levels of education, years of work experience, occupations, geographic locations, and demographic characteristics; it found, among other things, that, “overall, the federal government paid 16 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.” The findings of the CBO study are consistent with most other outside studies, which show that federal employees receive greater total benefits than private-sector workers. The report found that state governments pay on average 6.2 percent more per hour in wages and benefits, including pension benefits, than the private sector for the 22 major occupational categories that exist in both sectors. Additionally, the report found that no state government pays its employees on par or below what the private sector pays; that the largest percentage difference in pay between the public and private sector is 40 percent; and that the highest difference in pay is $61 an hour. This disproportionately generous public sector compensation is a major driver of unfunded state and municipal pension liabilities across the country, which have been accurately described by pundits and experts of all political stripes as looming financial crises. Total compensation paid to federal civilian workers totaled $271 billion in 2011, which means that regardless of whether or not the president decides extends the freeze on cost-ofliving increases for federal workers, overall federal compensation will have significant budgetary ramifications in the decades to come. At a time when the national debt has grown to more than $16.3 trillion, Congress cannot afford to ignore the conclusions of the studies like the CBO report, which concludes that total compensation is 16 percent higher for federal than private sector workers. It is clear that the underlying assumptions that the FSC uses to calculate its compensation figures are incomplete and therefore the group’s findings are inaccurate. To avoid facing any misconceptions about compensation in the future, the FSC should correct

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the flawed methodology it uses to calculate federal versus private sector employee pay Public vs. Private Sector Compensation - Tax Foundation in Last Week's Editorial Pages, January 2009.\ There are 144 million wage and salary jobs in the United States. About 22 million, or 15%, of those are federal, state, and local government jobs. Provided in this section are data relating to the average compensation received by both government and private sector employees. The data from this section are collected from the Bureau of Economic Analysis (BEA) and include both wage and salary compensation and compensation in forms other than wages.

This non-wage compensation includes employer contributions to employee pension and insurance funds and government social insurance funds such as social security and unemployment, all of which are important to consider when looking at the total compensation picture. Unfortunately, while BEA can accurately report non-wage compensation for the private sector, the task is more difficult for state and local governments. This is because many governments provide employees with pension and retirement plans, the future liabilities of which, by many calculations, are not adequately funded by current government contributions to those plans.

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Chapter 3: Public Sector Private Sector

Public vs private sector Company profile : The two companies taken to find out the disparities are SBI in public sector and HDFC in private sector.

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SBI (State Bank of India) is an Indian multinational, public sector banking and financial services company. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As of 2014-15, it had assets of ₹20.480 trillion (US$300 billion) and more than 14,000 branches, including 191 foreign offices spread across 36 countries, making it the largest banking and financial services company in India by assets. The company is ranked 232nd on the Fortune Global 500 list of the world's biggest corporations as of 2016. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding, in 1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two "presidency banks" in British India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn became the State Bank of India in 1955. Government of India owned the Imperial Bank of India in 1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. State Bank of India is a banking behemoth and has 20% market share in deposits and loans among Indian commercial banks.SBI is one of the largest employers in the country having 222,033 employees as on 31 March 2014, out of which there were 45,132 female employees (20%) and 2,610 (1%) employees with disabilities. Pay scales in nationalised banks and SBI (including its associates) are fixed through Bipartite Settlements. Pay scales are revised every 4 years.. HDFC Bank (Housing Development Finance Corporation) is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It has about 87,555 employees and has a presence in Bahrain, Hong Kong and Dubai. HDFC Bank was incorporated in August 1994. As of June 30, 2016, the Bank had a nationwide distribution network of 4,541 branches and 12,013 ATM's in 2,587 cities/towns. HDFC Bank is the second largest private bank in India as measured by assets. It is the largest bank in India by market capitalization as of February 2016. It was ranked 69th in 2016 Brand Top 100 Most Valuable Global Brands. HDFC Bank provides a number of products and services which includes Wholesale banking, Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal loans, Loan Against Property and Credit Cards. HDFC Bank merged with Times Bank in February 2000. This was the first merger of two private banks in the New Generation Private Sector Banks category. In 2008, Centurion Bank was acquired by HDFC Bank.

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Chapter 4: Data Analysis

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Questionnaire:

1. Does your company have a bonus or incentive plan ?

Interpretation : From the above graph, we observe that both public sector and private sector have bonus or incentive plans.

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2. .Are you totally aware of the current compensation and benefits policy in your organisation ?

Interpretation :

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From the graph, 95% of SBI employees are aware of the compensation and benefits policy, while 5% of them are not totally aware of the policies. In HDFC, 97% of the employees are aware and the rest 3% are not. This indicates that the private sector employees are well focused and are fully conscious about the policies of their salaries than the public sector employee who are a bit negligent.

3. What type of bonus does your organisation give its employees ?

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Interpretation : We observe that different sectors have different compensation policies. Public sectors have different compensation policy while the private sectors have a complete different policy. SBI has incentive based bonus while HDFC has annual or year end bonus policy.

4. Does your organisation give financial incentives or non financial incentives or both ?

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Interpretation : We understand that both the sectors, public and private give both financial and non financial incentives. Though HDFC leads in the both financial and non financial incentives, SBI also tries and gives a lot of hidden incentives to their employees. But over all, private sector leads in giving better incentives.

5. How much is your annual salary ?

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Interpretation : We understand that the salaries in private sector are more when compared to the public sector. For example, the pay of a branch manager in SBI is around 5L-10L and in HDFC it’s 6L-15L. A pay of an Associate branch manager in HDFC is 3L-8L and in SBI the pay is 2.5L6.5L. The salary of a personal banker in SBI is 2L-5L and in HDFC it’s 1.2L-4.5L. The pay of credit analyst is 2.3L-12L and clerk is 1.4L-4L. The pay of sales executive is 1L-4L and relationship manager is 4L-14L.

6. How many hours do you work ?

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Interpretation : We understand that the working hours also differs from sectors. The working hours in private companies are more when compared to public sector. In the above graph, the working hours of SBI are 8 hours and the working hours of HDFC are 9 hours.Work for more working hours and get paid more, work for stagnant working hours and get according to it. About 17 % employees of private sector are dissatisfied from general working conditions of their organization. Hence public sector employees are more satisfied than private sector employees.

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7. From the incentives given below, please choose the one's provided by your company. .

Interpretation :

We understand that different incentives are given in public and private sectors. From the above example, we see SBI employees get pension allowance, retirement insurance, health insurance,performance based incentives, provident fund, transportation allowance and other incentives. While in HDFC, their employees get shift allowance, pension allowance, education allowance, health allowance, overtime allowance, performance based incentives,

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provident fund, transportation allowance and other incentives. We conclude that even in giving extra incentives, private sector leads over public sector.

8. Does the compensation paid by your company allow to attract and retain the best employees ?

Interpretation : We understand that private sector companies gives better incentives to attract employees to work. But, as per the research, public sector doesn’t have to boast its incentives to attract employees because normally, everybody aspires to work in a government company for

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certain reasons. The main reason for most people opting public sector over private sector would mainly be for job security. If not, private sector gives the best of the incentives.

9. Are you satisfied about the compensation system practiced in your company ?

Interpretation : We understand that in spite of giving better incentives than public sectors, private sector employees, majorly, are not satisfied. About 60% employees of private sector are dissatisfied, 10% neutral and only 30% are satisfied. Major cause of dissatisfaction is not having job security. 20% extremely satisfied and 80% satisfied in public sector due to having job

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security in their jobs. Thus, public sector employees are happy and satisfied due to job security even having less salary.

Objective 1 : To understand the key compensation and benefits trends across sectors in the Indian market. Compensation analysis : The compensation package comprises of monetary and nonmonetary benefits that includes salary, special allowances, house rent allowance, travel allowance, mobile allowance, employee stock options, club memberships, accommodations, retirement benefits and other benefits. It may include a number of other benefits such as insurance, extended leaves and retirement programs. Compensation, both monetary and non-monetary is considered to be important by the organisation and employees for various reasons such as: > Increasing employee morale and motivation > Improving performance of the employee > Increasing productivity > Enhancing employee efficiency > Reducing employee turnover > Commitment > Retaining best employees > Loyalty gained > Helps dealing with union issues > Organizational citizenship behaviour Compensation can be divided into two components :

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1. Fixed This component takes care of > Basic Pay > HR Allowance (HRA) > Dearness Allowance (DA)

2. Flexible > City Compensatory Allowance (CCA) > Other Allowance > Mobile Reimbursement / Month > Educational Allowance > Travel Allowance > Gross per Month = Sum of all the above. > Gross per Annum= 12*Gross/Month > PF Contribution= 12% of Basic/Annum > Gratuity > ESI Contribution (ESIC)= 4.75% of Gross/Annum > Medical = The Mediclaim facility provided to an employee who are not covered under > Employee State Insurance (ESI). > EX-Gratia/Bonus The total cost hence is as follows: Annual Fixed Gross Cost (AFGC) = Gross/Annum + Ex-gratia Annual Total Cost = AFGC + PF + ESIC Annual total cost is also called as CTC (the compensation an employee would receive from the organization) Scope : The compensation and reward system plays a vital role in a business organisation. Job description, job analysis, job evaluation, pay structure, and salary surveys are the important components of compensation system. Compensation evolved from theories like economic

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theory, administrative theory, and social science theory. There are a few factors that affect the compensation plan. The overall macroeconomics situation where in the state of the economy of the country in which the firms are situated plays a major role in determining the compensation to be paid. For instance, if an economy is booming or is in high growth trajectory, chances are that the employees would pay the employee more and conversely and vice-versa. The existing government policies also play an important role in affecting the pay. Different types of companies, factors, industries following different types of methods such as time rate system, piece rate system and balance or debt method. In a particular company, compensation is given depending upon their level. Mainly they are top management, senior management, middle management, junior management and clerical and compensation criteria goes with the flow. Executive compensation refers to the financial payments and non monetary benefits provided to high level management in exchange for their work on behalf of an organisation. Corporate presidents, chief executive officers, chief financial officers, vice presidents, managing directors and others senior executives are paid executive compensation. Benefits are a form of compensation paid by employers to employees over, and above the amount of pay specified as a base salary or hourly rate of pay. Benefits are a portion of a total compensation package for employees. Benefits include paid time off such as sick days, and vacation days, health insurance, life insurance, retirement benefits, paid prescriptions, flexible spending accounts, disability insurance, relocation offer, legal assistance, employee discounts,child care benefits, and more

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Disparities between various fields :

The above graph represents various disparities in compensation in certain markets in India.The graph included markets like automobiles, BFSI, chemicals, consumer business, energy, engineering and manufacturing, Hi-Tech, ITes, infrastructure and real estate, media and advertising, pharma and life sciences, retail and others. We can see that engineering and manufacturing sector is paid the most and then Hi-Tech comes second, ITes on third, BFSI and pharma on fourth, consumer business on fifth, retail on sixth, automobiles on seventh, chemical, infrastructure and media on eighth and energy in the end.Others include companies in Hospitality, Professional Services, Agriculture, Aviation, Export and Social Services sectors. So, we learn that the compensation policy is not the same in all the sectors. It differs from field to field. It’s high in some fields, moderate in some fields and less in some fields.

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Executive summary : Increment : An increase or addition on a fixed scale is called increment. The average salary increment across sectors is projected at 10.7% in FY 2016, which is 0.4% points higher than the previous FY 2015 (10.3%) Variable pay : Variable pay is employee compensation that changes as compared to salary which is paid in equal proportions throughout the year. Variable pay is used generally to recognize and reward employee contribution toward company productivity, profitability, teamwork, safety, quality, or some other metric deemed important. The average variable pay across sectors is projected at 17.4% in FY 2016, which is 0.4% points higher than the previous FY 2015 (17.0%)

Overall industry analysis : Average annual increments FY 2015 in comparison to FY 2016 :

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Consumer business and retail sectors show a decrease in projected increments for FY 2016 in relation to last FY. Infrastructure and real estate has the maximum increase in projected average increments over previous FY. In pharma, media, Hi-Tech and ITeS sectors, the projected increments are significantly higher than Industry average whereas retail have lower than industry average increment projections.

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Average annual variable pay FY 2016 in comparison to FY 2015 :

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BFSI, infrastructure and real estate have the maximum increase in projected average variable pay over previous FY. Media have projected lower than average industry average variable pay. In BFSI, pharma and consumer business, the projected average variable pay are significantly higher than Industry average

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Objective 2 : Comparison between the compensation and benefits given in public and private sector. One of the most coveted jobs in India is the bank job, which offers a plethora of bright options to the employees, be it a comfortable lifestyle, stability or low interest rates on loans. Not just in India, but throughout the world, people try their level best to end up in a bank job, because of the benefits they offer, and preferably public sector banks, as they are always a few steps up in offering the benefits to the employees. Banking industry has grown by leaps and bounds in the past few years and offers some of the best opportunities to grow as a professional. However, the experience of working with a public sector bank could be totally different from a private sector bank in terms of work hours, level of competition and the professional learning curve. Job security and compensation can also be at a great deal of variance and it would be best to explore these aspects before making the ideal choice of banking organization to build a successful career. There are 26 banks operating in the public sector in India. SBI and its 5 associate banks, 19 nationalized banks and IDBI bank appear under the public sector. Out of 21 private sector commercial banks, 14 appear under old private sector banks, while the remaining 7 are grouped under new private sector banks. The public sector is that portion of an economic system that is controlled by national, state or provincial, and local governments. The section of a nation's economy, which is under the control of government, whether it is central, state or local, is known as the public sector. It also consists of their agencies, and their chartered bodies. The public sector is one of the largest sectors of any economy. The basic objective is to serve people. Compensation is the main centre of attraction for every employee. In public sector banks, compensation to the officers is paid according to their seniority and competency both. Public sector banks are known for their better organizational structure and greater penetration in customer base. Work environment is also relatively less competitive as compared with privately-owned banks and professionals often do not have to focus on meeting targets and being the best performer in a team. There is typically greater stress on providing necessary training to their personnel in order to help update their knowledge and skills to be a better performer in the long run. Job security is much higher as compared to private sector banks and for some, this could be the prime attraction for building a long-term career.

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The part of the national economy that is not under direct state control is private sector.The private sector is the part of a country's economic system that is run by individuals and companies, rather than the government. The basic goal is to make profits. The private sector banks in India believe that to attract the right talent, the remuneration policy should be structured in line with other peer group banks, and is sensitive to compensation packages in this part of the financial market. Compensation is structured in terms of fixed pay, variable pay and employee stock options, with the last two being strongly contingent on employee performance. Unlike public banks, private banks compensate their officers in accordance to their competency skills. Thus, it is clear from the views of the bank officials that those who will perform better, will be able to earn more. Also, a skillful person will be compensated more as compared to a less skilled or non-performing employee. Private sector banks are usually known for their highly competitive outlook and technological superiority. As a result, careers in private sector banking also tend to be more competitive where professionals are required to meet stiff targets and perform above par to ensure good career growth. Riskreward component is also higher and remuneration could be better but job security may not be on par with publicly-owned banks.

Compensation

:

For entry-level professionals, public sector banks may not offer as exciting a work experience as might be possible with their privately-owned counterparts. The payscales are fixed for every position and pay hikes are not as frequent if compared with private banks which may not be a good enough incentive for top performers. Promotions are usually based on the years of work experience instead of merit although out-of-turn promotions can also happen occasionally. However, work hours are among the best and there is less competition or targets to meet which gives enough time to grow as a professional at one’s own pace. Job security is one of the most important advantages with public sector banks as rarely anyone is laid off, except for disciplinary reasons. The kind of remuneration offered primarily depends on the merit of an individual more than anything else. Candidates with an excellent academic background and a competitive outlook can get a higher pay package with some of the best private banks today. Perks and incentives are not an issue for those who can deliver higher levels of performance and can also be

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promoted in a comparatively short span of time based on their merit. Generally, a competitive work atmosphere can provide the much-needed motivation to perform better and individuals can enjoy a fast-paced career growth. However, the working hours could be longer as compared with public sector banks and job security can also be an issue, especially for lowerto-mid rung professionals. However, even top-level professionals may also not be completely safe in this sense.

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Chapter 5: Findings, Suggestions & Conclusion

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Findings : In the first graph, we learn that both public and private sectors have an incentive/bonus plan. In the second graph, we understand that, majority of employees both in SBI and HDFC are aware of their company’s compensation and benefits policy. In SBI, the employees are given an incentive based hike and in HDFC, the employees are given annual/year end based hike which is a major difference.In the fourth graph, though HDFC leads in the both financial and non financial incentives, SBI also tries and gives a lot of hidden incentives to their employees. In the fifth graph, we understand the pay structure prevailing in SBI and HDFC. From the very ground level to the top most management, the HDFC pays more when compared to SBI. In the sixth graph, we learn the number of hours worked by employees in both the sectors. We understood that in a SBI, employees work for eight hours and HDFC employees work for eight and a half to nine hours per day. In seventh graph, SBI employees are given pension allowance, retirement insurance, health allowance, performance based pay, provident fund, transportation allowance etc. In HDFC, the employees are given, shift allowance,

pension

allowance,

education

allowance,

health

allowance,

overtime

allowance,performance based pay, provident fund, transportation allowance etc. In the eighth graph, we understand at what rate the companies are giving benefits to attract and retain the employees. Most of the private sector employees agree with the fact than the public sector employees. A limited people are either do not agree or unsure of the fact. In the ninth graph, we understand the rate of satisfaction of the employees towards their compensation system. A major part of the employees in private sector are not satisfied with the compensation system. Very less employees are slightly happy and the rest are neutral. While in public sector, most of the employees are satisfied, a few are not and the rest are neutral.

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Suggestions: Private and Public Banks provide precious services to the general public and also to the industry. Not the only variety of services and profit are important, but simultaneously the quality of services, the cost of services and safety of public money is also important. During the course of research a lot of problems of financial nature and non-financial nature, have been emerged. The problem of depositors, the problems of borrowers, the problems of employees, the problem of management included among them. These problems are in detail at appropriate places. 1. All the banks must have ATM facilities. It will be better to have networking ATM system i.e. if it is not possible to install ATMs in all parts of the city there should be tied up and other banks. Presently, some banks are doing the same 2. There should be the suitable recruitment of more officers in the public sector banks so that the branches, which are really understaffed and overburdened, become systematically sufficient. 3. There should be the appropriate recruitment of more officers in the public sector banks so that the branches, which are really understaffed and overburdened, become systematically sufficient.

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Conclusion :

After analysing all the graphs, we understand that, a lot of differences are prevailing between public and private sectors. Generally, every company ought to have a bonus plan to have a healthy work life for the employees. Bonus and incentive programs can effectively drive employee behaviour and yield the desired business results. However, if not properly designed or implemented, bonus and incentive programs can become a major barrier to business success and can create high levels of employee frustration. It’s very important for all the employees to know all the benefits they deserve be it in public or private sector. In the above survey, we found out that more of private sector employees are aware than of public sector employees but with a minimal difference only. The type of compensation policy existing in the sectors. Public companies follow a total different plan while the private follow another plan. Both the sectors give financial and non-financial incentives. Private sector gives better incentives than the public sector. But, nevertheless public sector gives a main incentive i.e., job security which is not given in private companies. We learn about the different types of incentives given in public and private sectors in the given choices. The incentives given in public companies are different from the incentives given in private companies. Most private companies tries giving more incentives to attract and retain the employees while everybody wants to join the public sector because of the job security. Public sector employees are very much satisfied with their compensation policy when compared to the private sector employees. In the end we understand that private sector companies are paid more when compared to public sector employees.

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.

Bibliography

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:

https://www.theguardian.com/news/datablog/2012/mar/27/public-private-sector-pay https://www.pdfcoke.com/doc/35001648/Compensation-Ppt-private-vs-public https://www2.deloitte.com/content/dam/Deloitte/in/Documents/human-capital/in-hcdeloitte-india-annual-compensation-trends-survey-report-fy-2016-noexp.pdf http://shodhganga.inflibnet.ac.in/bitstream/10603/28131/11/11_chapter%204.pdf http://shodhganga.inflibnet.ac.in/bitstream/10603/6913/10/10_chapter%205.pdf http://www.naukrihub.com/salary-information/salary-of-government-and-privatesector-banks.html http://www.goodreturns.in/classroom/2015/04/difference-between-public-sector-privatesector-banks-347748.html

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Annexure

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Questionnaire: Employee name: Company’s name: Age: Gender: E-mail address: Phone number: 1. What type of company are you working with? (i) Public sector (ii) Private sector 2. How much is your annual salary? (i)

0-100000

(ii) 100000-200000 (iii) 200000-300000 (iv) 300000-400000 (v)

400000-500000

(vi) 500000-600000 (vii) 600000-700000 (viii) 700000-more 3. State since how long are you working with this organisation. 4. How many hours do you work per day? 5. What was your starting salary? 6. Does your company have a bonus or incentive plan? (i) Yes (ii) No

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7. What type of bonus? (i) Annual / Year End bonus (ii) Incentive bonus (iii) Other

8. From the incentives given below, please choose the one's provided by your company. (i)Shift Allowance (ii)Profit sharing (iii)Pension allowance (iv)Retirement insurance (v)Food Allowance (vi)Education Allowance (vii)Health Allowance (viii)Overtime Allowance (ix)Performance based pay (x)Provident Fund (xi)Employee stock options (xii)Leave travel concession (xiii)Transportation Allowance (xiv)Other 9. Does the compensation paid by your company allow to attract and retain the best employees? (i) Yes (ii) No (iii) Maybe 10. Are you satisfied about the compensation system practiced in your company ? (i) Agree (ii) Disagree (iii) Can’t say

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