1.0 Introduction Money is no longer the key determinant.

Issues such as a motivational work environment, a compatible work culture and an appropriate work/life balance are more important than money. If the 90s was the decade of the customer, the next 10 years are seeing a growing focus on employees. Leading companies are recognizing that their business goals and the personal needs of their employees need to coincide and that jobs must deliver value to employees beyond pay and monetary benefits. Thus, as our course requirement we will try to analyze the strategies that are implemented in a small firm. As a part of our research, we have considered an international apparel sourcing company named as ALZ Textile Limited a Turkish based Bangladesh production office. 1.1 Scope The scope of our study was wide as we have to research on a wide area regarding compensation strategies, though here it is said about only ALZ Textile Limited. The data was collected strictly for academic purposes only. 1.2 Sources For conducting our survey, we followed the Sample Survey method and used a structured questionnaire to collect the data. The data collected was primary in nature. Some secondary data also we have collected for the research purpose. From internet, books & newspaper we collect a lot of data which helps a lot to conduct this research. Again our teacher also helps us to provide a lot of valuable information during lectures. 1.3 Limitations The biggest constraint that we faced was however, the allocation of time and resources to best meet our needs. Yet we had managed to conduct physical survey at the company for several times. We had to talk over phone who are presently working at ALZ Textile. However, they were not willing to provide internal information about their company which is a strong limitation of our research.

1.4 Methodology The study primarily used quantitative tools with qualitative information. For quantitative results, the research design involved causal research by using survey method. The sample size used for the project is 7 respondents. Data was collected from those respondents who are service holders in this company at various positions. The collected data was then statistically analyzed for generating results.

2.1 Compensation system The compensation system results from the allocation, conversion and transfer of a portion of the income of an organization to its employees for their monetary and in kind claims on goods and services. Compensation basically is a monetary reward for an employee like salary, wages, and bonuses. Also backed by non monetary benefits like allowances, insurance and medical services etc. Monetary claims on goods and services are wages and salaries paid to an employee in the form of money or any other form that is quickly and easily transferable to money at the favoritism of the employee. As medium of exchange, money enables an employee to purchase certain kinds and amounts of goods and services available in the marketplace. The value of any in kind payment to a specific employee depends directly on employee perception of it worth. Compensation management provides step by step approach for designing remuneration system that recognizes job requirements: employee related knowledge and skill and performance related incentives that individual, team and work unit and organization performance. Total remuneration also includes a host of benefits that protect and expend the lifestyle and health of workers and their families. The total of these contributions by organization represent its labor cost. On the other hand these costs should contribute to improved employee performance and on the other hand expended productivity so that an organization can be competitive, as well as profitable in providing its goods and services within global economy. 2.2 The Reward System The reward system of an organization includes anything that an employee may value and desire that the employer is able or willing to offer in exchange for employee contribution. Reward can be compensation component and non compensation as well. Monetary payments can be the form of coins paper money or in the less tangible form of checks or credit cards.

2.3 Rewarding employees Reward should be given on the basis of difference between standard goal and actual job performance.

Reward system should be equal for the same level of job position and employee performances.

To reward employee need motivation. For motivation, need performance appraisal system. Performance Management is the integration of performance appraisal systems with broader human resource systems as means of aligning employees work behaviors with organizations goals. Without motivation, no employee feels interest to do the job.

Performance Management should be an ongoing, interactive process that is deigned to enhance employee capability and facilitate productivity.

Organization should have a standard goal of job performance. It can be setup by production measures, personal activities, performance, targets activities etc. And standard job has to be clear to every employee. They will try to achieve that standard goal.

There salary and compensations structure should be more improved to match with present macroeconomics situation of our country. And they can maintain a better living standard.

Before developing the salary structure, organization should consider individual equity, internal equity and external equity, Authority should give some power to employees; so that they motivate, inspire and responsible of some decision making for betterment of the organization.

If they had to work forcefully or all decisions comes from top level; at that time they will not get enjoy doing that work.

Authority should think employees career progression goal and feed back.

2.4 Compensation in a knowledge based global Economy The rise of the global markets over the last two decades of the twentieth century and into the twenty first century has placed greater stress on organizations regarding their ability to compete and be profitable. The need to be competitive is critical to all organizations like profit and non profit, privately owned or government oriented. To be successful, these organizations must provide high quality goods and services to their clients in a cost effective manner. A major cost for all organization in providing goods and services is their labor costs. In competitive global economy, all organization must be able to focus on the effective and efficient delivery of the products they designed to offer. A key factor in promoting effective delivery essential goods and services in the provision of a performance based remuneration system for all workers. Thus, today compensation is big factor which needs to be externally competitive and again fair to employees. It must succeed to attract and retain the potentials, which will drive the organization.

3.1 Company Background ALZ Textile Limited which is a liaison office or production office in Bangladesh for its parent company ALZ Tekstil SAN TiC AS, a famous Turkish fashion retailers who owns stores like Collezione, Herry, Zero and Into Sportswear. ALZ Textile Limited is like local garments buying houses but they are distinct as they buy for themselves. Currently employs 45 number of employees in various position like country manger, merchandisers, quality controller, compliance officer etc. The parent company has history 55 years in the field of textile & clothing. Where as , the ALZ Textile Limited operating in Bangladesh for last 7 years and collaborating with local manufacturers. They offer various products in knitwear, woven and sweaters. They consider Zara, Mango, Bershka as competitors who are famous Spanish fashion companies. 3.2 Pay Model Policy Decisions at ALZ Textile Limited Internal Alignment Internal alignment, often called internal equity, refers to the relationships between jobs, skills and competencies within an organization. In other words, jobs and peoples skills are compared in terms of their relative contributions to the organizations business objectives. According to our findings, ALZ Textile maintains internal alignment and provides their employees the reason to stay in the organization by paying them equitably and handsomely.
6

Posts Country Manager

Criteria At least 10 years satisfactory and continuous services as Country Manger/ Director in foreign fashion company. At least 5 years satisfactory and continuous services as General Manager At least 5 years satisfactory and continuous services as Merchandising Manager At least 3 years satisfactory and continuous services as Merchandisers. Graduates / Master Degree Holders in relative industry At least 5 years satisfactory and continuous services as quality controller.

Monthly Basic Pay (Tk.) 3,50,000

General Manager

1,20,000

Merchandising Manger

85,000

Senior Merchandisers

45,000

Assistant Merchandisers Quality Controller

15,000 25,000

Receptionist Tea Boy

Direct Recruitment Direct Recruitment

7,000 4,500

Illustration: Pay relationship among different jobs/skills/competencies of ALZ TEXTILE LTD. External Competitiveness It refers to pay comparisons with competitors. In order to set an externally competitive compensation system, an organization must the deal the following questions: What forms of compensation should we use? How should total compensation be positioned against our competitors?

We have sought out the external competitiveness of ALZ Textile Limited in the perspective of these questions.

Employees of ALZ Textile Limited get a competitive salary with a wide range of fringe benefits. In order to sustain the employees performance on the job, employers of the organization provide different facilities of modern life house rent allowances, medical allowance, transport allowance, house utility bills. The company also gives various festive bonuses as well as other bonuses like performance bonus, security bonus etc. The following figure illustrates the forms of compensations that it provides:

Forms of Compensation Paid Holidays Loan Facilities Performance Bonuses and Other Bonuses Medical Facilities and Health Insurance Allowances

Employee Contributions It is concerned with providing emphasis on employees contribution as it directly affects employees behavior and attitude. ALZ Textile basically recognizes employee contribution based on both seniority and individual performance. For example, at ALZ Textile, promotion cannot be claimed as a matter of right and all promotions shall be made on the basis of merit and seniority as per promotion criteria laid down in the following Illustration: Serial no. 01 (Against 22 traits) For each traits: (a) Excellent 1.5 marks (b) Good 1.0 mark Particulars Marks 33

(c) Average 0.5 mark (d) Below Average 02 0.0 mark Academic Qualification (a) Up to Masters Degree 4.0 marks (b)Above Masters Degree 03 04 1.0 mark Professional Qualification Training (Maximum 6 Training=6 marks) 05 1.0 mark Seniority in The Feeder Grade (a) For required minimum prior of services to be eligible for promotion 16 marks (b) For each additional year of service at 2 marks Per year (Maximum 7 years) 06 07 14 marks Promotion Examination (viva/written/or both) Adverse Service Record in the Feeder Grade Total Marks Minimum requirement Management A policy regarding management of the pay system is essential to ensure that right people is getting the right pay for achieving the right objective in the right way. ALZ Textile manages pay as part of the business mission. The elements of its mission highlighting the importance of human resource retention through competitive compensation packages are as follows: Attract and retain quality human resources.
9

05

10 06

30

16 Minus marks if any 100

for eligibility

60

 Extending competitive compensation packages to the employees. To support these elements of the business mission, ALZ Textile maintains proper documentation about employees performance at each level. And based on the evaluation criteria, they evaluate employees and reward them according to their contribution towards the business objective. The company gives utmost importance for making continuous investment in Research and Development (R&D) and Training to achieve operational efficiency in the competitive global banking scenario. The objectives of designing all training programs are to bridge the gap between present level of competence and the required level of competence. Therefore, the pay of each employee meets increments with more advanced trainings throughout their careers. 3.3 Compensation Dimensions There are eight compensation dimensions and ALZ Textile uses all the dimensions. The eight compensation dimensions areI. Pay for work and performance: Pay for work and performance includes money that is provide in the short term like weekly, monthly and annual bonuses/awards and that permits employees to pay for and contract for the payment of desired goods and services. ALZ Textiles amount of money payments provides to employees normally depends on specific job requirements. They pay their employee the component like base pay, premiums and differentials, short-term bonuses, merit pay and certain allowances. II. Pay for time not worked: The number of hours worked per week and the number of days worked per year have decreased. Workers have enjoyed more day off with pay for holidays, longer paid vacations and paid time off for a wide variety of personal reasons. ALZ pays the employees for time not worked. III. Loss of job income continuation: Job security is and always has been the primary consideration for most workers. ALZ Textile assures the employees about their jobs and the income derived from working will continue until they are ready to retire. ALZ Textile not only
10

assures them about accident and sickness problem but also assures about personal problems or interpersonal dynamics problems. IV. Disability income continuation: The possibility always exists that a worker will incur health or accident disability because of these disabilities employees are frequently unable to perform their assignment. ALZ Textile gives the facility to their employees by providing expense continue medical, surgical and hospital bills. V. Deferred income: Most employees depend on some kind of employer-provided program for income continuation after retirement. ALZ Textile provides various kinds of program like social security, employer-provided pension plans, annuities and supplemental income plans provide income after retirements. VI. Spouse income continuation: Most employees with family obligations are concerned with what might happen if they are no longer able to provide money that will allow their families to maintain a particular standard of living. The employees get the facilities from ALZ Textiles too. VII. Health, Accident and liability protection: when a health problem occurs, ALZ Textile not only provides income continuation but also pays for goods and services required in overcoming the illness or disability. They provide a wide variety of insurance plan to assist in paying for this goods and services. VIII. Income Equivalent payment: A final set of compensation components may be grouped under the title of income equivalent payment. Employees usually find them highly desirable and both employer and employees find certain tax benefit in them. ALZ Textile also maintain the dimension. 3.4 Non-Compensation System The other major part of the reward system consists of non-compensation rewards. Noncompensation rewards are all the situation related reward not included in the compensation
11

package. ALZ Textile also uses the non-compensation packages. There are six noncompensation packages. These are: I. Enhance dignity and satisfaction from work performed: Possibly the least costly and one of the most powerful rewards an organization can offer to employees is to recognize the person as a useful and valuable contributor. ALZ Textile provides this kind of recognition so that employees have the feelings of self-worth and pride in making a contribution. II. Enhance physiological health, intellectual and growth and emotional maturity: ALZ Textile uses the system by considering the number of hours the employee spends on the jobs, on travel to and from the work site and off the job in attempting to resolve problems. They give medical facilities to the employees. They have a good working environment and all the equipment they use is safe. III. Promote constructive social relationship with coworkers: An old adage states that One man is no man. There are even more reminders that one human alone is weak. ALZ Textile has such a worth place environment where trust, fellowship, loyalty and love emanate from the top level of management to the lower levels of the organization promotes the kinds of social interaction most people need in order to thrive. IV. Design jobs that require adequate attention and effort: ALZ Textile gives special attention to focus on scientific management efforts to specialize work assignments. They design the job such a way that workers could be taught quickly how to perform a few highly repetitive tasks. They give main focus on the employees so that the employees never become bored and dissatisfaction because it hampers their productivity. V. Allocation sufficient resources to perform work assignments: ALZ gives sufficient resources to perform work assignments. They produce certain kinds and qualities of output within a specific time. They know that resources are available to help them meet these demands. To give the employee available resource and meet their demand the organization must place a win-win situation.
12

VI. Offer supportive leadership and management: Supportive leadership and management are very important for an organization. ALZ Textile focuses on the system. Their followers have faith in and abide by the actions taken by their leaders. Employees have the faith and trust in management assist in establishing a workplace environment where job security becomes accepted. They have leaders who have sufficiently flexible with policies, rules and regulations so that the employee can meet job and no job responsibilities without infringing on the rights and the opportunities of other employees.

13

4.1 Point Method Job Evaluation Prelude In Point Method, a set of compensable factors are identified for determining the worth of jobs. Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument. The points for each factor are summed to form a total point score for the job. Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade. Methodology To create point method job evaluation form, firstly we did the Job Analysis at Eastern Overseas Limited for the position of Executive Director. From the job analysis we got Job Description & Job Specification. With the help of the generated Job description & Job Specification, we determined the following: Compensable Factor Factor degrees with numerical scale Weight reflecting the relative importance of each factors

14

FACTOR SCALING

Focusing Factor Denoting Degree 1st Degree denotes the Basic Requirements 2nd Degree denotes The accustomed requirements 3rd Degree denotes- The unique requirements 4th Degree Denotes- The Sophisticated requirements

15

1. Skill (Weight = 10%+5%+5% = 20%) Degree Level 1st Degree Ability Knowledge & Education Thorough knowledge of Upper Hudson Library System policies and procedures Masters degree from any reputed university with no second class at any level of education Experience Three years of relevant professiona l experience

Ability to work with general software like, MS Office, SPSS for making report and presentation
Ability to prioritize and multitask Ability to plan and coordinate the work of staff Ability to develop and implement effective systemwide policies, goals and objectives

2nd Degree

Ability to implement and enforce system policies and procedures;

Knowledge of System organization , procedures, policies, goals and services; Knowledge of modern library administrati ve practices Special training is required about logistic procedure and policy in Bangladesh

Eight years of relevant professiona l experience

3rd Degree

Ability to accurately 16

evaluate services and programs Ability to effectively communicat e and work with other staff members and maintain effective working relationship s with staff and others Ability to exercise leadership and motivate staff Ability to use sound judgment and take initiative in making recommend ations for improveme nts in, and/or planning and developing new services, programs and policies

4th Degree

2. Responsibilities (Weight = 25%+25% = 50%) Degree Level Functional Supervisory 17

1st Degree

Formulates and recommends system-wide policies, goals, and objectives

2nd Degree

Administers personnel policy and procedures Implements and ensures the effectiveness of approved policies, procedures and goals, etc. Establishes and maintains effective working relationships with Directors, customers and with legislators (both Malaysia & Bangladesh) and government agencies Keeps informed of developments in the field through active participation in professional meetings and conferences, professional journals and staff interaction Serves as consultant to the Board and meets with the full Board and committees Performs other duties as

Supervises the preparation and administration of the annual budget and oversees the fiscal management of the system Directs the planning and organization of all programs and services for System members and evaluates the effectiveness of System services Directs and oversees the maintenance of the System building and all physical holdings

3rd Degree

4th Degree

Supervises all staff either directly or indirectly; oversees and/or conducts personnel performance 18

assigned

evaluations

3. Effort (Weight = 10%+5% = 15%) Degree Level 1st Degree Mental Planning and organizing as a team player Maintaining diplomacy and rapport Analyzing current situation and potential situations Conceptualizing the organization as a total system Viewing the organization holistically to make strategic decisions Physical Work requires no unusual demand for physical effort

2nd Degree

3rd Degree

4th Degree

4. Working Conditions (Weight = 5%+5%+5% = 15%) Degree Level 1st Degree Environment Work environme nt involves everyday risks or discomfort s Hazards Requires normal safety precaution s typical of such places as offices or meetings and training rooms E.g., use of safe work place practices Weather Involves working in moderate outdoor weather conditions

19

with office equipment, avoidance of trips and falls, and observance of fire regulations 2nd Degree 3rd Degree 4th Degree

JOB EVALUATION FORM

Focusing Factor- Assigning weights & determine the significance of the position

Weights of each sub factor are subjective in nature.

20

Job: General Manager COMPENSABLE FACTOR DEGREE Administrative TOTAL

Check one: WEIGHT =

Descriptive Brief:
Skill (20%): A bility Knowledge & Education Experie nce Responsibilities (50%): 1 2 3 4 x Function al Supervis ory 25% x 25% 100 100 5%

2 x x

4 x 10% 40 5% 10 10

Effort (15%): 1 M ental P hysical x 5 2 3 4 x 10% 40 5%

1 Working Conditions(15% ) : x x

4 5% 5 5% 5
320

ment zards

x Environ Figure- JOB EVALUATION FORM 5 Ha We 5%

21

ather

Every organization has a hierarchy of jobs, and each job lies in a certain position in the hierarchy. Each and every job of the organization needs to be analyzed in order to be evaluated. Job Evaluation is basically the process of systematically determining the relative worth of jobs, in order to create a job structure for the organization. In the figure drawn in the previous page, we have shown the Job Evaluation of General Manager. This job evaluation has been primed using the Point Method. This method basically has three common characteristics.1) Compensable Factors 2) Factor degrees numerically scaled 3) Weights reflecting the relative importance of each factor. The relative value of each job and the location of the job in the pay structure are determined by the total points assigned to it. Here, we are evaluating the job of a General Manager which is basically an administrative job. An Executive Director has the same compensable factors required for all other jobs. We have allocated a certain percentage against each compensable factor, and the allocation has a valid reasoning. Firstly, we start off with the skill needed in case of an Executive director. A degree of 4 has been assigned to the ability required of an Executive director. The reason for this is an Executive director needs to have the capability to be prepared mentally and cognitively to handle the situation as per demand arises But in case of knowledge & Education as well as experience, we have assigned a degree of 2 because in case of these mentioned factor the position holder requires the set up standard of the factors. As both Knowledge & education, experience have been assigned equal weights of 5%, so by multiplying the degrees with the weights we get a total mark of 40 in case of ability and 10 in case of both knowledge & education as well as Experience. Then we have responsibility as our next compensable factor. Here we have allocated 50% because an Executive director has a lot of responsibilities on his/her shoulder. Firstly when talking about the functional responsibilities we have set a degree of 4, because while playing the monitoring & decision maker role he needs to be well informed about the day to day activities conducting all over the organization. Again in case of Supervisory responsibilities a degree of 4 has been allocated because he has to perform lots of activities as supervisor as well as consultant.

22

Next we have effort as important compensable factor. We have allocated a certain percentage to this factor, as more effort is required of an Executive Director. An Executive Director needs to be mentally fit in order to take decisions, formulate policy & so forth. So here the sub factor mental effort is allocated 10% and 5% is allocated to physical effort. The measure in degree lays more in the mental effort rather than physical effort. Ultimately, the total point in case of mental effort is 40, and in case of physical effort it results in 5. Finally when taking the working condition as a compensable factor into consideration, we have allocated 15%, we have allocated same weight for the three sub factor which is 5% for each at the same time set same degree which is 1 as the job position is such that it doesnt sustain much sensitive issues in the working environment. As a consequence we can state that the total marks allotted in case of an Executive Director while evaluating their job is far more than other jobs of the same range. A score of 320 reflects the importance of the job, and can help in evaluation while comparing with other jobs. 4.2 Performance apparisal Performance appraisal data & information are used for making decisions in the following major areas: Organizational & human resource planning Employee tanning & development Compensation administration Employee movement Validation of selection process Performance Appraisal: A Cost- effectiveness Analysis In performance appraisal time problem can exist. Not only must job content can identified, but now time is required by the rater(supervisor) & rate(incumbent) in defining & prioritizing job duties & establishing performance dimensions & performance standards. Performance appraisal has a strong dissatisfaction component because in some manner (not necessarily logical, rational. systematic, justifiable, or explainable). The strength of universally applicable or generic performance appraisal instruments is that it does the following:
23

1. Covers a wide variety of job. 2. Is completed easily &quickly 3. Requires a minimal documentation 4. Is quantifiable 5. Is relatively easy & cheap to administer 6. Permits evasive actions to avoid unacceptable confrontations. DESIGINING A JOB CONTENT- BASED PERFORMANCE APPRAISAL PROGRAM The job definition now becomes the basis for the performance appraisal rating instrument. The responsibilities & duties of the job definition become transformed into dimensions & rating items. RATING SCALE DESIGN & DEVELOPMENT The desired strength of all rating scale techniques are that they a. be relatively easy to administer b. translate directly to quantitative terms c. permits standardization, thus allowing for comparability across various organizational lines(department, functions, occupations & jobs) d. Relate to various kinds of qualities or rating items. Performance Standards A performance standard is a criterion used to measure an employees performance. Setting standards to measure performance is neither new nor unusual. A basic performance measurement problem facing all supervisors (raters) is that jobs cannot be made uniforms; they cannot be made standard. Performance Standards at a Fully Acceptable Level of Performance At a fully acceptable level of performance, a performance standard should do the following. 1. Enable the user to differentiate between acceptable and unacceptable results. 2. Present some challenge to the employee.

24

3. Be realistic- that is, it should be attainable by any qualified, proficient, and fully trained employee who has the necessary authority and resources. 4. Be a statement of the conditions that will exist and that will measure a job activity when it is performed acceptably, expressed in terms of quantity, quality, time, cost, effect obtained, manner of performance, or method of doing. 5. Related to or express a time frame for accomplishment. 6. At least be recognizable if not observable.

25

5.0 Budget Process ALZ Textile Limited has an important role to play in the development of the organizations budget. The budget defines how the organization will spend its money for the coming planned period or plan year. This budget includes a capital budget, an operation budget, and a cash budget. Operating budget tells about the expenses in the human cost of the organization. Personnel budget consists of all kinds of staffing- related expenses such as wages and salaries, merit increases, pay structure adjustment, general increases, benefits, upgrades, bonuses, commissions, and other incentives, overtime and other various premiums and differentials and frequently, allowances for contract or outside labor. A major organization unit involve in the development of the budget is the compensation committee of the board of directors. The committee perform all or a select group of the following activities; 1. Periodically review and appraise the performance4of the chief officer and top management. 2. Set compensation for the chief executive officer. 3. Review compensation of competitive companies. 4. Review and approve proposed increases in compensation for officers and directors. 5. Monitor executive perquisites and expenses. 6. Review and approve criteria used for determining amounts of performance based bonuses for executives. 7. Review general policies and procedures relating to director and officer compensation and total compensation for all employees. 8. Ensure compatibility of the long term strategies objectives of the corporation and the performance goals used for determining long term incentive awards. 9. Develop special supplement awards in cash, stock, or a combination of both for extra ordinary accomplishments. 10. Review and approve personnel- related budgets. 11. Report findings to the full board.

26

6.0 Conclusion ALZ Textile Limited is one of the respected and reputed garments sourcing foreign buying houses in Bangladesh. This is, indeed, a milestone, which ALZ Textile has achieved with trust, support and dedication of all stakeholders, past and present, most importantly, its customers. Today, ALZ Textile has emerged as a respected company by upholding high ideals and values, solemn integrity & honesty, excellence, service and innovation in all spheres of the companys activities building on the already established foundation. In the long journey ALZ textile got some awards for their much kind of activities through its products. This reward is the result of effort, commitment and teamwork. In performance appraisal time problem can exist. Not only must job content can identified, but now time is required by the rater(supervisor) & rate(incumbent) in defining & prioritizing job duties & establishing performance dimensions & performance standards. ALZ Textile has an important role to play in the development of the organizations budget. The budget defines how the organization will spend its money for the coming planned period or plan year. This budget includes a capital budget, an operation budget, and a cash budget. Competitive global economy, all the organization, private and public, must be able to focus on the effective and efficient delivery of the products they are design to offer. A key factor in promoting effective delivery of essential goods and services in the provision of a performance based remuneration system for all workers.

27