Employee Compensation and Benefits Package of ACI Limited

Introduction of the report:

Bachelor of Business Administration (BBA) is a professional course and the internship program is an important part of Bachelor of Business Administration (BBA). This program creates a unique opportunity for the student to apply their theoretical knowledge into practice and gain valuable real world during the program, student can also realize existing business condition a part from having opportunities to solve the many problems. After completion of academic course requirements the students of BBA are sent to various organizations for 12 weeks internship to gather practical knowledge. It helps the students to acquaint with the real life situation. As ACI Limited is one of the most important organizations. So I have selected the ACI Limited which is one of the leading chemical industries in our country.

As a part of the internship program of BBA course requirement, I was assigned to do my internship in ACI Limited for a period of three months (04 March, 2012 to 03 June, 2012).

Background of the report:Internship program is an integral part of BBA program. Theoretical sessions alone cannot make a business student efficient and perfect in handling the real life business situation. Only a lot of theoretical knowledge will be of little importance unless it is applicable in practical life. So I need proper application of my knowledge to get some benefits from my theoretical knowledge to make it more meaningful.

Significance of the report:This report, “Employee compensation & benefits package of ACI Limited” has been prepared to fulfill the partial requirement of BBA program as a mean of internship program. While preparing this report, I had a great opportunity to have depth knowledge about the employee compensation & benefits of ACI Limited.

The main reason of this report is to become a familiar with the realistic business world and to attain practical knowledge about the employee compensation & benefits package of ACI Limited. It is known that there is no alternative of practical knowledge which is more beneficial than theoretical aspects. Internship is not only essential for practical experience but also require for understanding of corporate culture and to cope with the daylong working atmosphere. As a student of BBA this report will be more significant in my practical life. That’s why my selected topic is Employee compensation & benefits package. I have worked for three months at ACI Limited to complete the internship program as an academic requirement.

Scope of the report:The report covers the Employee compensation & benefits package of ACI Limited. The report presents employee compensation, allowance, incentives, Provident fund, gratuity, insurance, employee leave & medical facilities of ACI Limited.

Objective of the study:

Broad objective:

To know about the employee compensation and benefits package of ACI Limited.

 Specific objectives:

     To know about the employee benefits plan of ACI Limited.

     To illustrate various types of allowances and other compensation related facilities provided by ACI Limited.

     To identify the problems of employee compensation & benefits package of ACI Limited.

     To suggest some possible recommendations to overcome the problems.

Methodology of the report:

Type of Research:

This report is a descriptive type of research in nature and it administered by collecting both primary and secondary data. It has tried to use both the primary and secondary sources of collecting information and some are to make the report presentable with as less abstraction as possible.

Types of data collection:

In order to attain the objective of the report, all-necessary information’s are prepared by collecting both primary & secondary sources of data. These are:

Primary data:

Primary data collected directly to provide the ACI Limited companies employees compensation & benefits package through face-to-face interaction. It is the systematic collection of information directly from respondents using survey. Several sources of data collection are used to make this report. The source of data are-

³ Questionnaire survey.

³ Face to face communication.

³ Telephone interview.

Secondary data:

Some secondary data collected to make the report more concrete. These data has been collected from:

• § ACI Limited annual report 2009, 2010, 2011.
• § ACI Limited statistical report 2011.
• § Web site: www.aci-bd.com.

Methods of Primary data collection:

Primary data:

Fill up the questionnaire by questioning. In depth interview with ACI Limited employees.

Questionnaire Design:

This questionnaire was developed with the combination of close-ended procedure. By using close-ended questionnaire the researcher can identify any opinion, complain and feelings of the respondents. The length of the questionnaire is 2 (two) pages (A4 size paper). The questionnaire has 2(two) sections. In section 1 – the personal information, in section 2- Subject related questions.

Sample plan:

Population:

The population of my survey is all of the ACI Limited employees. The first step of the sampling design is to define the report population. I mainly focused on the Head office employees.

Sample Size:

The total sample size for the study is 20.

Table: 1.1 Sample size

Sample unit:

The total sample unit is 14.

 Data Analysis and reporting:

Statistical tools and computer software like Ms Word, Ms excel, Ms Power point have been used for analysis and reporting.

Limitations of the report:

The report is not free from some practical limitations. Following limitations have faced during the report and the time of working & data collection:

     In many cases the relevant authorities are not helpful to provide information.

     Up to date information were not available.

     Lack of instrumental facilities to get proper information.

     Lack of Records, Sufficient books, unavailable information in website. These constraints narrowed the scope of accurate analysis.

     The employees of the company were so much busy with their jobs, which lead a little time to consult with me.

History of ACI Limited:

ACI’s mission is to achieve business excellence through quality by understanding, accepting, meeting and exceeding customer expectations. ACI follows International Standards on Quality Management System to ensure consistent quality of products and services to achieve customer satisfaction. ACI also meets all national regulatory requirements relating to its current businesses and ensures that current Good Manufacturing Practices (CGMP) as recommended by World Health Organization is followed properly. ACI has been accepted as a Founding Member of the Community of Global Growth Companies by the World Economic Forum which is the most prestigious business networking organization.

Advanced Chemical Industries (ACI) was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the 24th of January 1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited Company. This Company also obtained listing with Dhaka Stock Exchange on 28 December, 1976 and its first trading of shares took place on 9 March, 1994. Later on 5 May, 1992, ICI plc divested 70% of its shareholding to local management. Subsequently the company was registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was made on 22 October 1995.

Advanced Chemical Industries (ACI) Limited is one of the leading conglomerates in Bangladesh, with a multinational heritage. The company has diversified into three major businesses.

 Mission, Vision & Values of ACI Limited:

Mission:

ACI’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

 Vision:

1. Endeavour to attain a position of leadership in each category of its businesses.
2. Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies.
3. Develop its employees by encouraging empowerment and rewarding innovation.
4. Promote an environment for learning and personal growth of its employees.
5. Provide products and services of high and consistent quality, ensuring value for money to its customers.
6. Encourage and assist in the qualitative improvement of the services of its suppliers and distributors.
7. Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence.

Values:

• Quality
• Customer Focus
• Fairness
• Transparency
• Continuous Improvement
• Innovation

 Chairman’s Profile:

Mr. M Anis Ud Dowla, the Chairman of ACI Limited, is one of the most successful personalities in Bangladesh business circle. He has maintained a high profile, and has provided leadership to business community in different capacities. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Ltd. In 1987, he became the Group Managing Director of the three ICI companies in Bangladesh. With experience gathered while working with British Multi-nationals for over 32 years, Mr. Dowla has continued to maintain the multinational culture and management style in ACI, with especial emphasis on quality, productivity and customer services.

M. Dowla was the President of Metropolitan Chamber of Commerce & Industry for three terms in 1975, 1976 & 1977 and the President of Bangladesh Employers’ Federation for four terms in 1976, 1977, 1994 and 1995.

 Management of ACI Limited:

Management Committee:

Board of Directors:

 Principal Bankers:

• Standard Chartered Bank
• The Hongkong and Shanghai Banking Corporation Limited
• Commercial Bank of Ceylon Plc
• Citibank N. A
• Eastern Bank Limited
• The City Bank Limited
• BRAC Bank Limited
• AB Bank Limited
• Bank Alfalah Limited
• Mercantile Bank Limited
• Premier Bank Limited
• Bank Asia Limited
• Dutch Bangla Bank Limited

 Management style:

Managers have to perform many roles in an organization and how they handle various situations will depend on their style of management.

             Senior Executive and officers                                          Executive Officer           

Business of ACI Limited:

Pharmaceuticals:

In 1973, the UK based multinational pharmaceutical company, ICI plc, established a subsidiary in Dhaka, known as ICI Bangladesh Manufacturers Limited. In 1992, ICI plc divested its share to local management, and the company was renamed Advanced Chemical Industries (ACI) Limited.

ACI formulates and markets a comprehensive range of more than 387 products covering all major therapeutic areas, which come in tablet, capsule, powder, liquid, cream, ointment, gel ,ophthalmic and injection forms. ACI also markets world-renowned branded pharmaceutical products like Arimidex, Casodex, Zoladex, Atarax etc. from world-class multinational companies like ASTRAZENECA, UK and UCB, BELGIUM in Bangladesh.

ACI is actively engaged in introducing newer molecules and Novel Drug Delivery Systems (NDDS) to meet the needs of the future.

ACI introduced the concept of quality management system by being the first company in Bangladesh to achieve ISO 9001 certification in 1995 and follows the policy of continuous improvement in all its operations.

Aligned with the concept that a pharmaceutical must ensure effective management of environment, ACI complies with standard environment management policy, thus adorned with EMS 14001 in 2000.

ACI maintains a congenial and supportive relationship with the healthcare community of Bangladesh, with the belief that business excellence can only be achieved through pursuit of quality by understanding, accepting, meeting and exceeding customer expectations.

The management of ACI, a competent team of professionals, thus operates with a progressive attitude to provide effective solutions to satisfy the customers’ needs, through its products and services of uncompromising quality.

 Consumer Brands & Commodity Products:

ACI Consumer Brands was initiated in 1995 with two major brands of the company – ACI Aerosol and Savlon. These are two of most prestigious products which are enjoying the leadership position in the market. The division started to take new businesses through off shore trading as well as local manufacturing. In this process ACI Consumer Brands launched many new products and also bonded with Joint Venture business relationships with ‘Dabur India’ and ‘Tetley UK’ and attained international alliances with world renowned companies.

The Consumer Brands Division boasts in having an unequivocal presence in consumers’ heart with the market leading brands like ACI Aerosol, Savlon, ACI Mosquito Coil & ACI Pure Spices and Flour. With close to 80% market share in own categories, ACI Aerosol and Savlon are the persistent performers in keeping the household clean and free from germs and harmful insects. The ACI mosquito coil has also emerged as a formidable opponent to both the mosquito and the competition, by providing effective and affordable solution to the conscious people of Bangladesh.

A sound mind goes with a sound body-ACI believes in this age old proverb and our young generation needs to grow up with healthy physique and sound mind who will lead the nation in future. With this belief, ACI has entered in to the commodity food business with “ACI Pure” Brand. The aim is to provide purest of the food products to Bangladeshi consumers at affordable price for which ACI has invested in very large scale in state of the art manufacturing facilities for daily kitchen essentials like vacuum evaporated edible Salt, Spices and Flour. The products are delighting the consumers by providing 100% dirt free, pure and natural food ingredients which can compete against any international products.

ACI Consumer Brands is successfully serving the consumer demand for foreign products in household and personal care category with the world renowned product range of Colgate, Nivea & Dabur. With the proper distribution and marketing by ACI consumer brands, the world’s No. 1 tea brand “Tetley” is now available to the consumers of Bangladesh.

As a successful business, The ACI Consumer Brands is focused on achieving the consistent growth required to continue the success and to make ACI an even stronger company. The Consumer Brands believe this is the best way to benefit the consumers, people and the shareholders of ACI.

ACI Consumer Brands Strategic Business Unit is headed by the Executive Director, Mr. Syed Alamgir. Mr Alamgir is regarded as an authoritarian personality in the area of Sales and Marketing in Bangladesh market. His track record has many successful brands which reached leadership position in different categories in FMCG market. He is supported by competent group of professionals working in the Marketing and Sales operations.

 Agribusinesses:

ACI Agribusiness is the largest integrator in Agriculture and Livestock and Fisheries. These businesses have subunits like Crop Protection, Seed, Fertilizer, Agrimachineries, and Animal Health. These businesses have glorified presence in Bangladesh.

CC & PH supplies crop protection chemicals, Seed supplies Hybrid Rice, vegetable and Maize seeds, Fertilizer Supplies Micronutrient and Foiler fertilizer, Agrimachineries supplies Tractors, Power Tiller and Harvester and Animal Health supplies high quality Nutritional, Veterinary and Poultry medicines and vaccines.

ACI Agribusiness is having strong partnership with national and international R & D companies, universities and research institutions. Before introducing any product, it is elaborately tested in the laboratory and farmers field.

ACI Agribusiness has a large, knowledgeable and highly skilled Field Force provides training and technical advices to the farmers. ACI is significantly contributing to national food security through its Agribusinesses division, which is the leading agricultural integrator of the country. ACI Agribusinesses is providing complete solution to the farmers need. This division has five separate SBUs. They are Seeds, Fertilizer, Motors, Crop Care & Public Health, and Animal Health. Farmers have developed confidence in our products for quality and economics. Farmers have also come to expect proper knowledge based service from our field force.

  Subsidiaries of ACI Limited:

     ACI Formulations Ltd.

     ACI Agrgochemicals

     Apex Leathercrafts Limited

     ACI Salt Limited

     ACI Pure Flour Limited

     ACI Foods Limited

     Premiaflex Plastics Limited

     Creative Communication Limited

    ACI Motors Limited

     ACI Logistics Limited

 Joint Ventures of ACI Limited:

     ACI Godrej Agrovet Private Limited

     Tetley ACI (Bangladesh) Limited

     Asian Consumer Care (Pvt) Limited

Quality policy of ACI Limited:

ACI’s mission is to achieve business excellence through quality by understanding, accepting, meeting and exceeding customer expectations.

ACI follows International Standards on Quality Management System to ensure consistent quality of products and services to achieve customer satisfaction. ACI also meets all national regulatory requirements relating to its current businesses and ensures that current Good Manufacturing Practices (CGMP) as recommended by World Health Organization is followed for its pharmaceutical operations.

The management of ACI commits itself to quality as the prime consideration in all its business decisions. All employees of ACI must follow documented procedures to ensure compliance with quality standards.

The pool of human resources of the company will be developed to their full potential and harnessed through regular training and their participation in seeking continuous improvement of work methods.

Environmental Policy of ACI Limited:

ACI is committed to maintain the harmonious balance of our eco-system and therefore constantly seeks ways to manufacture and produce products in an eco-friendly manner so that the balance of nature remains undisturbed and the environment remains sustainable.

In pursuit of this goal, ACI will

• Comply fully with all local and national environmental regulations.
• Conserve natural resources like water and energy for sustainable development, and adopt environmentally safe processes.
• Ensure appropriate treatment of all effluents prior to discharge, to prevent pollution or degradation of environment.
• Ensure appropriate communication and cooperate with internal and external interested parties on environmental issues.
• Create awareness on environmental issues among our employees and suppliers.

 Corporate social Responsibility of ACI Limited:

Societal Development through Educational Programs:

ACI’s guiding principle in all its operations is to be a ‘responsible corporate citizen’. Thus, Social Responsibility is a top priority for every individual at ACI. Our endeavors toward discharging our social responsibilities have become more focused since our adoption of the principles of the Global Compact.

Initiatives that have shown significant contribution to societal development are Continued Medical Education (CME) for medical professionals and Children’s Education Programs.

A dedicated team of medical graduates makes up the Medical Services Department (MSD) in ACI, which carries out CME programs termed ‘Clinical Meetings’ all across Bangladesh. These are essentially non-advertised meets of medical professionals that serve as a training and knowledge-sharing forum, often conducted by experts on the subject. Our partners in development for these programs are doctors, medical associations and/or departments, and various study groups. The level of involvement of ACI in these programs may range from only sponsoring the entire program to providing all types of services and technical support to the presenter to even conducting the program by an MSD doctor. Support from MSD include research support for deliberations at the meet, literature and multimedia presentation for the program, updates on new technology and thoughts in medical fields, and even educational support to any participant in their area of interest.

ACI has also undertaken an English Education program in Faridpur, one of the remotest districts of Bangladesh. This provides support to teach English Language to school going children.

Outcome:

Doctors in Bangladesh who are not living in the metropolitan cities have very limited access to the Internet or any other sources of information. In order to keep them updated on the developments in the medical practices regularly, the CME program has been proven highly effective.

ACI believes that by promoting education of children, we are contributing to societal development by shaping the minds of our future leaders.

Educating the farmers, with a focus on Environment Friendly Practices:

ACI has undertaken extensive programs to educate crop farmers all over rural Bangladesh in Good Agricultural Practices. We have a team of agricultural experts working at the field level all across the country, holding a range of technical trainings and field demonstrations. Their activities include

• Field demonstrations on various methods of crop protection, that pose the least hazard for the environment
• Training on new technologies of cultivation, for higher yields and new crops
• Training to channel partners (e.g. retailers and agricultural extension workers) and third parties (e.g. NGO workers)

ACI also has similar education programs for animal and poultry farmers. These include

• Technical trainings on diverse aspects of farming, and on application of new technologies
• Farmers’ group meeting for sharing of learning and experience
• Free visits to farms by veterinarians, to identify problems and give advices to individual farmers

Outcomes:

Our farmers are mostly illiterate having learnt the art and science of farming by assisting their family on the fields. Our continuous endeavors to educate farmers have given significant benefits on three fronts:

• Raising the level of awareness among farmers on improving their agricultural output through application of new technology, encouraging them to share experiences with neighboring farmers and, in the long run, developing educated farmers.
• Raising the educational level and technical knowledge of channel partners and third parties who act as advisors to the farmers.
• Most importantly, making the farmers aware of ways to protect the environment from hazardous uses of chemicals on their farms, allowing them the opportunity for informed decision-making.

Support Functions of ACI Limited:

ACI hopes to continue to play a leading role in promoting greater environmental responsibility among farmers in Bangladesh.

Human Resource (HR):

ACI HR works with a vision for creating a work-environment to foster creativity, innovation and productivity for achieving business excellence through dynamic and dedicated people.

We believe that Human Resources are the most important asset of the organization. We identify the training needs and provide trainings accordingly to develop the knowledge and skills of our human resources. Thought Leadership and Team Building meetings are conducted on a regular basis. We provide an enabling working environment to unleash the full potential of the employees and a performance based career progression.  We have a value based culture where dignity of the individual is the highest priority. We believe in empowerment and delegation. We organize different social events like Family Day, Cricket Tournament, and Badminton Tournament etc with an objective to strengthen the bondage among the employees. We practice modern HR Policies and procedures for Recruitment & Selection, Manpower Planning and succession planning. We use a combination of qualitative aspects and Balanced Score Card for performance appraisal.  We have attractive policies regarding car loan, gratuity, provident fund and hospitalization. We offer performance bonus, leave fare assistance, festival bonus and workers profit participation fund during different times within a year.  ACI is a place to learn, grow and contribute for improving the quality of life of people.

Finance and Planning:

ACI Finance and Planning function is the nerve centre of the conglomerate. Being the nature of the structure, ACI Finance and Planning plays the centralized role in all kinds of financial and accounting services. Meaning it handles financial and accounting matters of not only ACI Limited but also of all of its subsidiaries supporting the mission and vision of the Group. The major areas of its activities include:

• Corporate Finance
• Treasury
• Insurance and risk management
• Costing
• Credit Management
• Accounts payable management
• General accounting
• Taxation
• New business management

ACI finance is pioneering in introducing and implementing state of the art financial tools like electronic banking, integrated accounting systems, better foreign exchange management through hedging, derivatives etc. To allow us to excel in our performance ACI Finance has strong rapport with all the international and major local banks, non-financial institution including leasing companies.

Driving force of Finance is its motto which is “to become most value adding business partner”. To drive this vision, ACI Finance proactively helps business in providing right and timely information, analysis, budgetary management and participating in cross-functional team.

The Planning function not only compiles and coordinate the company plan of the conglomerate but also instrumental in feeding the CEO and top team different macro and micro economic situation of the country as well as world in large. These in-depth analyses help the company to make correct and pragmatic decision as a part of strategic initiative.

The new business development area is one of the most exciting areas in ACI. Here we keep a track on potential areas of growth being envisaged in the country, these are followed by rigorous analysis and subsequently matching these with ACI’s competence. This allows ACI’s growth engine to get enough fuel to take its course forward.

 Distribution:

The company maintains strategically located sales centers in nineteen different locations across the country. It has developed an advanced distribution system through its more than 300 skilled and trained manpower and a large fleet over eighty vehicles. The distribution system is capable of handling continuing volume of diverse range of products from the various businesses.

The company’s distribution centers are highly streamlined, computerized and automated. We are capable of maintaining a cold chain for some specialized range of products such as vaccines and insulin. The combination of this advanced function and multidimensional capabilities made it possible to handle hundreds of products efficiently.

 Commercial Department:

Commercial Department of ACI is one of the most vital functional departments of the Company which deals with the supply chain activities of ACI. In order to keep all the businesses running flawlessly, the dedicated and hard working employees of this department maintain a good liaison with the customers, both national and international. The Commercial Department is consistently achieving the best prices for the products that we purchase, ensuring enormous amount of cost savings for the company. It offers invincible professionalism and expertise in the entire commercial activities of ACI.

 MIS Department:

MIS department of ACI ensures the overall IT related supports for the company. This department manages a smooth operation of software’s, hardware trouble shooting and business databases related to sales and inventory. The MIS department consists of knowledgeable and skilled programmers and software developers. MIS provides customized report and data analysis to the management to facilitate effective decision making.

Training:

Training activities of ACI is focused on transforming its human capital to achieve business excellence by increasing the bandwidth of ACI workforce. To win present and future challenges we identify knowledge and skill sets that are pivotal factors and we design a variety of programs so that achieving such success by using creativity, agility, flexibility, skill diversity and IT technology becomes a custom. We scan external environment for comparing industry practices, benchmark best practices and implement competency management programs to offer outstanding services to our valued customers. Enormous and spontaneous shared efforts are made with the strategic intent of achieving excellence in delivering customized services to meet the ever changing development needs of the human resources. We design strategic learning roadmap consisting tailored learning strategies for each of our employee clusters of the business divisions, based on a shared vision, to make us a proud member of a learning organization. We adopt best technology based modules, methodologies, facilities, in-house and external faculties/trainers to ensure the best return from human development investments. Corporate Values of ACI are embedded in the process of designing, developing and delivering each activity of Training Department throughout the organization.

The word compensation has been derived from the Latin word “Compensatio” which means the reward or remuneration given in exchange for labor or service. Compensation may be financial and non- financial.

Various scholars have defined compensation in various ways. A few are mentioned below:

According to Thomas patten jr. and colleagues,

“Compensation refers to all forms of pay or rewards going to employees arising from their employments”

According to R.S.Schuler,

Compensation Management:“Compensation is a mode through which an organization logically evaluates the contribution of its employees and provides them with financial and non-financial incentives according to its affordability and within the government regulation”

Compensation management provides a step-by-step approaches for designing a remuneration system that recognize job requirements, employee related knowledge and skills, performance related incentives that link individual, team, work unit, and organization performance.

According to Richard l. Henderson,

“Compensation management is the process by which the authority of the organization provides some financial and non-financial benefits to the employees for their contribution”

Recognition of Employee’s contribution means-

Financial compensation:

The organization provides the financial facilities to the employees for doing their job in the organization. Financial compensation includes the followings:

• Salary.
• Wages.
• Incentives.
• Fringe benefits.
• Dearness allowance.
• Medical allowance.
• House rent allowance.
• Gratuity.
• Retirement benefits.

Non-financial compensation:

Besides financial compensation, the organization also provides non-financial compensation to the employees for attracting and performing their jobs in the organization. Non-financial compensation includes the following:

• Dignity.
• Recognition.
• Working condition.
• Social status.
• Achievement.

 Compensation system Components:

Objectives of compensation Management:

Objectives of compensation are very important because it helps the organization obtain, maintain and retain a productive work force.

Without adequate compensation, current employees are likely to leave. It is the main reason why most individuals seek employment. From the employee’s point of view, pay is necessary of life. Pay is the means by which people provide for their own and their family needs.

The Management of compensation must meet several objectives. These objectives ate listed below:

     To acquire qualified personnel:

Compensation needs to be high enough to attract qualified personnel.

     To retain present employees:

Compensation level must be competitive in order to retain qualified employees otherwise they may leave.

     To ensure equity:

Workers must be paid at a rate equal to the pay that similar workers receive in another firm.

     To reward desired behavior:

Good performance, experience, loyalty, new responsibilities and behavior can be rewarded through an effective compensation plan.

     To control costs:

The compensation system must be cost effective.

     To comply with legal regulations:

The compensation system must with all sorts of legal regulations.

     To further administrative efficiency:

IN pursuing the other objectives of effective compensation management, wage and salary specialists should design the compensation program in such a way that it can be administered efficiently. Administrative efficiency, however, is the secondary priority of the compensation management.

     To manage conflict and to ensure congenial working environment.

     To generate motivation among employees.

     To reduce turnover.

     To ensure loyalty/ commitment and participation.

     To reduce absenteeism.

     To enhance or improve productivity.

Factors affecting pay satisfaction:

To ensure continuity of sound working spirit.

Nash and Carroll found that pay satisfaction varies with the following factors.

Salary Level:

Higher the pay, higher the satisfaction within an occupational group.

     Community cost of living:

Lower the cost of living, higher the pay satisfaction.

     Education:

Lower the education level, higher the pay satisfaction.

     Experience:

Higher the experience, higher the pay dissatisfaction.

     Future expectations:

The more optimistic the employee is about future job conditions, the greater the pay satisfaction.

     Pay basis:

The more pay is perceived to be based on merit or performance, the greater the pay satisfaction.

     Other personal characteristics:

The more intelligent, self-assured and decisive a person is, the lower the pay dissatisfaction. Consequences of Ineffective compensation:

A compensation consequences of ineffective compensation system, may be termed as over- compensation and under- compensation

When the employees are paid more than what they really deserve, the system is called over- compensation and when the employees are paid less then they really deserve, the system is called under-compensation.

Over-compensation and Under-compensation are both harmful to the enterprise and employees alike. The effects of over and under-compensation on employees and the enterprise are stated below:

Table: 3.1 Consequences of Ineffective compensationConsequences of pay Dissatisfaction:

When employees are not satisfied with the compensation package, pay dissatisfaction arises. The pay dissatisfaction has manifold effects on employees. The desire for more pay may lower performance, increase grievances, cause stress, compel employees to search for new jobs resulting in loss of time and so on. These are stated below:

Desire for more pay:  

      Performance.

      Strikes.

      Grievances.

Search for higher paying jobs:

      Absenteeism.

      Turnover.

      Low performance.

Pay dissatisfaction:

      Job dissatisfaction.

      Turnover.

      Absenteeism.

      Psychological withdrawal.

      Poor mental health.

Compensation sub-systems of the reward system:People obtain compensation rewards that provide money to purchase a wide variety of goods and services to receive in kind payments of goods and services that would have required the expenditure of money.

There are eight compensation dimensions. These are as follows:

1. Pay for work and performance:

      Base pay.

      Base pay add-ons.

2. Pay for time not worked:

      Holidays.

      Vacations.

      Election official.

      Witness in court.

      Maternity leave.

      Paternity leave.

      Blood donation etc.

3. Disability income continuation:

      Short term disability.

      Long term disability.

4. Loss of job income continuation:

      Unemployment insurance.

      Guaranteed annual income.

      Job contract.

      Unemployment benefits.

5. Deferred income:

      Social security.

      Pensions plans.

      Savings and thrift plans.

6. Spouse income continuation:

      Pensions plans.

      Life insurance.

      Group life insurance.

      Total and permanent disability.

7. Health, Accident, Liability protection:

      Medical, Hospital and surgical insurance,

      Social security.

      Health maintenance organization. (HMO).

8. Income Equivalent payment:

      Child care.

      Certain tax benefits.

      Club membership.

      Giving of gift.

      Subsidized food service etc.

Non-Compensation sub-systems of the reward system:The other major part of the reward system consists of non-compensation rewards. These rewards are much more difficult to classify and their components far more complex than is the case of compensation rewards. Non-compensation rewards are all the situation related rewards not included in the compensation package.

      Enhance dignity & satisfaction from worked performed.

      Enhance psychological, Health, Intellectual growth, and emotional maturity.

      Promote constructive social relationship with co-workers.

      Design job that requires adequate attention and effort.

      Allocate sufficient resources to perform work assignments.

      Grant sufficient control over the job to meet personal demands.

      Offer supportive leadership & management.

 Compensation and benefits package of ACI Limited:

Compensation is really very important matter for any business organization. For any business organization, the employees who make up the workforce are very important. It is also very important to make an attractive compensation package for these employees. The compensation package must be very attractive to increase the image of the organization as well as to retain the employees with the organization.

ACI Limited is also following a compensation package that helps them to retain the full time employees and the casuals. Though they are on a track to compensate the employees in a competitive manner, but they try to give a bit higher salaries and wages to the employees to remain as a competitive organization in the market.

They judge the job positions first and then they go for the study of the same categorized job position in the other organizations, and see the pay level of these positions. Then, ACI Limited decides that how much will be paid to the positions that they are defining or examining. In this case ACI Limited tries to be very fair about the pay levels. They try to fix the pay level in such a manner that is fair and effective for them and to the employees too.

ACI compensation & benefit packages are:

Table: 4.1 ACI compensation & benefit packages

Employee benefits Plan of ACI Limited:

Employee benefits plan is the most important part of an organization. It is motivated to employee. ACI Limited continually evaluates and reviews its employee benefits plan to ensure that benefits are competitive. Employee benefits plan are:

I.      To establish wage & salary plan of  ACI Limited employees:

Wage & salary plan comprises the following components:

     ACI has a competitive monthly total base salary.

     The company follows an annual performance based salary increment.

     Performance bonus is available in ACI.

ACI Limited also provides night shift premium, incentive, festive advance, transport reimbursement etc.

II.      To implement employee incentive plan of ACI Limited:

     Quality of work output. ( How many units produced)

     Quality of  work output ( What was the quality of the product or service being produced or served)

     Monthly sales. ( How much sales was generated)

     Work safety record. ( How many hazard or errors are being reduced)

     Work attendance ( If the absent is reduced or attendance is good)

III.      To ensure health & medical allowance plan of ACI Limited employees:

All employees of ACI will receive a monthly medical allowance as per respective grade of the employee. The allowance will be paid together with the employee’s monthly salary and for this no receipt needs to be submitted.

 IV.      To make sure effective Provident fund plan of ACI Limited employees:

Permanent employees of ACI Limited are eligible to become members of the provident fund. Employees contribute 10% of their basic to the provident fund and the company makes equal contribution to the fund.

 V.      To make situation demanding  profit sharing plan of ACI Limited employees:

There are some employees who prefer to feel a sense of ownership; this also gives them direct reason to want to see the company succeed because they are financially invested. As a means to invigorate many companies offer profit sharing as a reward for strong motivation in a job well done.

VI.      To provide flexible-time benefits plan for employees in order to ensure their right:

Many employee want Alternative work schedules. Sometimes employees flourish on different kinds of work schedules as opposed to the traditional (and often monotonous) 9to 5 schedules.

VII.      To set up leave for marriage, maternity leave, sickness leave and vacation leave plan of ACI Limited employees:

ACI also has paid leave for marriage, maternity, sickness and vacation plan.

 VIII.      To make sure short term & long term benefit plan of ACI Limited employees:

• Short term benefits plan:
  • Yearly Leave Fare Assistance.
  • Yearly two festival bonuses.
  • Yearly workers participation Fund.
  • Quarterly sales incentive.
• Long Term benefits plan:
  • Provident Fund.
  • Gratuity.
  • Group Insurance Policy.
  • Medical Benefits.

  IX.      To establish gratuity plan of ACI Limited employees:

ACI has gratuity plan. Gratuity is considered as long-term financial benefit for employees. Payable at the time of leaving the company upon completion of at least 8 years of continuous service. The employee will receive an allowance equal to his/her last drawn basic for each completed year of service.

X.      To cover all employees under the group life insurance plan:

ACI Limited provides insurance coverage for partial or permanent disability and death under group life insurance.

  XI.      To concentrate on the  Leave benefits plan of ACI Limited employees:

ACI limited all management staff will have the following leave entitlement in a calendar year.

Privilege leave: 24 days

Sick leave: 14 days.

 Various allowances of ACI Limited:

Different types of allowances given on the basis of salary in ACI Limited:

Table: 4.2 various allowances of ACI Limited

Compensation related facilities/ Benefits of ACI Limited:

Employee salary:

ACI Limited is committed about maintaining salaries and benefits that are fair to all employees and competitive in the local market place. The management monitors changes in the economy and salary market to ensure that ht overall compensation package is sufficient to attract, recruit and retain high quality staff within the financial capabilities of ACI Limited. At all times the management considers long term financial implications of changes in employee compensation as well as fairness to employees currently serving the company.

Principles of salary:

The compensation structure is framed with the objective to attract and retain high quality people. The guiding principles of the compensation policies are:

1. Individual’s background and Experience.
2. External pay market levels and trends ( determined through compensation survey)
3. Particular skills requirements of the company.
4. Company’s affordability.
5. Company’s statutory obligations.

Payment of salary:

1. Mode of payment:

Payment shall only be made in Bangladeshi take. Every employee should have a salary account in company nominated commercial bank. The salary will be transferred to the respective salary accounts from the confidential department within the last day of each month.

2. Pro rate payment:

If any employee is hired in the middle of a month the salary will be paid on pro rate basis and the salary can be paid in cash if the salary account is yet to be opened.

3. Advance salary payment:

No advance salary or advance from already earned salary can be disbursed to any employee without written approval of the managing director.

 Loan against salary:

Generally such loan is discouraged. Only en extreme cases, depending on the merit, loan may be considered and approval for loan will require managing director’s approval.

Incentives:

Compensation fluctuates according to:

• A pre-established formula.
• Individual or group goals because group goals are different from individual goals.
• Company earnings

An incentive adds to base pay:

• It controls costs because the employee is being paid for his/ her extra effort and for the benefits brought to the organization.
• Motivates employees.

Incentive pay categories:

  Individual.

  Group.

  Company-Wide.

Individual incentive:

• Quality of work output. ( How many units produced)
• Quality of  work output ( What was the quality of the product or service being produced or served)
• Monthly sales. ( How much sales was generated)
• Work safety record. ( How many hazard or errors are being reduced)
• Work attendance ( If the absent is reduced or attendance is good)

 Group Incentives:

• Customer satisfaction.
• Labor cost savings.
• Materials cost savings.
• Reduction in accidents.
• Services cost savings.

 Company- Wide:

• Company profits.
• Market share.
• Sales revenue.

Sales Incentive:

1.               I.      Instead of performance bonus, field sales staff will the rewarded with quarterly sales incentive for their contribution to the company.
2.            II.      Incentive schemes for each business will be proposed by respective business head during budget preparation for the coming year. This scheme will require approval from the managing director and should be communicated to field force before beginning of the year.
3.          III.      Based of requirement of the business, head of business may propose and implement any change of the scheme subject to the approval of the managing director.

Provident fund:

The company has instituted provident fund for management staff.

1. All Management employees will join the provident fund scheme after confirmation.
2. Along with the confirmation latter Human Resource Department will send a provident fund joining and nomination form to the employee.
3.  The provident fund will run on contributory basis, i.e. 10% of basic salary from the employee and equal amount from the company.
4.  If any employee leaves the company, he/she will be entitled to the company’s contribution only after 5 years from the date of confirmation, else, the employee will only be entitled to his/her own contribution.
5. Company has formed a trusty committee to maintain the provident fund.
6. Conditions with regard to provident fund shall be regulated as per the rules of the fund.

 Gratuity:

An employee shall be eligible for gratuity on leaving the company after continuous and confirmed service of at least 8 years to the following terms and conditions:

I.      Separation on account of superannuation, ill-health, physical or mental incapacity, redundancy or termination:

Table: 4.3 Gratuities

  II.      Voluntary Resignation:

Table: 4.4 Gratuities

1. In the event of death or total disablement; gratuity will be paid at the rate of two month’s basic salary for each completed year of service. In case of death, the gratuity shall be paid to the legal heir/ heirs.
2. The term basis salary, as used, means basic salary last drawn by the employee at the time of separation from the company’s employment.

Insurance:

The company has instituted a fund for management staff which provides payment of death during service by any cause, except in the first twelve months of insurance.

1.                 I.      Group life insurance is payable under any kind of death during service except in case of suicide.
2.              II.      Staff should advise HR Department the particulars of their nominees including name and relationship.
3.            III.      If the nominee is a minor, the name of the minor’s guardian should also be advised.
4.           IV.      The payable insurance amount according to the  management grades are given below:

Table: 4.5 Insurance

             V.      Respective business/ department will pay equivalent to the payable insurance amount to the nominee/ guardian (in case of nominee is a minor).

Medical benefits:

All employees of ACI will receive a monthly medical allowance as per respective grade of the employee. The allowance will be paid together with the employee’s monthly salary and for this no receipt needs to be submitted. For special case of treatment, following are the additional support extended to the employee’s.

Table: 4.6 Medical benefits

1. In case of hospitalization of the staff, spouse or two dependant child, in any recognized hospital or clinic, the company will reimburse 50% of the hospitalization charges, which will include bed/cabin rent, doctor’s fees and laboratory tests & medicine required during the period of hospitalization. All other charges will be borne by the staff.
2. In case of surgery, the company will reimburse 75% of the total operation charges comprising of surgeons fee, anesthetist’s fee & O.T. charges and cost of medicine related to the surgery.
3. Prior approval from the head of business is necessary before hospitalization or surgery. The name of the patient and the name of the hospital/ clinic need to be stated while taking the approval.
4. Department heads will approve advance against surgery for staff on a case- to-case basis.
5. Expenses for delivery under caesarean section will be reimbursed as per clauses 2. Reimbursement of more than two children will not be allowed.
6. These rules will be subject to modification from time to time at the discretion of the company.
7. Normally, ACI does not allow treatment abroad, In case where treatment/ surgery are not sagely/ reliably available in Bangladesh, the ACI may consider allowing the individual to proceed abroad for such treatment/ surgery. In such cases, the company shall be totally satisfied as to the merits of the case on the basis of the best medical option available. All such treatment abroad should be approved by the managing director before initiating the formalities.
8. The ACI will not be liable to pay medical charges for any facial or skin beautification such as Rhinoplasty, Liposuction, Otoplasty, Blepharoplasty or laser/ lasik Surgery, Facelift, Cosmetics dentistry/ tooth restoration, etc.
9. In case of treatment in the hospitals/ clinics which are not enlisted; the bills will be settled at the rate of enlisted similar hospital/ clinic.

Leave:

 Entitlement:

All management staff will have the following leave entitlement in a calendar year:

Table: 4.7 Leave

 Entitlement credit:

1. Full entitlement is credited from the succeeding years on the basis of leave earned in the previous calendar year.
2. Privilege Leave is (PL) is credited after completion of one year service. However, there will be proportionate entitlement from the date of joining to the end of that calendar year.
3. For staff leaving the company’s service, proportionate PL is credited.
4. Sick Leave (SL) entitlement begins from the time of joining proportionate to the remaining period of the calendar year. Full entitlement is credited from the beginning of the following calendar years.
5. PL is not normally granted before completion of one year of service. However, in special circumstances managers my recommend leave for his subordinate and forward the application form to the head of the department for consideration, if approved, such leave will be adjusted from future entitlement when due.
6. It is not the policy of the company to grant leave without pay. Under extreme circumstances such as study leave, staff may make representation to their department heads. Sanction of such leave should be made in consultation of the HR Department.
7. Leave records for all management staff will be maintained by the HR department at the Head office. In January every year leave balance will be sent to the respective management staff for confirmation. On receipt of confirmation the leave application of the previous year will be destroyed.
8.  Leave roster will be prepared by each department for every year and department Heads should ensure that management staff under him are given leave as per roster.
9. Absence on account of “Hartal” will be adjusted from privilege Leave.

Leave Accumulation:

1. Leave may be accumulated up to maximum of 4 years entitlement for both office management & field staff. Unutilized leave in excess of 4 years entitlement on 1^st January shall stand lapse.
2. Leave lapsing on account of company’s business and therefore for no fault of the individual may be allowed to be carried forward in addition to the maximum entitlement. Such accumulation shall be allowed by the HR on recommendation by the respective department Head.

 Data analysis:

1.      Does human resource department properly contribute in your job?

Table: 4.8

Interpretation:

From the above graph, it is seen that 55% employees are agree, 35% employees are strongly agree, they said that human resource department properly contributes in their job and 10% employees are neutral.

Comment:

Most of the employees are said HR department properly contribute in their job.

2.      Are you satisfied with the levels of support that you normally get from HR department when you face problems?

Table: 4.9

Graph: 4.2 support to HR department

Interpretation:

From the above graph, it is seen that 45% employees are satisfied, 25% employees are strongly satisfied, and 20% employees are neutral and 10% employees are dissatisfied.

Comment:

Most of the employees are satisfied with the levels of support that normally get from HR department when they face problems.

3.      Are there any short term/ long term disabilities/facilities available in your organization?

Table: 4.10

Interpretation:

From the above graph, it is seen that 55% employees ate agree & 45% employees are strongly agree they said short term/ long term disabilities available in organization.

Comment:

Most of the employee said short term/ long term disabilities are available in organization.

4.      How do you rate your company’s incentive systems?

 Table: 4.11

Interpretation:

From the above graph, it is seen that 70% employees said that organization incentive systems are average, 20% employees said it is good, 10% employees are said it is very good.

Comment:

Most of the employees said that organization incentive systems are average.

5.      Are you satisfied with the compensation benefits and plans provided to you?

 Table: 4.12

Interpretation:

From the above graph, it is seen that 45% employees are dissatisfied with the compensation benefits and plans provided to their, 30% employees are satisfied, 15% employees are neutral, 10% employees are strongly satisfied.

Comment:

Most of the employees are dissatisfied with the compensation benefits and plans provided to them selves.

6.      Does your organization provide the TA/DA?

 Table: 4.13

Graph: 4.6 TA/DA

Interpretation:

From the above graph, it is seen that 80% employees are agree, 20% employees are strongly agree.

Comment:

Most of the employees said that organization provide the TA/DA.

7.      Are you satisfied with the TA/DA offered to you by your company?

 Table: 4.14

Interpretation:

From the above graph, it is seen that 65% employees are dissatisfied, 30% employees are satisfied with their TA/DA, and 5% employees are strongly satisfied with their TA/DA.

 Comment:

Most of the employees are dissatisfied with the TA/DA offered to their organization.

8.      Are you satisfied with the insurance coverage’s offered to you?

 Table: 4.15

Interpretation:

From the above graph, it is seen that 65% employees are dissatisfied, 25% employees are satisfied with the insurance coverage offered to them, and 10% employees are strongly satisfied.

Comment:

Most of the employee dissatisfied with insurance coverage offered to them.

9.      Do your organizations provide the life insurance facility?

Table: 4.16

Interpretation:

From the above graph, it is seen that 75% employees are agree & 25% employees are strongly agree, they are said that organization provide the life insurance facility.

Comment:

Most of the employees are agree about the organization provide the life insurance facility.

10.  What types of insurance facilities offered to you by your company?

Table: 4.17

Interpretation:

From the above graph, it is seen that 90% employees said that organization provide group insurance facilities to the employee, 10% employees said that organization also provide individual insurance facilities offered to their employee.

Comment:

Most of the employees said that organization provide the group insurance.

11.  Do your organizations provide the medical facilities?

Table: 4.18

Interpretation:

From the above graph, it is seen that 65% employees are agree, they said organization provide the medical facilities, 35% employees are strongly agree with the scenario.

Comment:

Most of the employees said that organization provide the medical facilities.

12.  How would you rate the type of pension/retirement plan provided to you?

Table: 4.19

Interpretation:

From the above graph, it is seen that 55% employees said ACI pension/ retirement plan is average, 25% employees said that ACI pension/retirement plan is good, 20% employees said that ACI pension/retirement plan is poor.

Comment:

Most of the employee said that ACI pension/ retirement plan is average.

13.  Are you satisfied with your current salaries?

Table: 4.20

Interpretation:

From the above graph, it is seen that 85% employees are dissatisfied with their current salaries, 10% employees are satisfied with their current salaries, and 5% employee are neutral position.

Comment:

Most of the employees said that they are dissatisfied with their current salaries.

14.  Are you satisfied with your work environments?

Table: 4.21

Interpretation:

From the above graph, it is seen that 60 % employees are satisfied with their work environments, 15% employees are strongly satisfied with their work environments, and 25% employee are dissatisfied with their work environments.

Comment:

Most of the employees are satisfied with their work environments.

Major findings:

     From the analysis it has seen that employees are not satisfied with the organization‘s incentive systems.

     ACI compensation related benefits and packages are not sufficient.

     Most of the employees are dissatisfied with the TA/DA offered by their organization.

     In the analysis it has seen that most of the employees are dissatisfied with the insurance coverage offered to them.

     ACI Limited only provides the group insurance facility but does not provide any individual insurance facility.

     From the analysis I found that ACI pension/ retirement plan is average.

     With the organization’s current salary structure, maximum amount of the employees are dissatisfied.

 Conclusion:

ACI Limited is one of the leading conglomerates in Bangladesh, with a multinational heritage. In BD ACI Limited has been doing corporate business and soundly maintaining social responsibilities. The agenda of this company earning profit, creating job opportunity, though trade and commerce. Achievement of ACI Limited is beyond description. Maintaining Government rules and regulations ACI Limited always try to contribute on national G.D.P and G.N.P. not only local business but also internationally. ACI follows most of the compensation practices and policy. They always try to contribute to employee satisfaction and given to employees all types of compensation benefits. It has always been a dream to be able to work for a highly reputed company and my dream was fulfilled for three months as I was conducting my internship in ACI Limited. It has been an amazing experience for me as I completed my internship as well as my first job from such an incredible organization. In this company, interns are not treated as guests for three months. We are actually involved in real time projects where our inputs and contributions are highly appreciated and necessary. During my internship or my first job, I was exposed to many works which I never thought of even doing. As I have Human Resource Management as my major so working under the department of HRM was really great to me. Therefore I must acknowledge the fact that there are countless number of things that I learnt during my internship about how the company operates, its day to day activities, problems that occur every day and how to resolve them effectively and efficiently. No matter where I work, I’m confident that I will be able to apply my learning and knowledge in any organization.

 Recommendations:

     The organization should ensure standard incentive policy to their employees for their high level of satisfaction.

     The organization should increase its compensation related benefits which are provided to the employees.

     The organization should put more concentration on TA/DA which offered to their employees.

     The organization should provide effective/acceptable insurance coverage to their employees.

     ACI Limited should also provide individual insurance benefit along with group insurance.

     The organization’s pension/ retirement plan should be modified in favor of their employees.

     The organization may increase current salary structure of their employees.

Bibliography:

Books:

• “Compensation management in a knowledge- Based world”, Henderson I. Richard, 10^th edition, Jun24, 2005.
• “Strategic compensation- A human resource management”, Martocchio J. Joseph, 6^th edition, Jan21, 2010.

Reports:

• Ø ACI Limited annual report 2009.
• ØACI Limited annual report 2010.
• ØACI Limited annual report 2011.
• Ø ACI Limited Statistical report 2011.

Websites:

• Ø www.aci-bd.com
• Ø www.google.com
• Ø www.scribd.com