Compensation system by zobaer

These HARM practices include human resource planning, recruitment and selection, induction, raining, performance appraisal, employee development, compensation plan, etc. This discussion has provided the opportunity to analyze the HARM practices of a business organization and to find out the facts which are creating barriers to effective HARM. – 90- Introduction Human Resource Management (HARM) Is a relatively new concept In Bangladesh. It was few years ago that this was considered as a part of the administrative functions of an organization.There was no individual identity for HARM. But as time passed people recognized the importance of HARM in organizations. They realized that HARM is to just to hire people. Apart form hiring, HARM has lots of functions which help an organization to gain competitive advantage (Islam, 2006). Effective HARM practices support business goals and objectives. That is why effective HARM practices are strategic. It can improve the performance of an o rganization by improving customer satisfaction, innovation and productivity.So from HER planning, recruitment and selection to training, performance appraisal, compensation, all practices of HARM are now considered as equally Important as any other aspects of the organization such as marketing, financing, etc. Literature Review Human resource management (HARM) is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. Synonyms include personnel administration, personnel management, manpower management, and industrial management (http en. Wisped. Erg). According to Non, Hollowness, Gerhard and Wright (2006), human resource management refers to the policies, practices and systems that influence employees' behavior, attitudes, and performance. They also say that many companies refer to HARM as involving ‘people practices'. HARM is the organizational function that deals tit issues related to people such as co mpensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training (Hatfield, 2006).According to Walked, a web based encyclopedia, HARM serves five key functions: 1) Hilling, 2) Compensation, 3) Evaluation and Management (of Performance), 4) Promotions, and 5) Management, Volvo. 10, No's. 3&4: Volvo. 11, No's. 1 & 2- 91 – of activities, and key among them is deciding what staffing needs the organization has and whether to use independent contractors or hire employees to fill these deeds, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring that the personnel and management practices conform to various regulations.Activities also include managing the organization's approach to employee benefits and compensation, employee records and personnel policies (Manager, 2006). According to Winning, what necessary in an H ER Department are the functions and responsibilities which none else either wants or is capable of doing. From recruiting to orienting new employees, from writing Job descriptions to tracking attendance, and from instituting ND monitoring policies to monitoring benefits, there has been a need for an HER generalist to assist senior management in both establishing a structure to hold down costs of administration (Winning, 2005).The ultimate aim of HARM is to ensure that at all times the business is correctly staffed by the right number of people with the skills relevant to the business needs (Islam, 2006). Thus HARM is meant to unlock the talent, experience, wisdom and common sense of many within the organization by making work simpler, quicker, rewarding, safer and fun (http://www. Cell-team. Com). Research Methodology This research article is case study-based. Square Pharmaceuticals Ltd (SSP) does have a separate Human Resource Department.The major part of this case study is based o n face-to-face interviews with managers and executives, using a questionnaire. , which consists of view and opinions of those particular people, which might raise the question of bias. In some cases some of them were not able to provide concrete facts or fugues. In this case some assumptions had to be made. Interviewing the managers and executives of SSP has provided the primary sources of information. Furthermore, company brochures, documents, and the company website were the secondary sources of data. No survey method has been used in this regard.Finally, due to time constraints it was not possible to conduct extensive interviews and surveys which could make the research paper more informative. A case study is the fact' of any particular issues, the contents of which require an in-depth focus of the social sciences area to Human Resource Management Practices -92- understand its phenomenon on the basis of it being an individual problem (Leeds, 1997). One of the essential characteri stics of using the case study approach is that it focuses on ‘one instance of the thing that is to be investigated' (Denseness, 1998).The advantage of the case study over other methods is that it attempts to be comprehensive, and involves the researcher in describing and analyzing the full notes, ‘one of the advantages cited for case study research is its uniqueness, its capacity for understanding complexity in particular contexts'. Apart from generalization, other criticisms can be that the case study method is a less rigorous form of inquiry, based on the accumulation of information and there is a lack of discipline in what Smith (1991) described as the logically weakest method of knowing.Mitchell (1999) states that the basic problem in the use of case material is theoretical that case studies prove valuable in situations where existing knowledge is limited, often providing in-depth contextual information, which may result in a superior level of understanding. Furtherm ore, case studies prove advantageous when the focus of the study is not typicality but the unusual, unexpected, covert or illicit (Hartley, 1994).The objective of this study is achieved through one single case study which provides both depth and reliability (see, for example, Harris and Gabon, 1998; Marching and Harrison, 1991; Sturdy, 1992). This case study is selected for a number of reasons, data accessibility, establishment organization, size and contribution in the sector and so on. It is said that a single case study is not enough for research. However, a single case study can give a lot of depth in the research area (see, for example, Dollar and Quaked, 2005.Mullahs et al. , 2002). Square Pharmaceuticals Ltd – Company Overview In Bangladesh, Square today symbolizes a name – a state of mind. But its Journey to growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. SS P is the largest pharmaceutical company in Bangladesh and it has been continuously in the first position among all national and multinational Sir Lankan Journal of Management, Volvo. 10, 3&4: Volvo. 11, NO'S. 1 & 2-93- companies since 1985.SSP is the manufacturer and marketer of finished pharmaceutical products, basic chemicals and agro vet products. Its products are manufactured in the form of tablets, capsules, suppositories, injections, liquids, drops, ointment, cream and powder, oral dry powder, inhalers and meter dose inhalers. SSP was converted into a public limited company in 1991. Currently the ales turnover of SSP is more than Take 622 core with 16. 23 percent market share having a growth rate of about 14. 91 percent. Square Pharmaceuticals Ltd. Ousted 11 percent growth in pharmaceutical formulation in 2004 and the company also introduced 43 new products during the period (December 25, The Daily Star- 2004). SSP has extended her range of services towards the highway of the global market. She pioneered exports of medicines from Bangladesh in 1987 and has been exporting antibiotics and other pharmaceutical products. This extension in business and services has manifested the credibility of SSP. SSP strives, above all, for top quality health care products at the least cost reaching the lowest rungs of the economic class of people in the country.They value their social obligations. They owe a responsibility to their shareholders and strive for protection of their capital as well as ensure the highest return and growth of their assets (http:// www. Squarer's. Com. Bad). According to SSP, their vision, mission and objectives are: Vision: [Square Pharmaceuticals Ltd] view business as a means to the material and social well being of the investors, employees and society at large, leading to accretion f wealth through financial and moral gains as a part of the process of human civilization.Mission: [Square Pharmaceuticals Ltd] mission is to produce and provide q uality and innovative healthcare relief for people, maintain stringently ethical standards in business operation and also ensuring benefit to the shareholders, stakeholders and Objectives: [Square Pharmaceuticals Ltd] objectives are to conduct transparent business operations based on the market mechanism within the legal and social framework with aims to attain the mission reflected by [their] vision. (http / www. Squarer's. Com. Bad). Human Resource Management Practices Supply Chain Department of Square Pharmaceuticals Ltd.Square Pharmaceuticals Ltd consists of several individual departments such as accounting & finance, marketing, sales, administration, human resource, supply chain, etc. All these departments are linked with one or more departments within the organization. For this research paper we have concentrated on the supply chain department of SSP. Throughout the research paper we will describe the HER activities related to this department and try to identify the problems a nd provide some recommendations to reduce or eliminate the problems. The supply chain department f SSP mainly works as the procurement department.It purchases all the needed raw materials, machinery and equipment, things needed for official work, food, vehicles needed for staff and management, etc. Thus all the purchasing actually takes place through the supply chain department. It is known as the supply chain department as it also maintains the suppliers outside of the organization on behalf of the organization. All the departments of the organization that need their necessary things send a requisition to the supply chain department with the consent of the department head. Then the supply chain department obtains the consent of theExecutive Director, Administration (DEAD) and contacts with different suppliers. It collects the quotations from the different-suppliers and decides from which supplier it will purchase the goods. The supply chain department not only deals with the local suppliers but also with the foreign suppliers (The structure of the supply chain department of SSP is given in the appendix). Key Themes While finding different human resource activities related to the supply chain department we have found that SSP does not have any specific human recapitulating program for the supply chain department.It does not follow any aroma labor demand forecasting and still did not take any initiative to determine the labor supply properly. So it still cannot measure whether there are more or less employees than what it actually needs. Sir Lankan Journal of Management, Volvo. 10, No's. 3 & 4: Volvo. 11, No's. 1 & 2 – 95 – While going through the recruitment and selection process we found that after the vacancy circulation lots of people submit their C.v.. So it is very difficult to sort these large numbers of C.v. and identify the person who can compete in the further steps of selection to fulfill the Job requirement.In the selection process the candidates only o through the written exam and interviews. The company does not provide any Job related problems for the candidates to solve. Thus it becomes very difficult to understand whether the candidates will be able to handle the Job-oriented problems in reality. While providing the Job description to the new employee the supply chain contact the HER department to make them know about these changes. Thus the HER department cannot know properly what a new employee is actually doing in the company and what his responsibilities are. SSP sometimes provides on the Job training and off the Job training.It has the capability to enhance the knowledge level f the employees to improve the skills and abilities of the employees. In the supply chain department of SSP there are no specific employee development processes. The employees are given promotions on the basis of their performance at the end of the year. But there is no practice of Job enlargement or enrichment or any other career development plan. The employees learn about the Job from the training program and sometimes learn from the mentoring of their boss. Thus the employees do not have any opportunity to develop their career through diversification.The employees of the supply chain department are evaluated only by self and the previous for performance appraisal. But the employees are not evaluated by other parties such as the suppliers, peers, etc. Even the feedback is not always provided to the employees properly. So it seems to us that the appraisal system is not consistent with the industry as now there are more strategic focused performance appraisal systems in practice. There are no specific reward systems for the employees' recognition except the promotions. They do not get any bonus or increment based on their performance.The whole compensation system for the employees of this department is quite sound though there is no Human Resource Management Practices regular practice of a specific non-monet ary compensation system such as recognition, praise, etc. To encourage the employees. The employee information system is not well organized. For some aspects of record maintenance an employee database is used and some other information of the employees is recorded manually by the file system. So sometimes there may be redundancy in data storing which is not cost effective for the company.Human Resource Planning The human resource planning process starts with a forecast of the people needed for the company and consists of goal setting and strategic planning and program implementation and evaluation (Non et al. , 2006). In the following part of the report we will discuss human resource planning in SSP in the context of its supply chain department. Human Resource Plan and Forecasting The human resource plan for the supply chain department is the same as that for all the other departments of SSP. The HER department prepares the plan at the end of the year.It collects the information fro m all the departments of the company about how many people they will need in the next year. The entire department's heads send the requisition with detailed information about what kind of person they need or their departments. Thus forecasting of future employees for the supply chain department is made in this way. Then human resource department takes the initiative for recruitment of those people, which we will discuss in the next segment of recruitment and selection. If the department needs more people at any time of the resource department.Except this forecasting part, SSP does not have any formal strategic planning. They did not faced any labor surplus problem so far. So they did not need to plan for reducing the labor surplus by downsizing, early retirement or any other techniques of laying off people (Personal communication, 2006). Sir Lankan Journal of Management, Volvo. 10, No's. 3 & 4: Volvo. 11, No's. 1 & 2- 97- Recruitment and Selection Human resource recruitment is the p ractice or activity carried out by the organization with the primary purpose of identifying and attracting potential employees.Selection is the process by which companies decide who will or will not be allowed into organizations (Non et al. , 2006). Thus recruitment is the process of getting a pool of candidates for the organization who can meet the requirements of a specific Job. After that selecting a person from those candidates is one of the toughest Jobs for an organization. In today's competitive business world it is very difficult to survive without potential manpower. Successful recruitment and selection can be expensive and time-consuming.But unsuccessful recruitment and selection can be a cause of the death of a business. SSP is one of the biggest employers in Bangladesh. Here we will discuss the recruitment policies and process for the supply chain department of SSP. Recruitment Objectives SSP needs such people for the supply chain department who can meet the needs of the organization to maintain the core business activities. Thus it searches for such people who are capable of doing the procurements and also maintaining the relationship with the supplier as a representative of SSP.Thus the objective of SSP is to hire a dynamic and outstanding person in the supply chain management area. Recruitment Policies Recruitment for the supply chain department in SSP is a Job of the human resource department. The human resource department finds a pool of candidates and along with the supply chain department selects the best person for the Job. Human Resource Management Practices -98- Recruitment Process for Supply Chain Department For the recruitment process JPL's supply chain department follows a very formal hiring process.Here the process is described briefly. The Assistant General Manager (GM) of the department fills up a requisition form with the Job position, requirements, criteria, Job description, and number of positions. It also clarifies why the depar tment needs a new person. Then the requisition is verified and approved by the HER Manager. The HER department publishes a circular in the newspaper for both the executives and non- executive level posts. It also publishes a circular in Job searching websites on the Internet (I. E. Boots) for the executive level posts.After receiving the C.v. from the candidates the selection process starts (Personal communication, 2006). Selection Process The HER department does a primary sorting of the C.v. and sends them to the supply candidates for a written examination. The HER department and the supply chain department make the question papers and conduct the exam. Both the HER department and the supply chain department check the exam scripts. The selected candidates from the written exam are called for an interview with the HER department and the supply chain department.Before going for the interview candidates fill a management application form with their personal information and salary expe ctations. Sir Lankan Journal of Management, Volvo. 10, No's. 3 & 4: Volvo. 11, No's. 1 & 2- 99- Sometimes the salary negotiation is done at the interview. The candidates selected from this interview are formally of selected for the Job. After that the selected candidates are sent for a medical check up. If everything is fine in the medical report then the appointment letter is given to the candidates with a set of instructions about the code of conduct of the organization (PersonalInduction and Probation Period for New Employees Induction refers to the process of helping people to make the transition into a new workplace, a new role or area of responsibility. It is considered to be a continuous process which generally starts with contact prior to taking up employment and proceeds through arrival, first days/weeks on the Job and generally up to the third month of employment. Induction is essential for all staff regardless of category or conditions of employment (http:// woman. Monish . Deed. AU).In SSP induction is the process of introducing the new employee to the organization. The HER department sakes the initiative to introduce the new employee to all the departments of SSP. A presentation is conducted by the department to let the new employee know about SSP in detail. Along with this an orientation program continues for 7-10 days to be familiar and linked with all the departments as the supply chain department is related to all other departments of the company. From six months after Joining the employee goes through a probation period.Within this time training is given to the employee. The employee tries to learn about his Job. After six months an evaluation of this employee is conducted by the GM. If the result is not satisfactory then the probation period is extended to another three months. After three months again a performance evaluation takes place. Then if the result is satisfactory the employee becomes permanent. But if the result is not satisfactory the employee's Job is terminated by the department with the consent of DEAD (Personal communication, 2006).Human Resource Management Practices -100- Job Description A Job description is a list of tasks, duties, and responsibilities that a Job entails (Non et al. , 2006). Job descriptions are supposed to describe duties and performance tankards that are directly linked to organizational success factors established by the leadership, and for which it is willing to pay a salary (Moore, 2007). Thus it works as a guideline for an employee to accomplish his Job activities effectively. It also provides a standard for the supervisor of the employee to evaluate the employee's of the department.When an employee Joins this department the GM prepares a new Job description based on the company's Job description and the skills and abilities that the employee actually obtains. Then the Job description is given to the employee. The employee follows the Job description as a guideline for his Job. D uring performance appraisal the supervisors also use the Job description to compare the employee's actual performance with the required one (Personal communication, 2006). Training Training is a planned effort to facilitate the learning of Jobs related knowledge, skills and behavior by employees (Non et al. 2006). In SSP like all other departments the supply chain department also arranges for a training program. Training takes place here in different forms. These are discussed here briefly. Induction Training After Joining this department of SSP the new employees get a specific training for a period of six months. During this time they are taught their Job related activities. This training is conducted in two different ways. These are classroom training and off the job training. Sir Lankan Journal of Management, Volvo. 10, No's. &4: Volvo. 11, No's. 1 & 2- 101 – Classroom Training Classroom training is arranged by SSP. The supply chain department sends the list of the employe es who will need the training and the topics that the training should cover to the HER department. Then the HER department contacts JPL's faculties to conduct the training. Thus classroom training is provided to the employees. At the end of training the employees are evaluated through a presentation. If the training result is satisfactory then the employees' probation period comes to an end.Off-the-Job Training Off-the-Job training takes place away from the normal work situation which means that the employee is not regarded as a productive worker when training is taking place. An advantage of off-the-Job training is that it allows people to get away from work and totally concentrate on the training being given. This is most effective for training concepts and ideas (http://en. Wisped. Org). For this training purpose the supply chain similarly contacts the HER department. The HER department then arranges the training program with some outside organization to provide training.Sometime s even the employees are also sent abroad for training. Here also the employees are needed to make a presentation in front of the top-level management after the completion of the training. On-the-Job Training On-the-Job training is given in a normal working situation, using the actual tools, equipment, documents or materials that they will use when fully trained. On-the-lob training is usually most effective for vocational work (http:// en. Kipped. Org). The Assistant General Manager (GM) of the supply chain department conducts a training program once a year for all the employees of the department.This is arranged for a very short period of time such as two or three days. At that time he tries to find out whether any employee needs any extensive training program or not, based on his performance evaluation. If any training program is required for the employees he contacts the HER department to arrange the training program (Personal -102- Employee Development Development is the acquis ition of knowledge, skills, and behaviors that improve an employee's ability to meet changes in Job requirements and in client and customer demands (Non et al. , 2006).There are several methods for employee development such as, formal education program, Job enlargement, Job enrichment, Job rotation, transfer, promotions, etc. In SSP for the supply chain department there are no such employee development processes. The employees are given promotions on the basis of their performance at the end of the year (personal communication, 2006). There are no opportunities for the employees to have Job enlargement, Job enrichment, rotation, etc. Thus they cannot learn anything more than their own Job activities and developing a career.Performance Appraisal Performance appraisal is the process through which an organization gets information on how well an employee is doing his or her Job (Non et al. , 2006). The central feature of any performance appraisal system is the establishment of objective s against which any assessment of the performance of the individual is based. The supply chain department of SSP conducts the performance appraisal for all the employees of the department. The HER department helps in this process. At first the employees are even the opportunity of self-evaluation.Later on the employees are evaluated by their reporting boss and the person supervising his boss. Thus all the employees including the GM and DEAD are evaluated. The MD evaluates the Idea's performance. For this evaluation purpose there is a specific performance appraisal form. Then the GM, DEAD and MD sit together to take decisions based on the employee evaluation. If any employee's performance is not satisfactory then they decide about how the performance of that employee can be improved. If any employee's performance is outstanding then he gets a promotion (Personal communication. 006). Sir Lankan Journal of Management, Volvo. 10, No's. 3&4: Volvo. 11, No's. 1 & 2- 103- Reward and Compen sation System The reward system of an organization includes anything that an employee may value and desire and that the employer is able or willing to offer in exchange for employee contributions. The reward system consists of a compensation and non-compensation system. Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.Pay Structure Pay structure is the relative pay of different Jobs bib structure) and how much they are paid (pay level) (Non et al. 2006). The pay structure for the employees of the supply chain department of SSP is shown below. Basic Salary + Home Rent + Transport + Medical Allowance Other Benefits Besides the promotion an increment in the basic salary is granted for all the employees once a year to adjust with inflation. The employees get five bonuses in a year. They also have the provident fund facility.For the provident fund the company itself cuts 10 percent from the ba sic and the employees need to submit 10 percent from his own income. SSP also has a retirement plan for the employees. They take gratuity from the company after retirement. The company also provides the profit sharing scheme for the employees. The employees get some health care benefits at a discounted rate from selected hospitals and health care centers of Square. From now the employees will get health care benefits at a discounted rate at the Square Hospital.The employees can have their food from the office canteen free of cost. The employees of this department get cell phone facilities from the company. SSP has an official agreement with Grahame phone. The company provides the hand set to the employees with the Simi card. Besides, SSP also pays a fixed amount of the monthly ill of the employees Basic pay: Basic pay usually refers to the pay received without taking into account any additional benefits or bonuses, such as a car, medical cover, commissions, clothing, food etc. T als o refers to the amount of pay before taking any deductions such as tax off. Every employees of the organization has been provided a basic salary which varies according to their ranks. Compensation package are given on the basis of their basic payment Provident Fund: The Company's Provident Fund is a funded scheme. All confirmed and permanent employees are entitled to be members of the Provident Fund. The employee nutrition, equal to 10% of the basic salary, is deducted each month through the payroll. The Company's Provident Fund is a funded scheme.All long-established and enduring employees are at liberty to be members of the Provident Fund. In the Provident Fund Ledger, both the employee's and the Company's contributions are accredited to the individual employee's account. Gratuity Facility: Gratuity is a scheme to motivate people to serve for longer durations with the same employer. Anybody who has served an organization for more than 5 years is eligible for Gratuity. A portion of the employee's last drawn salary would be multiplied with he number of years of service and paid out when the leave an organization after years of service.This facility has been provided by the organization when an employee will leave from the organization. Bonuses: Incentive bonuses are a creative form of compensation that some employers offer their employees. Bonuses and cash incentives are a form of variable pay linked to individual, collective or organizational performance. Non cash incentives are also widely used such as; competency based pay, skill based pay, employee recognition and commission. 0 Festival Bonus: The bonus that is given on the eve of religious festival is called