A
PROJECT REPORT ON
COMPENSATION MANAGEMENT
IN HETERO DRUGS LIMITED
SANATHNAGAR, HYDERABAD

In partial fulfillment of the requirement for the award of the degree of

MASTER OF HUMAN RESOURCE MANAGEMENT
Submitted by

G.VARALAKSHMI

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K.G.R.L.PG COLLEGE, BHIMAVARAM.
ANDHRA UNVERISTY VISKAPATANAM
(2009-2011)

DECLARATION

I here by declare that this project report titled a study on “COMPENSATION

MANAGEMENT” in HETERO DRUGS LIMITED has been carried out by me

Submitted in partial fulfillment of the award of the degree of “ MASTER OF

HUMAN RESOURCE MANAGEMENT”, in K.G.R.L .PG COLLEGE

BHIMAVARAM.

PLACE:
DATE: (G.VARALAKSHMI)

PREFACE

In today’s changing world on should aware of latest trends market demand then only survival can be possible and can compete with others.

The concept of “compensation management” plays a significant role in HUMAN RESOURECE MANAGEMENT.

COMPENSATION MANAGEMENT is defined as “ systematic approach to provide monetary value to employee in exchange of work performed”

A study has been conducted on “COMPANSATION MANAGEMENT” and a Questionnaire is prepared to conduct survey to know how it is working in “HETERO DRUGS LIMITED”.

A through analysis is presented in this report on the study conducted with the help of graphical representation.

ACKNOWLEDGEMENT

I take the opportunity to express my deep sense of obligation to Sri. CHINNA BABU (DY.G.M) for the HR Dept, My external guide Mr. CH.Janardhan reddy. HETERO DRUGS Limited, Sanathnagar having provided me with such An excellent opportunity to carry out my project work in HETERO DRUGS Limited. It is singular honor for me to acknowledgment the opportunity and service rendered by Sri. CHINNA BABU, HETERO DRUGS LIMITED, Sanathnagar, Hyderabad to perform this research Project in their esteemed organization.

My sincere thanks to my project guide MISS SRIDEVI KIRAN PH..D Associate Professor, K.G.R.L.PG.COLLEGE, BHIMAVARAM, Edhulabad for his valuable guidance and being a source of Support throughout the course of the project.

CONTENTS

CHAPTER-I Page. No. Review of Literature
CHAPTER-II
An overview of the Organization Part A: Brief profile of the organization Part B: Significance of the topic in the organization

CHAPTER-III Methodology Title of the study Need for the study Scope of the study Objectives of the study Population and sample Data collection sources Limitation of the study

CHAPTER-IV Data Analysis and Interpretations CHAPTER-V
Conclusion and recommendations

Bibliography Appendix

REVIEW OF LITERATURE
INTRODUCTION TO HRM

The concept of HRM emerged in the mid 1980’s again the background of the works of famous writers on management, pascale and Athos (1981) and Peters and Waterman (1982), who produced lists of the attributes that they claimed characterized successful companies. According to Leon C. Megginson, the term human resources can be thought of as, the total knowledge, skills, creative abilities, talents and aptitudes of an organization’s workforce, as well as the value, attitudes and beliefs of the individuals involved. “The term human resource can be explained in the sense that it is resource like any natural resource. It dose mean that the management can get use the skill, knowledge, ability etc., through the development of skills tapping and utilizing them again. Thus, it is long-term perspective where a personal is a short-term perspective. Human resources are also regarded as human factor, human asset and human capital. The terms labor and manpower had been used widely denoting mostly the physical abilities and capacities of employees. The term personnel had been used widely in the recent past to denote persons employed in any services. Thus, this term denotes the employees as a whole but it does not clearly denote various components of human resources like skill, knowledge, values etc.,

Keith Sisson (1990) suggests that thee are four main features increasingly associated with HRM. ➢ Stress on the integration of personnel policies both with one another and with business planning more generally ➢ The focus of responsibility for personnel management no longer resides with HR specialists ➢ Focus shifts from manager, trade union relations to management, employee relations and from collectivism to individualism ➢ Stress on commitment and the exercise of initiative, with managers now donning the role of enabler, empower and facilitator.

HUMAN RESOURCE MANAGEMENT:
DEFINITION:
According to Leon C Megginson, the term human resource can be thought of as “the total knowledge, skills, creative abilities, talents and aptitude of an organization’s workplace, as well as the value, attitudes and beliefs of the individuals involved. “HRM is the process consisting of four functions-acquisitions, development, motivation and maintenance of human resources” -Robbin and Decenzo “Personnel management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resource to the end, that individual, organizational and societal objectives are accomplished” Edwin B .Flippo
OBJECTIVES OF HRM: ➢ To ensure reconciliation of individual goals with those of the organization. ➢ To ensure effective utilization and maximum development of human resources. ➢ To achieve and maintain high morale among employees & develop their overall personality. ➢ To provide the organization with well-trained and well-motivated employees & maintain quality of work life. ➢ To increase to the fullest the employee's job satisfaction and self-actualization. ➢ To be ethically and socially responsive to the needs of society.

HUMAN RESOURCES MANAGERIAL FUNCTIONS:
Manager’s primary duty is to mange the people. Like other managers, a human resource manager performs the functions of planning, organizing, directing and controlling.

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1) Planning: A plan is a determination of future action. Establishment of policies and programs, goals are the process of planning. Human resource manager predict the trends in Labour market, wages, union demands, etc. and their impact on the co operatives.
2) Organizing: Organization is the subsequent activity of the planning. It allocated takes among the members of the group, establishing authority – responsibility relationships among them ant integrating their activities towards common goals.
3) Directing: Directing is process of motivating, activating, leading and supervising to peoples. Directing includes manager’s influence activity of subordinate’s action. It helps to sure the willing and effective cooperation of employees for attaining the organization objectives. 4) Controlling: It is implies checking, verifying and regulating to ensure that everything occurs in conformity with the plan adopted and instructions issued. Controlling the management of human resource involves auditing training programs, analyzing Labour turnover records, directing moral surveys.
HUMAN RESOURCE OPERATIVE FUNCTIONS: Human resource manager’s tasks are concerned with specific activities of the recruitment and selection training, compensation and maintenance an efficient workforce.
1) Recruitment and Selection: It is concerned with the aim of the selecting right person for the right job. It consists of the following activities.
a) Job analysis
b) Human resource planning
c) Recruitment
d) Selection
e) Placement
f) Induction and orientation

2) Training Functions: Human resource manager has to improve the knowledge, skills aptitudes and values of employees so that they can perform the present and future jobs more effectively. It consists of the following activities,
a) Performance Appraisal
b) Training
c) Executive Development
d) Career Planning and Development.
3) Compensation Function: It deals with the equitable and fair remuneration to employees for their contribution to the attainment of organizational objectives. It consists of the following activities,
a) Job Evaluation
b)Wage and Salary Administration
c) Bonus
4) Coordinating Functions: It is the process of reconciling the goals of the cooperatives with those of its members. Coordination involves motivating employees through various financial and non-financial incentives, providing job satisfaction, handling employee’s grievances through formal grievance procedures, collective bargaining, and worker’s participation in management, conflict resolution, developing sound relation employee counseling improving quality of work life, etc.
5) Maintenance Functions: It deals with protecting and promoting the physical and mental health of the employees. For this purpose several types of fringe benefits such as housing, medical aid, educational facilities, conveyance facilities, etc. are provided to employees.

Compensation Management:

Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. Compensation management, also known as wage and salary administration, remuneration management, or reward management, is concerned with designing and implementing total compensation package. The traditional concept of wage and salary administration emphasized on only determination of wage and salary structures in organizational settings. However, over the passage of time, many more forms of compensation as discussed earlier, entered the business field which necessitated to take wage and salary administration in comprehensive way with a suitable change in its nomenclature.

Beach has defined wage and salary administration as follows: "Wage and salary administration refers to the establishment and implementation of sound policies and practices of employee compensation. It includes such areas as job evaluation, surveys of wages and salaries, analysis of relevant organizational problems, development and maintenance of wage structure, establishing rules for administering wages. Wage payments, incentives, profit sharing, wage changes and adjustments, supplementary payments, control of compensation costs and other related items"

Components of Compensation system:
The literal meaning of compensation is to counter-balance. In the case of human resource management, compensation is referred to as money and other benefits received by an employee for providing services to his employer. Money and benefits received may be in different forms-base compensation in money form and various benefits, which may be associated with employee's service to the employer like provident fund, gratuity, and insurance scheme, and any other payment which the employee receives or benefits he enjoys in lieu of such payment.
Casio has defined compensation as follows:
"Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity”

Based on above description of compensation, we may identify its various components as follows:

Wage and Salary:
Wage and salary are the most important component of compensation and these are essential irrespective of the type of organization. Wage is referred to as remuneration to workers particularly, hourly-rated payment. Salary refers to as remuneration paid to white-collar employees including managerial personnel. Wages and salary are paid on the basis of fixed period of time and normally not associated with productivity of an employee at a particular time.

Incentives:
Incentives are the additional payment to employees besides the payment of wages and salaries. Often these are linked with productivity, either in terms of higher production or cost saving or both. These incentives may be given on individual basis or group basis.
Fringe Benefits:
Fringe benefits include such benefits which are provided to the employees either having long-term impact like provident fund, gratuity, pension; or occurrence of certain events like medical benefits, accident relief, health and life insurance; or facilitation in performance of job like uniforms, Canteens, recreation, etc.
Perquisites:
These are normally provided to managerial personnel either to facilitate their job performance or to retain them in the organization.Such perquisites include company car, club membership, free residential accommodation, paid holiday trips, stock options, etc.
Wages:
According to economic theory, wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them. In its actual sense which is prevalent in the practice, wages are paid to workers which include basic wages and other allowances which are linked with the wages like dearness allowances, etc.
Traditionally, in the absence of any bargaining power possessed by laborers, they did not have any say in the determination of wages paid to them. This has led to the development of several theories of wages such as subsistence theory by Ricardo, wage fund theory by Adam Smith, surplus value theory by Karl Marx, residual claimant theory by Francis Walker, marginal productivity theory by Philip Wickstted and John Clark, bargaining theory by John Davidson and behavioral theory by James March and Herbert Simon. Each theory tries to explain how wages are determined. In the
Indian context, soon after the independence, Government of India set up a Committee on Fair Wages in 1948 which has defined various concepts of wages which govern the wage structure in the country specially in those sectors which can be termed as underpaid and where workers do not have bargaining power through unions. These concepts are: minimum wage, living wage, and fair wage. Later, the concept of need based minimum wage was added. Let us have a brief look at these concepts.
Minimum Wage:
A minimum wage is one which has to be paid by an employer to his workers irrespective of his ability to pay. According to the above committee,
"Minimum wage is the wage which must provide not only for the bare sustenance of life, but for the preservation of the efficiency of the workers. For this purpose, minimum wage must provide some measure of education, medical requirements and amenities. " Subsequent to the committee's report, Government enacted legal provisions regarding minimum wages under the Minimum Wages Act. 1948. This Act does not define the concept of minimum wages but empowers the Central Government as well as State Governments to fix minimum wages from time to time. Wherever this Act applies, the payment of minimum wages is mandatory. In 1957, Indian Labor Conference elaborated the concept of fixation of minimum wars which were termed as need-based minimum wages.
For the calculation of wages, the Conference suggested the following guidelines:
♣ The standard working class family should be taken to consist of three consumption units for the earner; the earnings of women, children and adolescents should be disregarded.
♣ The minimum food requirements should be calculated on the basis of the net intake of 2.700 calories per adult.
♣ The clothing requirements should be estimated at a per capita consumption of 18 yards per annum per person.
♣ In respect of housing. the norms should be the minimum rent charged by the
♣ Government in any area for houses provided under subsidized housing scheme for low-income groups.
♣ Fuel. Lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimumwage.
Living Wage:
Along with the minimum wage the Committee on Fair Wages has given the concept of living wage which has been defined as follows:
"A living wage is one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for his children, protection against ill-health, requirements of essential social needs and a measure of insurance against the more important misfortunes including old age. "
Living wage is more than the concept of minimum wage. Such a wage is determined keeping in view the national income and paying capacity of industrial sector. The Committee also observed that since the national income did not support the payment of living wage. it should be implemented in three phases. In the initial stage the wages to be paid to the entire working class were to be established and stabilized. In the second phase fair wages were to be established in the community and industry. In the final phase the working class was to be paid the living wage.

Fair Wage:
The concept of fair wage is linked with the capacity of the industry to pay. The Committee has defined fair wage as follows: "Fair wage is the wage which is above the minimum wage but below the living wage. The lower limit of the fair wage is obviously the minimum wage: the upper limit is to be set by the capacity of the industry to pay. "
Thus, fair wage depends on different variables affecting wage determination. Such factors are labor productivity prevailing wage rates, the level of national income and its distribution and the capacity of industry to pay.
At present, the concept of fair wages is followed by the most business organizations.
Methods of Wage Payment:
In devising system of wage determination, the critical question that emerges is whether the wage will be linked to time spent on the workplace or output achieved during a specified period. This results into two types of wages time wage and piece wage. These two basic systems have their own relative merits and demerits. Sometimes, in order to avoid hardship to employees, a combination of these two methods is followed to ensure the payment of minimum wages. This method is known as balance method. Let us see how these methods work.

Time Wage Method:
In time wage method, the wage is determined on the basis of time worked which may be hourly, daily, weekly, monthly or any other time base. A worker is paid wage for the time worked irrespective of his output during that time. Perhaps, this is the oldest and most prevalent system of wage payment.
Merits of Time Wage:
This method is applied more commonly because it has certain inherent merits which are as under:
♣ There are certain jobs in which output within a specified period is not easily measurable. e.g. The job of a peon.In such a case wage payment is linked to time.
♣ It is quite easy to understand and calculate the amount of wages to be paid.
♣ Thus, even an illiterate worker can understand it.
♣ Both employers and workers know well in advance the amount of wages payable and they can adjust their budgets accordingly.
♣ It ensures the payment of regular and specific wages which is beneficial from social point of view.
♣ Product/service quality tends to be high as workers are not in hurry to produce more without regard to quality.

Demerits of Time Wage:
Though adopted more commonly, time wage system suffers from a number of drawbacks and if the workers are not adequately motivated for higher performance
This system can generate inefficiency in the following ways:
♣ Since there is no direct linkage between performance and wages. Employees tend to take easy approach.
♣ This system does not differentiate between efficient and inefficient workers: gradually, inefficiency percolates to efficient workers too.
♣ It de motivates efficient workers for more output as they are put at par with inefficient ones.
♣ Labor cost of production becomes difficult to determine in advance because wages are not linked to output.
♣ Since productivity is not a criterion for fixing wages. There is a possibility that wrong employees are placed on the job.
Various merits and demerits of time wage system suggest that this system can be followed in some jobs but not in all. This system is more suitable in the following situations:
♣ Where units of output are not measurable precisely like office work.
♣ Where individual employees do not have direct control on their outputs like assembly work.
♣ Where quality of work is more pronounced and requires creative imagination like artistic work.
♣ Where machinery and raw materials are quite sophisticated which require handling with utmost care like processing of precious metals.
♣ Where work is of highly varied nature and standards of outputs cannot be ascertained like research work.
♣ Where workers' unions oppose the introduction of piece rate system.
♣ Where supervision is good and the supervisors can estimate a fair day's work.

Piece Wage Method:
In piece wage method workers are paid wages according to the quantity of output during a specified period. This may be calculated on the basis of number of units produced or the completion of a job where output is not measurable in terms of individual units. Piece wage method too has its own merits and demerits.
Merits of Piece Wage:
Piece wage method has the following merits:
♣ There is a direct relationship between output and wages which works as a motivating factor to workers to produce more.
♣ It differentiates efficient and inefficient workers and provides incentives to inefficient workers to become efficient.
♣ This is fair and equitable so far as utilization of human resources is concerned.
♣ It. requires less supervision if there is in-built system for product quality control.
♣ The organization can estimate its cost of production well in advance because wage cost is directly proportional to output. Demerits of Piece Wage:
Piece wage system has the following demerits:
♣ There is a problem in fixing piece rate in the absence of any standardized procedure.
♣ There is a tendency on the part of the employers to cut piece rate if workers' earnings are quite high.
♣ The method does not ensure minimum wages as output may be adversely affected by factors beyond control.
♣ The product quality and machinery conditions are likely to suffer because workers concentrate more on quantity rather than quality.
♣ There may be jealousy and interpersonal conflict among workers because of their uneven earnings at the same workplace. ♣ Trade unions generally oppose this system because of the fear of discrimination among workers based on their working.
Various merits and demerits of piece wage system indicate that this system is not suitable for all conditions but only to specific

conditions which are as follows:
♣ Where the output of each individual worker can be measured precisely.
♣ Where the quantity of output is a direct result of skills and efforts of individual workers.
♣ When the flow of work is regular and work interruptions do not occur.
♣ Where production methods are standardized and job is of repetitive nature.
♣ Where workmanship is not required.

Balance Method: Balance method also known as debt method, is essentially a combination of time wage and piece wage methods. Under this method, a worker is guaranteed a fixed wage based on time rate with a provision of piece wage method. Thus, if worker produces more quantity in a period, usually on weekly or monthly basis, and earns more than his time wage, he is given credit for additional output which is compensated in another period in which production quantity falls below the time wage. This method provides a sense of security to a worker so far as his wage earning is concerned. At the same time, he is also motivated to produce more because of inclusion of piece wage system. This method has its relevance in a workplace where the work flow is irregular like docks.
Factors Affecting Wages:
On the basis of above discussion, we may summarize the factors affecting wage rates as under:
♣ Demand for and supply of labor: Demand and supply conditions of labor have considerable influence on the determination of wage rates.
♣ If there is a short supply of labor, the wages may be high whereas if there is no dearth of labor, the wages tend to be low.
♣ Labor unions: If the laborers are well organized into strong trade unions, their bargaining power would be high and they can demand higher rates of wages. On the other hand, if the laborers are not organized, the management may fix low wages.
♣ Cost of living: The cost of living of workers also has a strong influence on the rate of wages. If this factor is not considered, the laborers may not be in a position to make both ends meet and this will affect their efficiency.
Hence progressive employers consider this factor also.
♣ Prevailing wage rates: Prevailing wages in a particular industry are also taken into account by the employers while deciding wage levels for their employees. By considering the prevailing wage level, employers will come reasonable close to the wage level of competitors, and this will enable them to retain and attract qualified workers to the organizations.
♣ Ability to pay: The wage level, to a large extent, is determined by the ability of the enterprise to pay its workers. The ability to pay in turn is determined by the profit-earning capacity of the enterprise.
♣ Job requirements: Job requirements are also an important factor affecting wages. Jobs requiring specialized knowledge or involving much mental or manual effort are priced higher than those which are light or which do not need any specialized knowledge.
♣ State regulation: State regulation is another important factor influencing wage rtes. As the State assumes responsibility for safeguarding the interest of citizens, it has to step in to regulate the wage rates of laborers through legislative measures.
♣ Increment system: In some organizations wages automatically increase annually at a prescribed rate without any relation to workers’ performance. In some other organizations annual increases based on merit. Thus, the prevailing system of granting increments also affects wages.
Incentives:
‘Incentive’ may be defined as any reward of benefit given to the employee over and above his wage or salary with a view to motivating him to excel in his work. Incentives include both monetary as well as non-monetary rewards. A scheme of incentive is a plan to motivate individual or group performance.
The following are some of the definitions of the term ‘Incentive’:
♣ Wage incentives are extra financial motivation. They are designed to stimulate human effort by rewarding the person, over and above the time rated remuneration, for improvements in the present or targeted results” – The National Commission on Labor.
♣ “It refers to all the plans that provide extra pay for extra performance in addition to regular wages for a job” –Hummel and Nickerson.
♣ “It is any formal and announced programmed under which the income of an individual, a small group, a plant work force or all the employees of a firm are partially or wholly related to some measure of productivity output”
– Scott.
Need for incentive: It is true that monetary compensation does constitute very important reason for the working of an employee. But this compensation alone cannot bring job satisfaction to the workers. One cannot expect effective performance from a worker who is dissatisfied with its job, even if he is well paid. Sociologists and industrial psychologists also view that the financial aspect is not the only dominant motivating force. Confidence in the management, pride in the job and in firm and concern for the overall good cannot be brought by a bonus. Hence the modern authorities on management science have recognized the need for the provision of incentives to build up good morale.
Incentives for work:
Incentives can take any form. According to Z. Clark Dickinson the important incentives for work can be listed as follows:
♣ Desire for livelihood and fear of want.
♣ Desire for approval of master and fear of punishment.
♣ Desire for praise and fear of being dismissed.
♣ Impulse to activity or joy in work and dislike of inactivity.
♣ The moral command and fear of conscience.
Robert E. Salton has mentioned the following nine factors as the Motives for work.
♣ Doing something worthwhile (Good).
♣ Trust in leadership.
♣ Doing my share (Participation)
♣ I count for something (Recognition).
♣ A decent living (Fair Wages).
♣ A chance to get somewhere (Opportunity).
♣ A safe future (Security).
♣ Know what’s going on (Communication).
♣ Conditions at work (Environment)
Classification of Incentives:
All forms of incentives can be broadly classified into two kinds namely,
♣ Financial Incentives, and
♣ Non-financial Incentives.
Financial Incentives
Financial incentives or pecuniary incentives are the most original of all the incentives. It is given in the form of money.
The financial incentives still form the most important influencing and motivating factor up to a certain limit.
Because it is only by virtue of the monetary compensation that the workers can satisfy their fundamental needs such as food, clothing, shelter etc. The financial incentives may be either direct or indirect. Direct incentives include wages, bonus and other incentives directly given to the workers in the form of cash.
Indirect financial incentives include subsistence allowance expenses, medical expenses etc.
Non-financial incentives: Non-financial or non-pecuniary incentives include all other influences planned or unplanned, which stimulate exertion. Mere monetary incentive cannot help the management in solving all the problems of industrial unrest.
Further additional cash wage may also tempt the workers to misuse the money in vices like gambling, drinking etc.Under such circumstances, the nonfinancial incentives have a significant role to play. Such incentives create a healthy atmosphere and change the mental outlook of the workers. They make the working class more stabilized and economically sound. Thus, in short, the workers by virtue of the non-financial incentives are enabled to enjoy a richer and fuller life. Experiences of foreign countries particularly countries like Britain, America and Japan have shown that there is a high degree of positive correlation between non-financial benefit schemes and labor productivity.
Non-Financial Incentives can take a variety of forms. Some of the popular ones are given below:
Job Security:
The management must try its best to create a sense of job security. There should be no risk of retrenchment, demotion and termination. Experiences have also shown that the productivity is less in those concerns where workers have no feeling of safe and secure. But it is high in those concerns where they have a feeling of job security.
Recognition:
Recognition of work is the essence of securing good work. Efficient people would naturally like to get recognition for their skill and excellence in their work. Such recognition can do many things that what a cash reward can do. Of course it is not practicable for the superiors to praise everybody for every thing done by them. But the technique of praise must be practiced as far as possible.
Participation:
Workers feel more satisfied when they are given an opportunity to raise their voice in handling the affairs of the enterprise. Since they actually take part in the decision-making their co-operation is assured.

Sincere Interest in Subordinates as Individual Persons:
The workers must be made to feel pride in their job. Various techniques can be employed to develop pride to work. Food products, dynamic leadership, fair treatment, ethical conduct etc. can effectively stimulate the workers’ pride in their job and in the firm.
Pride in job:
The workers must be made to feel pride in their job. Various techniques can be employed to develop pride to work. Food products, dynamic leadership, fair treatment, ethical conduct etc. can effectively stimulate the workers pride in their job and in the firm.
Delegation of Responsibility:
Delegation of rights and responsibilities to execute a given task often proves to be a strong motivating factor. By delegation the superior trusts his workers and stimulates them to show better results.
Other Incentives:
Other incentives like quick promotion, provisions of facilities for development and training, provision of labor welfare amenities etc. also have a significant role to play in motivating the employees.
Merits of Incentives:
The following are the advantages derived by providing incentives to employees:

Higher output:
By providing incentives to his employees, the employer is able to induce them to work better. This leads to higher output.

Greater profits:
Needless to say, higher output results in greater profits for the business. This happens in two ways. First, the cost per unit becomes less and second, the enterprise is able to keep the selling price low and this result in greater sales.
No problem of idle time:
In an organization where no proper incentives are available for the workers, the tendency will be to while away the time.
When suitable incentives are available, the workers become time conscious. They begin to see every minute in terms of money.
Supervision does not pose any problem:
When suitable incentives are available, the workers become duty conscious. The need for close supervision, thus, does not arise.
Efficient workers are able to earn more:
Such of those workers who are highly efficient are able to earn more by way of performance bonus, higher commission and so on.
Possible to identify inefficient and dull workers:
If, in spite of the incentive schemes, some workers are able to earn only their normal wage, it should mean that they are basically dull. The employer, therefore, has to decide whether to retain them or subject them to rigorous training.
Rate of labor turnover is bound to be low:
If adequate incentives are available to the workers, they may not have a feeling of dissatisfaction. Such workers are sure to have greater work commitment and therefore may not leave the organization. The rate of labor turnover, as a result, is bound to be low.

Reduction in complaints and grievances:
As the organization makes available suitable incentives to the workers, they may not have anything to complain about. This leads to reduction in complaints and grievances.
Problems arising out of incentives:
The following problems are bound to arise while implementing an incentive plan:
Quality of work may suffer:
The workers, those in the production department in particular, may give undue importance to the quantity of output produced neglecting the quality of output. Such a problem can be overcome only if the organization has a perfect system of quality control.
Inter-personnel relationships may suffer:
Only those employees who are really efficient will be benefited out of incentives. This may promote ill feelings among the employees of an organization.

Wear and tear of machines may be more:
As the employees are keen on increasing the output all the time, they may handle the machines carelessly. These increases the wear and tear of machines.
Health of the workers may get affected:
Some workers tend to overwork in order to earn more and this may affect their health.
Increase in accidents:
There is always a preference to step up output disregarding even safety regulations and this may increase the rate of accidents in the workplace.

Increase in paper work:
Proper administration of any incentive scheme involves lot of paper work. It necessitates the maintenance of proper records and books.
Requirements of a sound incentive plan:
A good incentive plan shall fulfill the following requirements:
Trust and confidence:
The success of any incentive plan depends on the existence of an atmosphere of trust and confidence between the workers and the management. In the absence of such an atmosphere, the workers may resist any such proposal by the management.
Consensus required:
The management should not take a unilateral decision while evolving an incentive scheme. Consensus between the workers and the management is necessary for the success of the plan.
Assured minimum wage:
Payment to any worker should not be totally related to his performance. Every worker should be assured of a minimum wave notwithstanding performance. Only then the workers would have a sense of security.
No scope for bias or favoritism:
The standards set under the incentive plan should be based on objective analysis. It should not expect too much out of the employee nor should it give scope for bias or favoritism.
Simple to operate:
The incentive plan should not involve tedious calculations. It should be so simple that the worker will be in a position to work out his total earnings himself.

Beneficial to both the workers and the management:
The incentive plan should be beneficial to both the workers and the management. From the management's point of view, it should be cost effective. From the workers' point of view, it should offer return, at a rate higher than the normal rate of wages, for the extra efforts made by them.
Sound system of evaluation:
A perfect system of evaluating the employee’s performance should be created in the organization. The results of evaluation should be made known to the employees at the earliest.
Redressing grievances:
Grievances and complaints are bound to arise whenever any incentive plan is in vogue in the organization. Proper machinery should be installed for the quick handling of all such complaints.
Review:
The progress of the incentive scheme should be periodically reviewed. Only then it would be possible to notice and remove defects, if any, in the plan.
Fringe Benefits:
The fringe benefits are categorized as follows:
♣ Payment for Time Not worked: Benefits under this category include: sick leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance time, bargaining time, travel time etc.
♣ Extra Pay for time Worked: This category covers the benefits such as: premium pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment compensation, Christmas bonus, Deewali or Pooja bonus, food cost subsidy, housing subsidy, recreation. Organizations provide a variety of fringe benefits. The fringe benefits are classified under four heads as given here under:

Employment Security:
Benefits under this head include unemployment, insurance, technological adjustment pay, leave travel pay, overtime pay, level for negotiation, leave for maternity, leave for grievances, holidays, cost of living bonus, call-back pay, lay-off, retiring rooms, jobs to the sons/daughters of the employees and the like.
Health Protection:
Benefits under this head include accident insurance, disability insurance, health insurance, hospitalization, life insurance, medical care, sick benefits, sick leave, etc.
Old Age and Retirement:
Benefits under this category include: deferred income plans, pension, gratuity, provident fund, old age assistance, old age counseling, and medical benefits for retired employees, traveling concession to retired employees, jobs to sons/daughters of the deceased employee and the like.
Personnel Identification, Participation and Stimulation:
This category covers the following benefits: anniversary awards, attendance bonus, canteen, cooperative credit societies, educational facilities, beauty parlor services, housing, income tax aid, counseling, quality bonus, recreational programs, stress counseling, safety measures etc.
Employee Security:
Physical and job security to the employee should also be provided with a view to promoting security to the employee and his family members. The benefit of confirmation of the employee on the job creates a sense of job security. Further a minimum and continuous wage or salary gives a sense of security to the life.

Retrenchment Compensation:
The Industrial Disputes Act, 1947 provides for the payment of compensation in case of lay-off and retrenchment. The no seasonal industrial establishments employing 50 or more workers have to give one month’s notice or one month’s wages to all the workers who are retrenched after one year’s continuous service. The compensation is paid at the rate of 15 days wage for every completed year of service with a maximum of 45 days wage in a year. Workers are eligible for compensation as stated above even in case of closing down of undertakings.
Lay-off Compensation:
In case of lay-off, employees are entitled to lay-off compensation at the rate to 50% of the total of the basic wage and dearness allowance for the period of their lay-off except for weekly holidays. Lay-off compensation can normally be paid up to 45 days in a year.
Safety and Health: Employee’s safety and health should be taken care of in order to protect the employee against accidents, unhealthy working conditions and to protect worker’s capacity. In India, the Factories Act, 1948, stipulated certain requirements regarding working conditions with a view to provide safe working environment. These provisions relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fume, artificial humidification, over-crowding, lighting, drinking water, latrine urinals, and spittoons. Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, striking geared devices for cutting off power, self-acting machines, easing of new machinery, probation of employment of women and children near cotton openers, hoists and lifts, lifting machines, chains ropes and lifting tackles, revolving machinery, pressure plant, floors, excessive weights, protection of eyes, precautions against dangerous fumes, explosive Orin flammable dust, gas etc. Precautions in case of fire, power to require specifications of defective parts of test of stability, safety of buildings and machinery etc.
Objectives of Fringe Benefits:
The view point of employers is that fringe benefits form an important part of employee incentives to obtain their loyalty and retaining them. The important objectives of fringe benefits are:
♣ To create and improve sound industrial relations
♣ To boost up employee morale.
♣ To motivate the employees by identifying and satisfying their unsatisfied needs.
♣ To provide qualitative work environment and work life.
♣ To provide security to the employees against social risks like old age benefits and maternity benefits.
♣ To protect the health of the employees and to provide safety to the employees against accidents.
♣ To promote employee’s welfare by providing welfare measures like recreation facilities.
♣ To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are called golden hand-cuffs.
♣ To meet requirements of various legislations relating to fringe benefits.

Need for Extending Benefits to Employees:
♣ Rising prices and cost of living has brought about incessant demand for provision of extra benefit to the employees.
♣ Employers too have found that fringe benefits present attractive areas of negotiation when large wage and salary increases are not feasible.
♣ As organizations have developed ore elaborate fringe benefits programs for their employees, greater pressure has been placed upon competing organizations to match these benefits in order to attract and keep employees.
♣ Recognition that fringe benefits are non-taxable rewards has been major stimulus to their expansion.
♣ Rapid industrialization, increasingly heavy urbanization and the growth of a capitalistic economy have made it difficult for most employees to protect themselves against the adverse impact of these developments. Since it was workers who are responsible for production, it was held that employers should accept responsibility for meeting some of the needs of their employees. As a result, some benefits-and-services programs were adopted by employers
♣ The growing volume of labor legislation, particularly social security legislation, made it imperative for employers to share equally with their employees the cost of old age, survivor and disability benefits.
♣ The growth and strength of trade unions has substantially influenced the growth of company benefits and services.
♣ Labor scarcity and competition for qualified personnel has led to the initiation, evolution and implementation of a number of compensation plans.
♣ The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go, at least partly, to the employees who are responsible for it, so that they may be protected against the insecurity arising from unemployment, sickness, injury and old age. Company benefits-and-services programs are among some of the mechanisms which managers use to supply this security.
Flexible Benefits:
What are Flexible Benefits Flexible benefits allows allow employees to pick benefits that most their needs. The idea is to allow each employee to choose a benefit package that is individually tailored to his or her own needs and situation. It replaces the traditional “one-benefit-plan-fits-all” programs that dominated organizations for more than 50 years. The average organization provides fringe benefits worth approximately 40% of an employee’s salary. Traditional benefit programs were designed for the typical employees of the 1950s—- a male with wife and two children at home. Less than 10% of employees now fit this stereotype. While 25% of today’s employees are single, a third are part of two-income families with no children. As such these traditional programs don’t tend to meet the needs of today’s more diverse workforce. Flexible benefits, however, do meet these diverse needs. They can be uniquely tailored to reflect differences in employee needs based on age, marital status, spouses’ benefit status, number and age of dependents, and the like.The three most popular type of benefit plans are modular plans, core-plus options, and flexible spending accounts. Modular plans are pre-designed packages of benefits, with each module put together to meet the needs of a specific group of employees. So a module designed for single employees with no dependents might include only essential benefits. Another, designed for single parents, might have additional life insurance, disability insurance, and expanded health coverage. Core-plus plans consist of a core of essential benefits and a menu-like selection of other benefits options from which employees can select and add to the core. Typically, each employee is given “benefit credits,” which allow the “purchase “of additional benefits that uniquely meet his or her needs. Flexible spending plans allow employees to set aside up to the dollar amount offered in the plan to pay for particular services. It’s a convenient way, for example, for employees to pay for health-care and dental premiums. Flexible spending accounts can increase employee take-home pay because employees don’t have to pay taxes on the dollars they spend out of these accounts.

Linking Flexible Benefits and Expectancy Theory: Giving all employees the same benefits assumed that all employees have the same needs. Of course we know that assumption is false. Thus, flexible benefits turn the benefit expenditure into a motivator. Consistent with expectancy theory’s thesis that organizational rewards should be linked to each individual employees goals, flexible benefits individualized rewards by allowing each employ to choose the compensation package that best satisfies his or her current needs.

Flexible Benefits in Practice: Today almost all major Corporations in the United States offer Flexible benefits. And they are becoming a norm in other countries too. For instances a recent survey of 136 Canadian Organizations found that 93% have adopted flexible benefits or will in the near term. And a similar survey of 307 firms in the United Kingdom found that while only 16% have flexible benefits programs in place, another 60% are either in the process of implementing them or are seriously considering them. In India and most countries of Asia with the exception of Japan Flexible benefits are not offered by employers for various reasons which may create personnel and trade union problems.. In India some flexible benefits are offered in a limited way to the top management personnel like Executive Directors, President, Vice President, General Manager etc., It May take a few more years to offer flexible benefits to employees in India and other Asian counties by the managements.
401k Compensation system:
There are two main types of employer-sponsored retirement plans: defined benefit and defined contribution. A defined benefit plan, such as a traditional pension plan, sets the amount that the employer will pay to workers upon their retirement. In defined contribution plans, the plan sets the amount of the contributions that an employer makes, not the benefit it will pay at retirement. In 1978, section 401(k)of the Internal Revenue Code authorized a new kind of defined contribution plan that allows the employee to make pre-tax contributions to the plan. In a 401(k) plan, the employer sets up a special savings and investment account with an investment company, a bank trust dept, or an insurance company. The employee agrees to put part of his or her salary into the plan through automatic deductions each pay period. This money is deducted before the employee’s paycheck is taxed, so that it remains untaxed until it is taken out of the plan, often years or even decades later. Employers frequently match employee contributions up to a certain level, sometimes by as much as 100 percent, but are not required to do so. The money in the plan is invested into one or more funds provided in the plan according to choices made by the employee. The plans usually are intended to earn money over a very long period of time, which is much less risky than short-term investing. Employees like 401(k) plans for several reasons. The tax deferral an obvious plus. Others popular features include the increased portability of this plan from one employer to another, the matching contributions, and the sense of control due to the ability to choose one’s own investments.

Objectives of Compensation Management:

The basic objective of compensation management can be briefly termed as meeting the needs of both employees and the organization. Since both these needs emerge from different sources, often, there is a conflict between the two. This conflict can be understood by agency theory which explains relationship between employees and employers. The theory suggests that employers and employees are two main stakeholders in a business unit, the former assuming the role of principals and the latter assuming the role of agents. The compensation paid to employees is agency consideration. Each party to agency tries to fix this consideration in its own favor. The employers want to pay as little as possible to keep their costs low. employees want to get as high as possible. The compensation management tries to strike a balance between these two with following specific objectives:

Attracting and Retaining Personnel:

From organization’s point of view, the compensation management aims at attracting and retaining right personnel in the organization. In the Indian corporate scene, there is no birth of personnel at operative levels but the problems come at the managerial and technical levels particularly for growing companies. Not only they require persons who are well qualified but they are also retained in the organization. In the present day context, managerial turnover is a big problem particularly in high knowledge based organizations.
Motivating Personnel:
Compensation management aims at motivating personnel for higher productivity. Monetary compensation has its own limitations in motivating people for superior performance. Alfie Kohn has gone to the extent of arguing that corporate incentive plans not only fail to work as intended but also undermine the objectives they intend to achieve. He argues that this is due to inadequate psychological assumptions on which reward systems are based. His conclusions are as follows:
♣ Rewards punish people-their use confirms that someone else is in control of the employee.
♣ Rewards rupture relationships-they create competition where teamwork and collaboration are desired.
♣ Rewards ignore reasons-they relieve managers from the urgent need to explore why an employee is effective or ineffective. ♣ Rewards discourage risk taking-employees tend to do exactly what is required to earn the reward, and not any more.
♣ Rewards undermine interest-they distract both manager and the employee from consideration of intrinsic motivation.
Notwithstanding these arguments, compensation management can be designed to motivate people through monetary compensation to some extent.
Optimizing Cost of Compensation:
Compensation management aims at optimizing cost of compensation by establishing some kind of linkage with performance and compensation. It is not necessary that higher level of wages and salaries will bring higher performance automatically but depends on the kind of linkage that is established between performance and wages and salaries. Compensation management tries to attempt at this.
Consistency in Compensation:
Compensation management tries to achieve consistency-both internal and external-in compensating employees. Internal consistency involves payment on the basis of criticality of jobs and employees' performance on jobs. Thus, higher compensation is attached to higher-level jobs. Similarly, higher compensation is attached to higher performers in the same job. Level of jobs within an organization is determined by job evaluation which will be discussed little later in this chapter. External consistency involves similar compensation for a job in all organizations. Though there are many factors involved in the determination of wage and salary structure for a job in an organization which may result into some kindof disparity in the compensation of a particular job as compared to other organizations, compensation management tries to reduce this disparity.
Compensation Management Process: In order to achieve the objectives of compensation management, it should proceed as a process.
This process has various sequential steps as shown:
♣ Organization’s strategy
♣ Compensation policy
♣ Job analysis and evaluation
♣ Analysis of contingent factors
♣ Design and implementation of compensation plan
♣ Evaluation and review

Organization’s Strategy:

Organization’s overall strategy though not a step of compensation management is the starting point in the total human resource management process including compensation management. Companies operating in different types of market/product having varying level of maturity, adopt different strategies and matching compensation strategy and blend of different compensation methods. Thus, it can be seen that organizations follow different strategies in different market situations and align their compensation strategy and contents with these strategies. In a growing market, an organization can expand its business through internal expansion or takeover and merger of other organizations in the same line of business or a combination of both. In such a growing market, the inputs, particularly human resources, do not grow in the same proportion as the business expands. Therefore, in order to make the growth strategy successful, the organization has to pay high cash to attract talents. For example, information technology is a fast growing business presently and we find maximum merger and higher managerial compensation in this industry. In mature market, the organization does not grow through additional investment but stabilizes and the growth comes through making the present investment more effective, known as learning curve growth. In such a situation, average cash and moderate incentives may work. The benefits which have been standardized have to be maintained. In the declining market, the organization has to harvest profit through cash generation and cost cutting and if this cannot be sustained over the long run, the possible retrenchment of business to invest somewhere else. In such a case, compensation strategy involves costcontrol with below average cash and incentive payments. Casio has observed that in viewing the compensation from strategic point of view, the companies do the following:
♣ They recognize remuneration as a pivotal control and incentive mechanism that can be used flexibly by the management to attain business objectives.
♣ They make the pay system an integral part of strategy formulation.
♣ They integrate pay considerations into strategic decision-making processes, such as those that involve planning and control.
♣ They view the company's performance as the ultimate criterion of the success of the strategic pay decisions and operational remuneration programmers.

Compensation Policy: Compensation policy is derived from organizational strategy and its policy on overall human resource management. In order to make compensation management to work effectively, the organization should clearly specify its compensation policy, which must include the basis for determining base compensation, incentives and benefits and various types of perquisites to various levels of employees. The policy should be linked with the organizational philosophy on human resources and strategy. Besides, many external factors which impinge on the policy must also be taken care of Job
Analysis and Evaluation. Job analysis provides basis for defining job description and job specification with the former dealing with various characteristics and responsibilities involved in a job and the latter dealing with qualities and skills required in job performer. Job analysis also provides base for job evaluation which determines the relative worth ofvarious jobs in the organization. The relative worth of various jobs determines the compensation package attached with each job.
Analysis of Contingent Factors: Compensation plan is always formulated in the light of various factors, both external and internal, which affect the operation of human resource management system. Various external factors are conditions of human resource market, cost of living, level of economic development, social factors, pressure of trade unions and various labor laws dealing with compensation management. Various internal factors are organization’s ability to pay and employees' related factors such as work performance, seniority, skills, etc. These factors may be analyzed through wage/salary survey. The impact of these factors will be discussed later.

Design and Implementation of Compensation Plan:

After going through the above steps, the organization may be able to design its compensation plan incorporating base compensation with provision of wage/salary increase over the period of time, various incentive plans, benefits and perquisites. Sometimes, these are determined by external party, for example, pay commissions for Government employees as well as for public sector enterprises. After designing the compensation plan, it is implemented. Implementation of compensation plan requires its communication to employees and putting this into practice.

Evaluation and Review:
A compensation plan is not a rigid and fixed one but is dynamic since it is affected by a variety of factors which are dynamic. Therefore, compensation management should have a provision for evaluating and reviewing the compensation plan. After implementation of the plan, it will generate results either in terms of intervening variables like employee satisfaction and morale or in terms of end-result variable like increase of productivity. However, this latter variable is more important. The evaluation of compensation plan must be done in this light. If it does not work as intended, there should be review of the plan necessitating a fresh look.
Designing and Developing the Compensation Plan:
Develop a program outline:
♣ Set an objective for the program.
♣ Establish target dates for implementation and completion.
♣ Determine a budget.
Designate an individual to oversee designing the compensation program:
♣ Determine whether this position will be permanent or temporary.
♣ Determine who will oversee the program once it is established.
♣ Determine the cost of going outside versus looking inside.
♣ Determine the cost of a consultant's review.
Develop a compensation philosophy:
♣ Form a compensation committee (presumably consisting of officers or at least including one officer of the company).
♣ Decide what, if any, differences should exist in pay structures for executives, professional employees, sales employees, and so on (e.g., hourly versus salaried rates, incentive-based versus non-contingent pay).
♣ Determine whether the company should set salaries at, above, or below market.
♣ Decide the extent to which employee benefits should replace or supplement cash compensation.
Conduct a job analysis of all positions:
♣ Conduct a general task analysis by major departments. What tasks must be accomplished by whom?
♣ Get input from senior vice presidents of marketing, finance, sales, administration, production, and other appropriate departments to determine the organizational structure and primary functions of each.
♣ Interview department managers and key employees, as necessary, to determine their specific job functions.
♣ Decide which job classifications should be exempt and which should be nonexempt.
♣ Develop model job descriptions for exempt and nonexempt positions and distribute the models to incumbents for review and comment; adjust job descriptions if necessary.
♣ Develop a final draft of job descriptions.
♣ Meet with department managers, as necessary, to review job descriptions.
♣ Finalize and document all job descriptions.
Evaluate jobs:
♣ Rank the jobs within each senior vice president's and manager's department, and then rank jobs between and among departments.
♣ Verify ranking by comparing it to industry market data concerning the ranking, and adjust if necessary.
♣ Prepare a matrix organizational review.
♣ On the basis of required tasks and forecasted business plans, develop a matrix of jobs crossing lines and departments.
♣ Compare the matrix with data from both the company structure and the industry wide market.
♣ Prepare flow charts of all ranks for each department for ease of interpretation and assessment.
♣ Present data and charts to the compensation committee for review and adjustment.
Determine grades:♣ Establish the number of levels - senior, junior, intermediate, and beginner - for each job family and assign a grade to each level.
♣ Determine the number of pay grades, or monetary range of a position at a particular level, within each department.
Establish grade pricing and salary range:
♣ Establish benchmark (key) jobs.
♣ Review the market price of benchmark jobs within the industry.
♣ Establish a trend line in accordance with company philosophy (i.e., where the company wants to be in relation to salary ranges in the industry).
Determine an appropriate salary structure:
♣ Determine the difference between each salary step.
♣ Determine a minimum and a maximum percent spread.
♣ Slot the remaining jobs.
♣ Review job descriptions.
♣ Verify the purpose, necessity, or other reasons for maintaining a position.
♣ Meet with the compensation committee for review, adjustments, and approval.
Develop a salary administration policy:
♣ Develop and document the general company policy.
♣ Develop and document specific policies for selected groups.
♣ Develop and document a strategy for merit raises and other pay increases, such as cost-of-living adjustments, bonuses, annual reviews, and promotions.
♣ Develop and document procedures to justify the policy (e.g., performance appraisal forms, a merit raise schedule).
♣ Meet with the compensation committee for review, adjustments, and approval.
Obtain top executives' approval of the basic salary program:
♣ Develop and present cost impact studies that project the expense of bringing the present staff up to the proposed levels.
♣ Present data to the compensation committee for review, adjustment, and approval.
♣ Present data to the executive operating committee (senior managers and officers) for review and approval.
Communicate the final program to employees and managers:
♣ Present the plan to the compensation committee for feedback, adjustments, review, and approval.
♣ Make a presentation to executive staff managers for approval or change, and incorporate necessary changes.
♣ Develop a plan for communicating the new program to employees, using slide shows or movies, literature, handouts, etc.
♣ Make presentations to managers and employees. Implement the program.
♣ Design and develop detailed systems, procedures, and forms.
♣ Work with HR information systems staff to establish effective implementation procedures, to develop appropriate data input forms, and to create effective monitoring reports for senior managers.
♣ Have the necessary forms printed.
♣ Develop and determine format specifications for all reports.
♣ Execute test runs on the human resources information system.
♣ Execute the program.
Monitor the program:
♣ Monitor feedback from managers.
♣ Make changes where necessary.
♣ Find flaws or problems in the program and adjust or modify where necessary.

PART-A: BRIEF PROFILE OF THE ORGANIZATION

PHARMACEUTICAL INDUSTRIAL PROFILE Pharmaceuticals are knowledge based technology intensive industry that is uniquely placed to develop and commercialize the outcomes of Australia’s long-term investment in medical research. India with a population of over a billion is a largely untapped market . In fact the penetration of modern medicine is less than 30% in India. Per capita expenditure on health care in India is US$453 and Malaysia US#189.The growth of middle class in the country has result in fast changing lifestyles in urban and to some extent rural centers. This opens a huge market for lifestyles in drugs, which has a very low contribution in the Indian markets.

Indian manufactures are one of the lowest cost produces of drugs in the world. With a scalable labor force, Indian manufactures can produce drugs at 40% to 50% of the cost to rest of the world. In some cases, this cost is as low as 90 percent. The value of the pharmacy market in India was US$4.5 billion in
2003.India pharmaceutical account for 1% of the global sales in terms of value and 8% in terms of volume. Globally it ranks 4th in volume terms and 13th in value. Indian pharmacy industry is highly fragmented with about 300 large manufacturing units and about 18000 small across the country. This makes Indian pharmacy market increasingly competitive.

World wide, the pharmaceutical industry operates in two categories, namely,

▪ GENERIC COMPANIES ▪ INNOVATIVE COMPANIES

➢ Generic companies are adoptive in nature and permit copying of medicines only after the patents expire are for unpatented products being quite. ➢ MNC’s are likely to introduce top and products in the domestic market.

SWOT ANLYSIS OF INDIAN PHARMA INDUSTRY [pic]

India ranks among top 14 drugs manufacturing countries of the world and rates very high in terms of technology, quality and range of medicines manufactured.

Strengths: 1. Indian manufactures are one of the lowest cost producers of the drugs in the world. 2. Indian pharmaceutical industries possess excellent chemistry and process reengineering skills. 3. The strength in chemistry skill helps Indian companies to develop process, which are cost effective. 4. Indian indigenous sector have better opportunities to enter into technical collaboration additional bulk drugs to improve present underrepresented in India.
Weaknesses:
1. Indian pharma companies are marred by the price regulation. 2. This reduced the pricing ability of companies. 3. Indian majors are relying on exports for growth. India accounts for 16% of the world’s total population while the size of industry is just 1% of the global pharma industry.
Opportunities:
1. The migration into a patent based regime is likely to transform industry fortunes in the long terms. 2. This leads to the expansion of health care industry of which Pharma Industry is an internal part.

.
Threats:
1. It might be possible that the new government may change certain provisions of the patent act formulation by the preceding government. 2. Threat from low cost countries like China and Israel exists.

STEPS TO STRENGTHEN THE INDUSTRY:

Indian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets.

Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements.

GLOBAL CONTEXT The pharmaceuticals industry spans a spectrum of activity from the technology intensive R&D segment associated with innovative drugs through to the production of generic and over-the-counter medicines. The industry is dominated by horizontally and vertically integrated multinational entities and is more research intensive than most other industries.
Worldwide industry sales are projected to grow strongly at 7.5 per cent per annum over the next five years. Espicom Business Intelligence estimate that the annual sales of pharmaceuticals will reach US$852 billion in 2009 and project it will reach US$1,158.5 billion in 2014. The markets driving this change will be: ➢ Central/Eastern Europe, with 9.7 per cent growth per annum ➢ The Americas, with 7.3 per cent growth per annum ➢ Middle East and Africa, with 8.6 per cent growth per annum ➢ Asia/Pacific, with 4.9 per cent growth per annum ➢ Western Europe, with 6.8 per cent growth per annum. This data shows that the global market for drugs is large and growing, that pharmaceuticals industry sales are concentrated in developed countries, that half of all sales are made by the top 10 global companies, but that there is still a reasonable degree of international competition at an industry level.

INDUSTRY R&D ACTIVITY Developing a new drug is expensive. Current estimates of the full cost of bringing a new chemical or biological entity to market are around US$1.3 billion. Longer development and approval times, larger and more complex clinical trials, increased expenditures on new technologies, and shifts in product portfolios towards riskier, more expensive therapeutic categories have contributed to a real increase in the development costs. Pharmaceuticals R&D expenditure is rising. Over the past two decades, the percentage of sales allocated to R&D has increased from 11.9 per cent in 1980 to an estimated 18 per cent in 2006 (for American owned firms). The number of products in development and the number of firms doing R&D are both rising; however R&D productivity continues to fall. The industry spent around $860 million on R&D in Australia in 2006-2007. With 0.4 per cent of the world’s population, Australia produces three per cent of global medical research and has a proud history of six Nobel laureates in medicine: ➢ Howard Florey (1945: development of penicillin) ➢ Frank Burnet (1960: research on organ transplantation) ➢ John Eccles (1963: research on the transmission of nerve impulses) ➢ Peter Doherty (1996: discoveries concerning the specificity of the cell mediated immune defense) ➢ Barry Marshall and J. Robin Warren (2005: discovery of the bacterium Helicobacter pylori and its role in gastritis and peptic ulcer disease).
This is in large part due to the importance the Government places on investing in Australian scientific research. This commitment has recently been enhanced through the Government's introduction of a Research and Development Tax Credit in the 2009-2010 Budget. A feature of the Australian innovation system is the relatively high proportion of government expenditure on R&D. In the health and medical area, this funding is allocated through a variety of R&D providers and there is considerable interaction between these entities. The bulk of the funding is provided through: ➢ The National Health and Medical Research Council (NHMRC) ➢ Specialized research institutes, e.g. Baker, Garvan, Queensland Institute of Medical Research
The Commonwealth Scientific and Industrial Research Organization (CSIRO).

PROFILE OF HETRO:

| |
|[pic] |
|Type |Private |
|Industry |Pharmaceuticals |
|Founded |1993 |
|Headquarters |Hyderabad, India |
|Key people |Dr. B. Partha Saradhi Reddy (CMD) |
|Employees |Over 6,000 |
|Website |www.heterodrugs.com |

Hetero is a research based global pharmaceutical company focused on development, manufacturing and marketing of Active Pharmaceutical Ingredients (APIs), Intermediate Chemicals & Finished Dosages. Ever since its establishment in 1993, Hetero showed a tradition of excellence and deep sense of commitment in developing cost effective processes to offer wide range of affordable drugs. Hetero is building on the strengths of vertical integration in discovery research, process chemistry, API manufacturing, formulation development and commercialization. Hetero is a leading international supplier with a rich portfolio of over 200 products from wide range of therapeutic categories both in active pharmaceutical ingredients and finished dosages.

Hetero’s manufacturing facilities are cGMP compliant meeting global standards in terms of infrastructure and systems. Majority of them are approved by the various regulatory authorities of USFDA, WHO-Geneva, Australian TGA, Spanish agency of medicines & health care products, ANVISA-Brazil, IDA-Netherlands etc.With full-fledged marketing capabilities, the company has been able to market its products in over 138 countries across the globe.

History of hetero:
Established in the year 1993, with the motto to be the best in the API manufacturing, Hetero today embodies the vision of a top notch player in developing and commercializing products catering to a variety of therapeutic categories, integrating into a leading finished dosage manufacturer. True to the Statement, "Where the Future Started Yesterday", with a foresight on the current trends in the Pharmaceutical Market, Hetero has grown from strength to strength, combining its Research Strengths, Manufacturing Capabilities, and Human Resources and well established quality management system. With full-fledged marketing capabilities, the company has been able to market its products in over 100 countries in Asia, Middle-east, Eastern Europe and Latin America. With its compliance to the most stringent regulatory requirements, Hetero has today gained foothold to market several of its APIs in the United States, Canada and Europe. With all six manufacturing facilities being supported by excellent infrastructure and compliance to the GMP requirements, Hetero has crossed numerous milestones in a comparatively short period since its inception

Founder:

A Visionary Scientist

“WHERE THE FUTURE STARTED YESTERDAY…….. WORKS A DAY AHEAD OF FUTURE……..” Dr.Bandi Parthasaradhi Reddy, Chairman & Managing Director of Hetero group is academically endowed with a Post Graduate and Doctoral degrees with distinction in the field of synthetic chemistry. Prior to founding of Hetero Drugs Limited, Dr. B.P.S Reddy had a stint in leading pharmaceutical companies as the head of the Research & Development division. His sharp analysis and ability to synthesize various chemical compounds lead to the discovery of new processes, cost effective schemes for manufacturing of various pharmaceutical products. During the said period Dr.B.P.S Reddy has the credit of introducing many new molecules for the first time in Indian pharmaceutical market. A visionary the world knows as Dr. B.P.S.Reddy, is the driving force behind this growing pharmaceutical phenomenon called“ HETERO”. Dr.B.P.S.Reddy’s dream child, Hetero was born in the year 1993 as a small API units. Today, 17 years later, the name is synonymous with leadership in pharmaceuticals with more than 18 manufacturing units and 8000 employees. An entity that is grown in stature by virtue of its combined strength in research, manufacturing and marketing.

Dr. B.P.S.Reddy steered Hetero towards the forefront of global pharmaceutical industry with his vision to be recognized as an aggressive company that combines its strength of R&D and manufacturing with definite advantages in terms of cost and chemistry with a strong emphasis on quality of the products.

Dr. B.P.S.Reddy is now focusing on giving new dimensions to Hetero in terms of research and innovation programs in discovery research to take the company to greater heights.

MANAGEMENT:

|S.NO. |NAME |DESIGNATION |
| | | |
|1. |Dr.B. ParthaSaradhi Reddy |Chairman & Managing Director |
|2. |M.Srinivasa Reddy |Director |
|3. |B. Vamsi Krishna |Director |
|4. |A. V. Narasa Reddy |Technical Director |
|5. |Dr. Ratnakar Reddy |R&D director |
|6. |C .Bhaskar Reddy |Quality Control Director |
|7. |J. Sambi Reddy |Director operations |
|8. |C. Mohan Reddy |Director operations |
|9. |D. Vishwanatha Reddy |Director |
|10. |B. Janardhan Reddy |Projects Director |
|11. |Dr. R. Raji Reddy |Director R&D |
|12. |Dr. P. Khadgapathi |Director formulations |

MAN POWER IN HETERO GROUP:

| S.NO |COMPANY NAME UNIT | MANPOWER |
| | API |
| HETERO DRUGS LIMITED(HDL) |
| |HDL | |307 |
|1 |HDL UNIT-I |622 |
|2 |HDL UNIT-IV |205 |
|3 |HDL UNIT-VI- (NR) |417 |
|4 |HDL UNIT-VIII |21 |
|5 |HDL UNIT-IX (SEZ) |236 |
|6 |HDL HRF (R&D) |356 |
| HETERO LABS LIMITED(HLL) | |
|1 |HLL Unit-I |1044 |
|2 |HLL UNIT-III (NR) |537 |
|3 |HLL UNIT-III-A(NR) |72 |
|4 |HLL UNIT-IX (SEZ) |355 |
|5 |HLL UNIT-III (BULK) |46 |
| | FORMULATION | |
| HETERO DRUGS LIMITED(HDL) |
|1 |HDL UNIT-II |41 |
| | HETERO LABS LIMITED(HLL) | |
|1 |HLL | |91 |
|2 |HLL UNIT-II |141 |
| | | |
|3 |HLL UNIT-IV |34 |
|4 |HLL UNIT-V |202 |
|5 |HLL UNIT-VI |109 |
|6 |HLL UNIT-VIII |97 |
|7 |HLL UNIT-III (A-BADDI-HYD) |221 |
|8 |HLL UNIT-III(EOU-I) | |390 |
|9 |HLL UNIT-III(EOU-II) | |189 |
|10 |HLL UNIT-VII(PELLETS) |58 |
|11 |HLL HRF | |3 |
| | | |
| |G ENERAL | |
|1 |HETERO INFRASTRUCTURE |26 |
|2 |CIREX |12 |
|3 |CLINSE |21 |
|4 |CIREX UNIT 1 | |157 |
| |TOTAL | |6010 |

HETERO UNITS:
| | UNIT | |
|S.NO | |LOCATION |
| | API |
| HETERO DRUGS LIMITED |
|1 |HDL-UNIT-I |BONTHAPALLY |
|2 |HDL-UNIT-IV |BONTHAPALLY |
| 3 |HDL-UNIT-VI- (NR) |NAKKAPALLY |
|4 |HDL-UNIT-VIII |BONTHAPALLY |
|5 |HDL-UNIT-IX (SEZ) |NAKKAPALLY |
|6 |HDL-HRF (R&D) |BALANAGAR |
| HETERO LABS LIMITED | |
|1 |HLL-Unit-I |KAZIPALLY |
|2 |HLL-UNIT-III (NR) |NAKKAPALLY |
|3 |HLL-UNIT-III-A(NR) |NAKKAPALLY |
|4 |HLL-UNIT-IX (SEZ) |NAKKAPALLY |
|5 |HLL-UNIT-III (BULK) |JEEDIMETLA |
| | FORMULATION | |
| HETERO DRUGS LIMITED |
|1 |HDL-UNIT-II |GANDI NAGAR |
| |HETERO LABS LIMITED | |
|1 |HLL-UNIT-II |BADDI |
|2 |HLL-UNIT-IV |BADDI |
|3 |HLL-UNIT-V |JADCHERLA |
|4 |HLL-UNIT-VI |JADCHERLA |
|5 |HLL-UNIT-VIII |BADDI |
|6 |HLL-UNIT-III (A-BADDI-HYD) |BADDI |
|7 |HLLUNITIII(EOU-I) | |JEEDIMETLA |
|8 |HLL-UNIT-III(EOU-II) | |JEEDIMETLA |
|9 |HLL-UNIT-VII(PELLETS) |JEEDIMETLA |
| |GENERAL | |
|1 |HETERO CORPORATE |SANATH NAGAR |
|2 |HETERO INFRASTRUCTURE |NAKKAPALLY |
|3 |CIREX |SANGA REDDY |
|4 |CLINSE |BALANAGAR |

HR STRUCTURE General Manager

Deputy General Manager

Assistant General Manager

Manager

Assistant Manager

Senior Executive

Executive

Junior Executive

Assistant Executive

Trainee

Vision and values:

Hetero believes in “WHERE THE FUTURE STARTED YESTERDAY…… WORKS A DAY AHEAD OF FUTURE………….”

HETERO’S Ambition is to be an aggressive player in pharmaceutical markets combining IIPR skills, manufacturing capabilities, strong human resources inputs and marketing strengths.
Values in pursuit of excellence: ❖ Innovation ❖ Creativity ❖ Reliability ❖ Accessibility ❖ Cost effectiveness ❖ Quality ❖ Accuracy ❖ Customer delight ❖ Eco friendly

Hetero visualizes itself as an aggressive player in the global pharmaceutical scenario; supplying generics developed combining intellectual property research strength and strong human resource inputs

The company values the concepts of having social responsibilities in the course of its assents to greater heights. It strongly believes in focusing on customer requirements and delivering the products at the right place.

Hetero considers its human resource as the core of all its capabilities and believes in tapping and honing the talent of its members to reach the zenith of success. It believes in continuous evaluation and improvement in all the factors that contribute in transforming the organization into a global to reckon. Hetero takes recognize the fact that the processes that it develops all eco friendly and it should not result in any consequence that harms the ecological harmony.

MISSION: Hetero’s mission is to be a globally acclaimed pharmaceutical company, meeting the requirement of healthcare imbibing the philosophy of both commercial and social concerns, driven by research and manufacturing capabilities.
STRENGTH:
❖ Strong emphasis on research and development ❖ Ability to develop processes for a large range of therapeutic categories ❖ Ability to orient and adapt to the changing facets of industry particularly in terms of regulations, intellectual property and manufacturing capabilities ❖ Cohesive teams of skilled professionals in all wings related to research, manufacturing and marketing ❖ Strong customer base and market presence ❖ A strong commitment towards the society to provide timely support by providing life saving drugs at relatively low costs, short span of time.

Global Presence: Hetero exports its products across different regions – USA, Canada, Europe, Japan, Latin America, Africa, Middle East, Far East, Australia, Russia & CIS, in the world and is catering to the requirements of around ‘138 ‘ countries in the world.

Business focus:
Active Pharmaceutical Ingredients, Hetero is one of the largest manufacturer and supplier of Active Pharmaceutical Ingredients (API’s) catering to the ever increasing requirements of the global pharmaceutical market. The infrastructure available with Hetero for manufacturing of Active Pharmaceutical Ingredients and the intermediate chemicals is one of the best, with State-of-the- Art facilities designed to meet the global standards and cGMPs.

With 11 API manufacturing facilities in operation, Hetero has been able to manufacture more than 200 APIs, and supply to different markets. 6 of the API facilities are approved by USFDA, TGA, EU, PMDA, KFDA and WHO.

Hetero is a trusted supplier of several APIs in wide range of therapeutic categories and the largest supplier of complete range in Antiretroviral products. Hetero also has dedicated facility for manufacturing of Oncology products.

Finished Dosages Hetero has world-class facilities for manufacturing wide range of finished dosages. As a leading innovation-driven corporation, Hetero is developing a growing portfolio of pharmaceutical products to meet some of the world's most urgent medical needs. Today Hetero is manufacturing product portfolio of over 200 products in major therapeutic areas, with an emphasis on antiretroviral, gastro-intestinal, cardiovascular, antidepressants/antipsychotics, anti-diabetics, pain management, anti-infective, dermatology and oncology. Hetero has • Four finished dosage manufacturing facilities, out of which two are USFDA, approved facilities. • Dedicated Oncology facility • Offers 1. Injectables 2. Solid/Liquid oral dosages 3. Ointments 4. Soft gelatine capsules 5. Inhalers
CRAMS:
Hetero initiated customer-centric division that will provide “Custom Research And Manufacturing Services” (CRAMS) for large, mid-sized and emerging biotech and pharmaceutical entities globally. Hetero will partner with these companies and cultivate opportunities to research, manufacture and develop compounds across the entire drug life cycle. This division will deliver fully-consolidated or customized manufacturing solutions for APIs, intermediate chemicals, pre-formulations and formulations across each stage of the pharmaceutical life cycle. Hetero provides premium solutions for product life cycle management including life cycle extensions and line extensions.

Biotechnology: Hetero is focusing on the development and manufacturing of bio-generics for domestic and international markets. Five biosimilars are in the various stages of development. Two products are expected to be commercialized in India for oncology and nephrology indications by 2011-12.
Drug Discovery: • Hetero started discovery research with the focus on developing NCEs in selected therapeutic areas. Scientists at Drug Discovery Division are working on the following projects : o ANTI-HIV Research o ANTI-HCV Research o Diabetes Research
Our business strategy is to out licence early stage discovery molecules and to explore early stage discovery collaborations to maximize the potential of our discovery projects.
Alliances / Partnerships: At Hetero, we value alliances/partnerships. Hetero has developed productive alliances and partnerships that advance our capacity to develop innovative medicines at lower costs. Our collaborations have produced strong, enduring partnerships and yielded consistent success in the market place. A glance at our track record highlights some of our achievements while illustrating the diversity among our partners and products. .

Hetero is regarded as one of the best companies in the world to work for, and generations of Hetero employees have sustained a culture that values excellence, integrity, and respect for people. diversity among our partners and the products.

Research & Development: Research & Development is the foundation of Hetero’s philosophy of developing cost-effective, high quality and safe medicines to society. Hetero Research Foundation is one of the most innovative, productive, and respected scientific research organizations which are recognized by the Department of Science & Technology, Government of India. Hetero Research Foundation (HRF) has a team of over 400 dedicated scientists working in the areas of Process, Analytical and Discovery Research. R&D centre conforms to international standards and has advanced equipment for both basic and applied research.
Process R&D HRF has developed process for 150 plus molecules for various markets. The R& D team actively involved in process development, scaling-up technology transfer and associates with manufacturing team through out life cycle of product. HRF has always been emphasizing to ensure that the processes being adopted for the products are cost effective, safe to handle and with optimum advantage in terms of yield and quality.
Analytical R&D Analytical research at HRF is equipped to conduct complete physical and chemical characterization of API’s/ NCE’s. Further, the team is well versed with regulatory filings and has vast experience in documentation. The infrastructure includes advanced instruments like LC-MS-MS, GC-MS, NMR, Powder XRD apart from several HPLC systems.

Manufacturing Infrastructure: Hetero group as a whole has 18 Manufacturing facilities at various locations encompassing manufacturing of Active Pharmaceutical Ingredients and Finished Dosage Products.

Committed to quality, safety and environment, most of our manufacturing facilities have been inspected and approved by the US FDA, WHO-Geneva, Spanish Agency of Medicines & Health care products, ANVISA-Brazil, IDA-Netherlands etc.,
Products:

1. API's - for Regulated Market 2. API's - for Semi Regulated Market 3. Finished Dosages 4. Intermediate Chemicals

Careers: Careers at HETERO Hetero’s strength lies in the talent and commitment of the people who work for us. Hetero is on the path of progress and expanding very fast in all its verticals. Opportunities exist in for talented people of diverse backgrounds in various departments. Hetero creates an environment for personal and professional growth of employees. A healthy work-life balance is supported through knowledge-driven work environment where ideas and skills are valued; where people can realise their full potential through dedicated training programs; and where individual contribution is respected, recognized and rewarded.
The hetero drugs limited culture: • Customer focus and performance driven where both external and internal customers are accorded the highest priority and where every one is sensitive to commitments, time & cost and focused on delivering innovative affordable medicines globally. • Entrepreneurial and innovative where genuine mistakes are tolerated, intelligent risk- taking is encouraged and people feel a sense of empowerment. • Egalitarian and trusting where rank and status consciousness is low, leadership walks the talk, where credibility &trustworthiness are championed and leader provide access to people, resource and information. • Flexible and adaptive where change is welcome and initiatives are implemented with sincerity and commitment, diversity is understood and accepted and mutual respect for diversity and various ethic culture coexist.

Work place ethics:
Open -door communication
Hetero drugs maintain an open –door culture for communication to assist with employee concerns. If employee does not feel comfortable discussing concerns with his or her supervisors or managers, they contact the next level of management. Hetero drugs believe that open communication is essential to successful work environment and all employees should feel free to raise concerns without fear of reprisal.
Courtesy
They develop an attitude or helpfulness towards their customers, suppliers, vendors and their fellow employees. Courtesy is a major component of good human relations. Good telephone etiquette is also important when dealing with others, both inside and outside of HETERO DRUGS.

Social Responsibility: Hetero recognizes its obligations towards the society and as a socially responsible organization; we strive to take care of the less privileged sections of our society. We extend our expertise to transform the lives of our people and make a difference to the society. In this initiative, Hetero has adapted few villages for their overall development.

Education: Hetero assists in setting up of schools where there is no access to education facilities, providing financial assistance to the poor students who have promising academic record, adapting schools.

Sports: Sponsors athletics from various educational institutions to participate in National and International level competition.

Medical: Hetero conducts periodical medical camps at various locations in socially backward areas to provide timely medical assistance to the needy. Hetero has liberally donated medicines to the Government of India, Government of A.P. and to various Hospitals.
News & Events
April'2010
Hetero launches one of the India’s largest finished dosage manufacturing facility in Special Economic Zone (SEZ) at Jadcherla. Hetero launches its new formulations facility (SEZ) at Jadcherla, Andhra Pradesh, India. Strategically located just 60kms from Hyderabad International airport, off NH 7, the project situated in the state's first green industrial park. The total unit area is 75 acres and with two manufacturing facilities. This facility offers a huge production capacity of 18 billion tablets and capsules per annum. It has a dedicated Oncology facility with a production capacity of 200 million tablets & capsules, 15 million liquid injectable vials & 15 million lyophilised Injectables. This World-class facility is meeting the cGMP and regulatory requirements, with integrated quality management system in place. All quality control Instruments are 21-CFR compliant. Walk in type stability chambers with global requirements for stability study and Integrated building management system from Honey well -USA , Lyophilizer VIRTIS -USA, Liquid Filling machine from BOSCH – Germany, makes this manufacturing facility at par with the best in the world.
April'2010
Hetero receives tentative approval for Tenofovir disoproxil fumarate tablets from USFDA. Hetero is pleased to announce that it has received the tentatively approval for Tenofovir disoproxil fumarate from the US Food & Drug Administration (USFDA). Tenofovir tablets 300 mg is generic equivalent to Viread tablets 300 mg of Gilead Sciences. Tenofovir belongs to a class of antiretroviral drugs known as nucleotide analogue reverse transcriptase inhibitors (nRTIs), which block reverse transcriptase, an enzyme crucial to viral production in HIV-infected people. Tenofovir is indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in adults.

Nov'2009 Hetero receives tentative approval of Lamivudine and Tenofovir fixed dose combination tablets, 300mg/300mg tablets from USFDA On November 5, 2009, using expedited review procedures developed to support the President's Emergency Program For AIDS Relief (PEPFAR1), the US Food and Drug Administration (FDA), granted tentative approval for lamivudine and tenofovir disoproxil fumarate fixed dose combination tablets, 300mg/300mg. The fixed dose combination product, indicated for use in combination with other antiretrovirals for the treatment of HIV-1 infection.
Awards & Accolades: Hetero has been scaling new heights on a continual basis. These achievements have been the result of concerted efforts on the part of different functions within the organization to achieve the organizational goal of being a leader. In its path to success, Hetero has seen many a milestone being crossed and achieved many awards on various fronts. Awards for exemplary work in R&D and marketing are just a few to name. A track of few events that saw Hetero reaching its Zenith of glory are:
2009
• Top Pharmexcil Gold Patent award. • Top Pharmexcil Outstanding Export Performance award in Drugs and Pharmaceuticals.

2006 • Chemexil Trishul export award for outstanding export performance 2001 Excellence & National Integration award in recognition of the efforts for excellence with affairs connected with educational specialties and creating teaching skills besides promoting harmony at all levels in the college.
1999
• Highest exporter award against stiff competition from internationally recognized domestic competitors.
1998
• Top Chemexil award for Exports.

1996 • National award for "Best Efforts in Research and Development" from the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, in the year 1996.

HIERARCHIAL STRUCTURE OF HETERO DRUGS LTD

HETERO’S PRODUCTS

Hetero is the first company in the Indian Pharmaceutical history to develop the following products.

• Lisinopril Anti Hypertensive

• Ramipril Anti Hypertensive

• Carvedilol Anti Hypertensive

• Fosinoprilsodium Anti Hypertensive

• Benazepril hydrochloride Anti Hypertensive

• Losartan Potassium Anti Hypertensive

• Valsartan Anti Hypertensive

• Candesertan Ancilextil Anti Hypertensive

• Lomefloxacin Hydrochloride Anti Bacterial

• Sparflaxacin Anti Bacterial • Itraconazole Anti Fungal

• Pantoprazole Sodium Anti Ulcerative

• Sertraline Hydrochloride Anti Depressant

PART –B: SIGNIFICANCE OF THE TOPIC IN THE ORGANIZATION

Compensation Management in Hetero Drugs Ltd.

Hetero Drugs follows COST TO COMPANY (CTC) rule. The contents of the salary for employees are as follows:

Gross Salary
+
Bonus
+
Provident Fund
+
Employee State Insurance
+
Gratuity

Note :Gross salary includes Basic + HRA + LTA + CA + Medical Allowance + Educational Allowance + Special Allowance and etc..

Components of Compensation in Hetero Drugs: In Hetero compensation components include both Earnings and Deductions.

Earnings: 1. Basic :

The basic amount of salary for a designation is fixed by the management on the basis of qualification, experience. Etc.

Note: The basic salary for an employee is 50% of the gross salary.

2. House Rent Allowance (HRA):

All the employees of the Hetero Drugs are provided with HRA. HRA received by an employee who resides in his own accommodation or in a house for which no rental is paid will be taxable.
Note: HRA received by an employee is 40% of his Basic.

3. Conveyance Allowance (CA):

It is paid for meeting the expenditure on travel for official purposes.
Note: Conveyance allowance is 40% of Basic.

4.Medical Allowance:

All the employees of Hetero Drugs Ltd. are provided with medical allowance for meeting their medical expenditure in their ill-health.

Note: Medical allowance = Basic/12.

5. Education Allowance:

Employees working at Hetero Drugs are provided with educational allowance as an extra benefit in addition to health care.

Note: Education Allowance is a fixed amount of Rs.200 Per month.

6.Special Allowance:

All the employees in Hetero are also provided with Special Allowance. It is also included as a component in Gross Salary. 7.Leave Travel Allowance(LTA):

At Hetero Drugs LTA is provided only for executive cadre in different levels.

Note: As an example a junior executive is paid an amount of Rs.4000 PA whereas asenior executive is paid an amount of Rs.4500 PA. 8. Maternity Benefit: All the women employees working with Hetero Drugs are provided with maternity benefit as per the norms of “MATERNITY BENEFIT ACT-1961”.

Note: Women employees who are covered under ESI ACT are provided with maternity benefit of 84 days of leave with wages i.e. 6 weeks before and 6 weeks after the delivery. If any miscarriage occurs then the leave will be extended two weeks.

Women employees who are not covered under ESI ACT are provided with maternity benefit under the MATERNITY BEBEFIT ACT-1961. They will be provided with 84 days of leave with wages i.e. 6 weeks before and 6 weeks after the delivery. If any miscarriage occurs then the employee will not be provided extra leave with wages.

Deductions:

9. Provident Fund (PF):
Employees working for Hetero Drugs are provided with provident fund as per the norms of “PROVIDENT FUND ACT-1952”.

Note: Contribution of provident fund includes: Employer: 13.61% of basic. Employee: 12% of basic.

10.Employee State Insurance (ESI): Employees of Hetero are also provided with employee state insurance as per the norms of “EMPLOYEE STATE INSURANCE ACT-1948”.
Note: Contributions for ESI are as follows: Employer: 4.75% of basic. Employee: 1.75% of basic.
Eligibility: The employees who are securing Rs.15000 or below are eligible to get PF and ESI from employer and government. 10.Professional Tax: All the components of compensation i.e. basic, HRA, LTA, CA, medical allowance, education allowance, special allowance, bonus, ESI and PF are taxable.

Note: The professional tax levied as per employees earning are as follows:
|Salary in Rs. PM |Professional Tax in Rs. |
|5001 - 6000 |60 |
|6001 - 10000 |80 |
|10001 - 15000 |100 |
|15001 - 20000 |150 |
|20001 - 50000 |200 |

11.Bonus:

Bonus is paid to all the employees as an annual benefit. It is taxable on receipt basis and is included in the gross salary.Bonus is an extra payment done to the employee besides the normal wages.
According to the “PAYMENT OF BONUS ACT-1965”:
Minimum bonus is 8.33% of basic.
Maximum bonus is 20% of basic.

Note: All the employees of Hetero drugs receive a minimum bonus of 8.33% of basic. 12.Gratuity:

Employees of Hetero Drugs are also provided with gratuity as per the norms of “PAYMENT OF GRATUITY ACT-1972”.

Note: The employee will be eligible for gratuity after his completion of 5 Yrs. tenure with the firm. If an employee dies without his completion of 5 Yrs. service, then his family is paid gratuity under humanity considerations.
Annual Benefits provided by Hetero Drugs: The annual benefits provided to employees by Hetero Drugs Ltd. are as follows: ▪ Bonus

▪ Leave Travel Allowance (LTA) ▪ Medical Allowance ▪ Provident Fund (PF) ▪ Employee State Insurance (ESI)

Compensation measures taken by Hetero Drugs Ltd.

For the effective management of compensation administration policy, Hetero Drugs follows the below steps: • Effective formulation of compensation policy by HRM department work force.

• Proper implementation and evaluation of formulated compensation policy • The compensation policy was revised as per the living standards every three years ever since establishment. • But now Hetero Drugs Ltd. HRM has decided to revise the policy every two years from the current economic year • The firm has been providing HRA, LTA, medical, education and special allowances along with the statutory benefits such as PF, ESI, gratuity, and maternity benefits for the employee

METHODOLOGY

TITLE OF THE STIDY

COMPENSATION MANAGEMENT

NEED FOR THE STUDY:

1. A Compensation management helps the organization to obtain, maintain and retain a productive workforce. 2. A good compensation package is important to motivate the employees to increase the organizational productivity. 3. Compensation Management is needed to balance the work-employee relation by providing monetary and non-monetary benefits to employees. 4. Compensation helps in running an organization effectively and accomplishing its goals.

OBJECTIVES OF THE STUDY:

The primary objectives of job evaluation is to determine the relative worth of different jobs in the organization and provide the basics for the compensation management system
1. To determine the position and place of a job in the organizational hierarchy 2. To clarify the responsibility and authority associated with each job.
3. Managing the internal and external consistency in the compensation
4. Maintaining complete and accurate data relating to job specification and job description of various jobs.
5. To ensure employee satisfaction with respect to the compensation. SCOPE OF COMPENSATION MANAGAMENT:

Today’s compensation systems have come from a long way. With the changing organizational structures workers’ need and compensation systems have also been changing. From the bureaucratic organizations to the participative organizations, employees have started asking for their rights and appropriate compensations. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees.

Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of an organization.

[pic]

Traditional Compensation Systems

In the traditional organizational structures, employees were expected to work hard and obey the bosses’ orders. In return they were provided with job security, salary increments and promotions annually.

The salary was determined on the basis of the job work and the years of experience the employee is holding. Some of the organizations provided for retirement benefits such as, pension plans, for the employees. It was assumed that humans work for money, there was no space for other psychological and social needs of workers.

Change in Compensation Systems

With the behavioral science theories and evolution of labour and trade unions, employees started asking for their rights. Maslow brought in the need hierarchy for the rights of the employees. He stated that employees do not work only for money but there are other needs too which they want to satisfy from there job, i.e. social needs, psychological needs, safety needs, self-actualization, etc. Now the employees were being treated as human resource.

Their performance was being measured and appraised based on the organizational and individual performance. Competition among employees existed. Employees were expected to work hard to have the job security. The compensation system was designed on the basis of job work and related proficiency of the employee.

[pic] Maslow’s Need Hierarchy
Today’s Modern Compensation Systems

Today the compensation systems are designed aligned to the business goals and strategies. The employees are expected to work and take their own decisions. Authority is being delegated. Employees feel secured and valued in the organization. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. Some of the benefits are special allowances like mobile, company’s vehicle; House rent allowances; statutory leaves, etc.

IMPORTANCE OF COMPENSATION SYSTEM:

Compensation and Reward system play vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process. Just as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits, similarly the Labour expects wages from the process. Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos.

Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:

o An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.

o It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.

o Such system should also solve disputes between the employee union and management. o The system should follow the management principle of equal pay.

o It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.

o Sound Compensation/Reward System brings peace in the relationship of employer and employees.

o It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.

o The system provides growth and advancement opportunities to the deserving employees.

o The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.

o The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.

o The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.

o The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.

RESEARCH METHDOLOGY:

Workers compensation is one of the most pressing problems in the pharmaceutical industry today. Each of the fifty states has a workers’ compensation law there are wide differences in the costs ,benefits and administration of these laws between the states. To accomplish this goal the research team felt a review of the construction industry was needed to identify best practices and to use these practices in formulating guidelines for improves workers compensation management. The research team presents several findings of its research efforts plus offer several recommendations on both workers compensation management practices and ot5her measures for evaluating employee safety performance.

RESEARCH DESIGN- A research design is the arrangement of limitation for connection and analysis of data in a manner that aims to combine relevance to the research purpose procedure.

SAMPLING TECHNIQUE-Compensation management

DATA COLLECTION-Data will be calculated from two measures

PRIMARY DATA-The primary data are which are collected a fresh and for the first time and thus to be original in character The primary data will be collected through questionnaire. These method has been chosen keeping in view its simplicity and incase of few questions the respondents are free to present their own views, opinions and suggestions

SECONDARY DATA-The secondary data are these which have been collected by some one else and which have already been passed through statistical process In case the secondary data will be collected from the reports like H.R manuals of the company reports of the company name, books of various authors and from web sites of the company and others

METHDOLOGY OF THE STUDY-
1. Sampling method -convenience sampling
2. Sample size -A sample size of 50 respondents has been taken
3. Sampling unit -Hetero Drugs
4 Sampling elements - employees of Hetero Drugs
5. Research instrument – structured questionnaire
6. Statistical method -Percentage Method

LIMITATIONS OF THE COMPENSATION MANGEMENT
1. Project duration is limited to 45 days
2. As a method adopted is convenience sampling, results may not accurate
3. Most of the employees not responded for our questionnaire during office hours
4. Some of the respondents could not spare much time to answer the questionnaire because of lack of their valuable time.
5. The details given about their performance by the employees might be based in some cases
6. Complete information has not revealed by the company for administrative response
7. The question being mostly close ended, it might not have totally represents the perception of all the workmen as regard to empowerment

Data Analysis and Interpretations: 1. Are you satisfied with the compensation provided by the management?
|S. No. |Response |No.of respondents |Percentage |
|1 |Satisfied |30 |60 |
|2 |Highly Satisfied |0 |0 |
|3 |Dissatisfied |15 |30 |
|4 |Highly dissatisfied |5 |10 |
| |Total |50 |100 |

[pic]INTERPRETATION: On observing the above graph, it is interpreted that the percentage of employees who are satisfied with the compensation provided by the management is 60%, Highly satisfied employees is 0%, dissatisfied employees is 30%,& highly dissatisfied employees is 10%.

2.Do you feel that the compensation is being fixed with the mutual understanding of both employer and employee?
|S.No |Response |No. of respondents |Percentage |
|1 |Agree |40 |80 |
|2 |Strongly agree |0 |0 |
|3 |Disagree |10 |20 |
|4 |Strongly disagree |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION: The above graph indicates that 80%, of the employees agree with the open ion that the compensation is being fixed by the mutual understanding of both employer and employee and 20% disagree with this open ion.

3. Mode of paying salary in your organization?
|S.No. |Response |No. of respondents |Percentage |
|1 |Bank account |50 |100 |
|2 |By cash |0 |0 |
|3 |By cheque |0 |0 |
|4 |Any other |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION: On observing the above graph, it is interpreted that 100%, of the employees agree with the opinion that mode of paying salary in HETERO DRUGS LIMITIED is through “Salary Account”.

4. Whether your organization is providing equal pay for work of equal value?
|S.No. |Response |No of Respondents |Percentage |
|1 |Yes |50 |100 |
|2 |No |0 |0 |
| |Total |50 |100 |

[pic]

INTERPETATION: This graph indicates that 100% of the employees agree that the organization is providing equal pay for work of equal value.

5. Which of the following benefits are provided to you?
|S.No. |Response |No. of Respondents |Percentage |
|1 |Monetary |5 |10 |
|2 |Non-Monetary |0 |0 |
|3 |Both |45 |80 |
|4 |Any Other |5 |10 |
| |Total |50 |100 |

[pic]

INTERPETATION: The above graph says that 90% of the employees agree that they are getting both the monetary &non-monetary benefits by the organization.

6. Does the performed employee get any monetary benefits in addition to the annual benefits?
|S.No. |Response |No. of respondents |Percentage |
|1 |Yes |15 |30 |
|2 |No |5 |10 |
|3 |Sometimes |5 |10 |
|4 |Can’t say |25 |50 |
| |Total |50 |100 |

[pic]

INTERPETATION: The above graph indicates that 30% of the employee agree that the performed employee gets monetary benefits in addition to the annual benefits, 10% disagree with this open ion, 10% open ion is sometimes they will get, 50% open ion is can’t say.
7. What percentage of bonus is provided to you?
|S.No. |Response |No. of Respondents |Percentage |
|1 |8.33% |50 |100 |
|2 |12% |0 |0 |
|3 |15% |0 |0 |
|4 |20% |0 |0 |
| |Total |50 |100 |

[pic]

INTERPETATION:
By the Above graph it is clear that, 100% of the employees agree that the organization provides them 8.33% of the bonus.

8. Are the employees getting overtime wages?
|S.No. |Response |No. of Respondents |Percentage |
|1 |Yes |35 |70 |
|2 |No |5 |10 |
|3 |Sometimes |10 |20 |
|4 |Can’t say |0 |0 |
| |Total |50 |100 |

[pic]

INTERPETATION: The above graph indicates that 70% of the employee agree that the organization is providing them overtime wages, 10% disagree with this open ion and 20% employee opinion is sometimes,

9. Is your organization providing statutory benefits such as ESI, PF, GRATUITY and MATERNITY benefits as per the GOVE Act’s?

|S.No. |Response |No. of Respondents |Percentage |
|1 |Yes |50 |100 |
|2 |No |0 |O |
| |Total |50 |100 |

[pic]

INTERPETATION:
On observing above graph it is interpreted that 100% of employee agree that they are getting statutory benefits such as ESI, PF, GRATUTITY, MATERNITY benefits as per the GOVT Act’s.

10. Does your organization provide “hospital, medical care” for the benefits of the employees?

|S.No. |Response |No. of Respondents |Percentage |
|1 |Yes |50 |100 |
|2 |No |0 |0 |
|3 |Sometimes |0 |0 |
| |Total |50 |100 |

[pic]

INTERPETATION:
The Above graph, it is interpreted that 100% of the agree that they are provided by the medical Hospital benefits in the organization.

11. Does your organization provide any “Recreation” facility for the employees?
|S.No. |Response |No. of Respondents |Percentage |
|1 |Yes |0 |0 |
|2 |No |45 |90 |
|3 |Sometimes |5 |10 |
| |Total |50 |100 |

[pic]

INTERPRETATION: The above graph, indicates that 90% of the employees agree with the Opinion that they are not provides with any “Recreation” facility by the organization, 10% opinioned that some time they will be provided with the recreation facility.

12. How often does the restructuring of salary take place in your organization?
|S.No. |Response |No. of Respondents |Percentage |
|1 |Annual |0 |0 |
|2 |Biannual |0 |0 |
|3 |Three yearly |50 |100 |
|4 |Based on the inflation rate |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
By the above graph, it is interpreted that 100% employees agree that the organization restructures the salaries for every three years.

13. Does your organization consider advances in case of emergency?
|S.No. |Response |No. of Respondents |Percentages |
| | | | |
|1 |Agree |40 |80 |
|2 |Strongly dis agree |10 |20 |
|3 |Disagree |0 |0 |
|4 |Strongly disagree |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
By this graph, it is clear that 80% of employees agree that, the organization will consider advances in case of emergency and 20% strongly agree with this open ion.

14.Does your organization is providing any sonority based pay?
|S.No. |Response |No of Respondents |Percentage |
|1 |Yes |10 |20 |
|2 |No |30 |60 |
|3 |Sometimes |5 |10 |
|4 |Can’t say |5 |10 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
On observing the above graph, it is interpreted that 20% of employee agree with the openion that the organization is providing seniority based pay,60% this agree with this opinion ,10% opinion is some times , 10% opinion is can’t say.

15. In case of job rotation does the employee get any hike in the salary?
|S.No. |Response |No of Respondents |Percentage |
|1 |Yes |0 |0 |
|2 |No |50 |100 |
|3 |Sometimes |0 |0 |
|4 |Can’t say |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
This graph, indicates that 100% employee agree that in case of job rotation the employee will not get hick in the salary.

16. Do you feel any of the following should be given a part from the compensation?
|S.No. |Response |No of Respondents |Percentages |
|1 |Vehicle loan |5 |10 |
|2 |Housing loan |30 |60 |
|3 |Education loan |15 |30 |
|4 |Marriage loan |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
On observing the above graph, it is interpreted that 10% of employs feel that should be given vehicle loan a part from the compensation, 60% preferred housing loan, 30% preferred Education loan

17. What kind of extra allowance is provided by your organization?
|S.No. |Response |No of Respondents |Percentage |
|1 |Travelling allowance |0 |0 |
|2 |Mobile allowance |0 |0 |
|3 |Special allowance |0 |0 |
|4 | |50 |100 |
| |All the above | | |
| |Total |50 |100 |

[pic]

INTERPRETATION:
This graph indicates that 100% of the employee agrees that they are provided with all the above allowances.
18. Are you satisfied with the HRA provided by your organization?
|S.No. |Response |No of respondents |Percentage |
|1 |Satisfied |40 |80 |
|2 |Highly satisfied |10 |20 |
|3 |Dissatisfied |0 |0 |
|4 |Highly dissatisfied |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
This graph shows that 80% of employees are satisfied with the HRA provided by the organization, 20% are highly satisfied.

19.Is your organization provides LTA?
|S.No. |Response |No of respondents |Percentage |
|1 |Yes |50 |100 |
|2 |No |0 |0 |
|3 |Sometimes |0 |0 |
| |Total |50 |100 |

[pic]

INTERPRETATION:
This graph indicates that 100% of employee agrees that they are provided with LTA by the organization.

20. What do you consider prominent criteria for reward?
|S.No. |Response |No of respondents |Percentage |
|1 |Performance |O |0 |
|2 |Merit |O |0 |
|3 |Behaviour |O |0 |
|4 |All the above |50 |100 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
By this graph, it is clear that 100% of employee agree that the prominent criteria for reward is all the above.

21. What kind of reward is provided by our organization?
|S.No. |Response |No of Respondents |Percentage |
|1 |Team based |0 |0 |
|2 |Performance based |30 |60 |
|3 |Project based |0 |0 |
|4 |All the above |20 |40 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
On observing above graph, it is interpreted that 60% of employee agree, that performance based reward is provided in their organization and 40% opinion is all the above

22. On what basis does the salary increments in your organization happens?
|S.No. |Response |No of Respondents |Percentage |
|1 |Loyalty |0 |0 |
|2 |Performance |30 |60 |
|3 |Experience |20 |40 |
|4 |All the above |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
This graph indicates that 60% of employees agree that the salary increments in their organization take places on the basis of performance 40% openioned that on the basis experience salary increments take places.

23. How often do they increase your salary?
|S.No. |Response |No of Respondents |Percentages |
|1 |Quarterly |0 |0 |
|2 |Half yearly |0 |0 |
|3 |Annually |0 |0 |
|4 |Bimanually |50 |100 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
This Graph indicates that 100% of employee agrees that salary increments take place biannually in their organization.

24. Does your organization provided “Disablement” benefits?
|S.No. |Response |No of Respondents |Percentages |
|1 |Yes |30 |60 |
|2 |No |20 |40 |
|3 |Sometimes |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
By this graph, it is clear that 60% of employees agree that the organization provides Disablement benefit and 40% dis agree with this opinion.

25. Does your organization provided “Retirement” benefit?
|S.No. |Response |No of Respondents |Percentages |
|1 |Yes |0 |0 |
|2 |No |50 |100 |
|3 |Sometimes |0 |0 |
|4 |Can’t say |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
By this graph, it is clear that 100% employees agree that the organization not providing retirement benefit.

26. How do you feel about the benefit provided in your organization?
|S.No. |Response |No of Respondents |Percentage |
|1 |Satisfied |30 |60 |
|2 |Higlysatisfied |0 |0 |
|3 |Dissatisfied |20 |40 |
|4 |Highly dissatisfied |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
On observing the above graph, it is interpreted that 60% of employee are satisfied with the benefit provided by the organization and 40% are dissatisfied.

27. Does your organization have separate department for wage and salary administration?
|S.No. |Response |No of Respondents |Percentage |
|1 |Yes |0 |O |
|2 |No |50 |100 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
By above graph, it is clear that the organization does not have separate department for wage and salary administration.

28. Do you agree, that the compensation provided in your will help the reduce the turnover?
|S.No. |Response |No of Respondents |Percentage |
|1 |agree |40 |80 |
|2 |Strongly agree |10 |20 |
|3 |Disagree |0 |0 |
|4 |Strongly disagree |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
On observing the above graph it is interpreted that 80% of the employee agree with the opinion with the compensation provided in their organization will help to reduce the turnover and 20% strongly agreed with this opinion

29. Does your organization do proper implementation and evaluation of the compensation policy?
|S.No. |response |No of Respondents |Percentage |
|1 |Agree |40 |80 |
|2 |Strongly agree |10 |20 |
|3 |Disagree |0 |0 |
|4 |Strongly disagree |0 |0 |
| |Total |50 |100 |

[pic]
INTERPERTATION:
This graph, indicates that 80% of employees agree with the opinion that their organization does the proper implementation and evaluation of compensation policy and 20% strongly agree with this opinion

30. Does the company change the compensation policy as per the changing living standards?
|S.No. |Response |No of Respondents |Percentages |
|1 |Agree |30 |60 |
|2 |Strongly agree |20 |40 |
|3 |Disagree |0 |0 |
|4 |Strongly dis agree |0 |0 |
| |Total |50 |100 |

[pic]

INTERPERTATION:
By this graph, it is clear that 60% of employee agree that the company changes the compensation policy as per the changing living standards and 40% strongly agree.

FINDINGS AND RECOMMONDATIONS

FINDINGS:

❖ The study on compensation as I find in hetero drugs limited. After scrutinizing of the employees of hetero drugs it is found that majority of the employee opinion that organization culture is the vital element that provides with compensation ❖ It is also found that the jobs they are doing are challenging with less stress at the work place. they are highly satisfied with the level of income which they are earning ❖ It is also found that working hours are feasible and the benefits and allowances that are provided for them are satisfactory ❖ Encouragement of workers participation in management ,the appraisal technique followed by the organization and the leaves taking system in the organization ,recruitment process and salary administration are the key factors ❖ When asked what contributes to compensation, majority of the respondents opined that job security, the job benefits provided by the organization, good communication network, better working hours, utilization of the knowledge of employees at all the levels.

SUGGESTIONS:

❖ Recreational events like conducting of games, cultural activities may be planned to promote healthy relations among the workers of different departments this will bring out the hidden talents in the workmen. ❖ Loan facilities should be provided ❖ The management has to look after the perfect format properly. They have to modify that format which will beneficial to all the employees in the organization. ❖ The company should examine the various credit policies. And the company has to choose best among the profitable results.

CONCLUSION:

HETERO DRUGS LIMITED follows “COST TO COMPANY” rule . According to which it provides gross salary (Basic+ other incentives), bonus, PF ESI , GRATUTITY for its employees.

The management of HETERO DRUGS looks not only after the formulation of compensation administration policy but also the effective implementation and evaluation of it in order to satisfy its employees and their families and to hire competing work force.

BIBLIOGRAPHY:

BOOKS K.ASHWATHAPPA - HUMAN RESOURCE AND PERSONAL MANAGEMENT P.SUBBA RAO - HUMAN RESOURCE MANAGEMENT

WEB-SITE : WWW.GOOGLE.COM WWW.HETERO.COM WWW.CITEHR.COM

Questionnaire
Company Name: Hetero Drugs Limited
Project: Compensation Management

Dear sir/Madam,

I am conducting this entitled survey “compensation management” as a project work in MHRM course. I Request you to kindly fill up the following questionnaire, giving your free and frank options. The given information will be kept confidential and used for academic purposes’. I will be thankful for your positive response.

1.Are you satisfied with the compensation provided by the management ? ( )
a) Satisfied b) Highly Satisfied
c) Dissatisfied d) highly dissatisfied

2. Do you feel that the compensation is being fixed with the mutual understanding of both employer and employee? ( )
a) Agree b) Strongly agree
c) Disagree d) strongly disagree

3.Mode of paying salary in your organization? ( )
a) Bank account B)By cash
c) By cheque d)any other

4. Whether your organization is providing equal pay for work of equal value? ( )
a)Yes b)No
5.Which of the following benefits are provided to you ? ( ) a)Monetary b)Non monetary
c)Both d) Any other
6.Does the performed employee get any monetary benefits in addition to the annual benefits? ( )
a) Yes b)No c)Sometimes d)cant say
7.What percentage of bonus is provided to you ? ( )
a) 8.33% b) 12% c) 15% d)20%
8. Are the employees getting overtime wages ? ( )
a) Yes b)No c)Sometimes d)cant say
9. Is your organization providing statutory benefits such as E.S.I, P.F & Gratuity.. etc., as per the Govt Act’s? ( )
a) Yes b)No
10.Does your organization provide “ hospital/medical care” for the benefit of employees? ( ) a) Yes b)No c)Sometimes 11Does your organization provides any “recreation” facility for the employees? ( ) a)Yes b)No c)Sometimes
12. Your organization provide payment for time not worked ( )
A). Holiday pay b) Shift premium
c). Paid vacation d) All the above

13. Does your organization consider advances in case of emergency ? ( )
a) Agree b) Strongly agree
c) Disagree d) strongly disagree
14.Does your organization provides any seniority based pay? ( )
a) Yes b)No c)Sometimes d)cant say
15.In case of job rotation does the employee get any hike in the salary? ( )
a) Yes b)No c)Sometimes d)cant say
16.Do you feel any of the following should be given a part from the compensation? ( )
a).Vehicle loan b).Housing loan
c). Education Loan d) Credit card facility
17. What kind of extra allowance is provided by your origination? ( )
a) Travelling allowance b) Mobile allowance
c) Special allowance d) All the above
18. Are you satisfied with the HRA provided by your organization? ( ) a Satisfied b) Highly Satisfied
c) Dissatisfied d) Highly dissatisfied
19. Is your organization provides LTA ? ( )
a) Yes b)No c)Sometimes
20. What do you consider as the prominent criteria for rewards ? ( ) a Performance b)Merit
c) Behavior d) All the above
21. What kind of reward is provided by your organization ? ( )
a) Team based b)Performance based
c) Project based d)All the above

22.On what basics does the salary increments in your organization happens? ( )
a).Loyalty b) Performance
c) Experience d) All the above
23.How often do they increase your salary ? ( )
a) Monthly b)Quarterly
c)Half-yearly d)Annually
24. Does your organization provides “Disablement “ benefit? ( )
a) Yes b)No c)Sometimes
25. Does your organization provide “Retirement” benefit? ( )
a) Yes b)No c)Sometimes d)cant say
26.How do you feel about the benefits provided in your origination ? ( ) a Satisfied b) Highly Satisfied
c) Dissatisfied d) highly dissatisfied
27. Does your origination have separate department for wage & salary administration? ( )
a) Yes b) No
28. Do you agree that the compensation provided in your organization will help to reduce the turnover? ( )
a) Agree b) Strongly agree
c) Disagree d) strongly disagree

29. Does your originations do proper implementation and evaluations of the compensation policy? ( )
a) Agree b) Strongly agree
c) Disagree d) strongly disagree
30. Does the company changes compensation policy as per the changing living standards? ( )
a) Agree b) Strongly agree
c) Disagree d) strongly disagree

Name: …………………………
Designation: ……………………
Signature:……………………….
Date: ………………………………

-----------------------
MANAGING DIRECTOR

DIRECTOR

VICE PRESIDENT
(Operating)

VICE PRESIDENT
(Marketing)

GENERAL MANAGER
(Finance)

GENERAL MANAGER
(Corporate Office)

GENERAL MANAGER
(Stores)

GENERAL MANAGER
(Production)

DEPUTY GENERAL MANAGER
(Formulation)

SENIOR MANAGER

MANAGER