© 2019 IJRAR June 2019, Volume 6, Issue 2 www.ijrar.

org (E-ISSN 2348-1269, P- ISSN 2349-5138)

A STUDY ON COMPENSATION MANAGEMENT

WITH REFERENCE TO IDBI FEDERAL LIFE
INSURANCE COMPANY PRIVATE LIMITED
1 P. HARIKA GOUD, 2RAMA DEVI
1
PG Scholar, Department of Business Administration, TKR College of Engineering, Hyderabad, Telangana
2
Asst. Professor, Department of Business Administration, TKR College of Engineering, Hyderabad, Telangana

ABSTRACT:
If you pick the right people and give them an opportunity to spread their wings and put compensation as a carrier
behind it, you almost don’t have to manage them.” The aim of this study is to build an understanding regarding the
study the Compensation Management system in Insurance Company. So understanding of it will help in terms of
identifying the importance of Compensation from the perspective from HR. Now a days in the area of
Globalization major MNC Organization are entered into the insurance company and giving competition to local
players in terms of capturing market share as well as giving competitions in terms of getting best HR from their
competitors from the labor market. So here researchers have tried to find out the role of Compensation
Management in terms of attracting the talent from the market, try to identifies the components that are offered in
the industry & lastly to find out the relationship between compensation management & productivity of an
employee.

INTRODUCTION
The term compensation as a substitute word for wages and salaries, is of recent origin. Wages is now considered
as a cost factor. Therefore, strategic management of wages and salaries is very important for organization. It has
become imperative for organizations balance the cost of compensation and employee motivation to survive in a
competitive world. Employee compensation is a better term than employee benefits or wages or salaries. What the
employee provides the employer is a labor service, usually known as work. This labor service consists of many
different kinds of employee behavior, such as showing up regularly and on time, carrying out tasks dependently,
cooperative with others and making suggestions.

In simple words compensation is the remuneration received by an employee in return for his/her contribution to
the organization. It is an organized practice that involves balancing the work-employee relation by providing
monitory and non-monitory benefits to employees. Compensation is an integral part of human resource
management which helps in motivating the employees and improving organizational effectiveness.

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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 such as rent is the return expected by the land lord, capitalist experts' interest and organizer I.e.
entrepreneur expects profits. Similarly, the labor expects wages from the process. Labor plays vital role in
bringing about the process of production/business in motion.

DEFINITION OF COMPENSATION MANAGEMENT

‘‘Compensation includes direct cash payments, indirect payments in the form pf of employee benefits an
incentive to motivate employees to strive for higher level of productivity.’’
‘‘Compensation may be defined as a package of financial and non-financial benefits that the employees receive
for his/her contribution rendered to the organization.

STATEMENT OF PROBLEM:

The present study explores the valued dimensions of compensation management at IDBI federal life insurance
company limited. It focuses on types, issues, importance and improvements of compensation management.

NEED OF THE STUDY:

For any organization, compensation management has to be designed to achieve the below mentioned goals:
 To motivate them toward better performance and
 To retain their service over an extended period of time

SCOPE OF THE STUDY

In today’s worlds organization tries more to assess the worth of an individual in terms of his performance and
contribution to the organizations. With the growing demand of work force and constant challenges in the business
environment, organizations have to evolve and accurate system for evaluating jobs and assessing their worth.
Compensation management helps to determine the relative worth of a job in an organization in a systematic,
consistent and accurate manner. It also helps in estimating the basic pay for each job in accordance with
Importance of the job in the organizational hierarchy. Ones in a basic pay is determined, the rewards. incentives
and benefits attached worth the pay, positions and performance are also determined. The basic wage, incentives
and reward and benefits, together form a compensation package of an employee.

OBJECTIVES OF THE STUDY

The objectives of the study are as follows:
 To know whether the employees are getting fair and equitable remuneration.
 To know whether the employees are getting their wages according to their efficiency and productivity.

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 To know whether the workers are getting enough motivation to work more efficiently.
 To solve the work place and issues and problems the employees are facing in the organization.
 To check whether all the employees are getting their bonuses, incentives on time or not.

RESEARCHER METHODOLOGY:
The unit selected for the research consists of junior level officers and operational managers.
The sample selected for the research purpose consists of 50 employees. A random sampling method was applied to
collect the data from various resources. A specific questionnaire was personally administered to collect the data
towards the purpose of the data collection.
The necessary data and information have been collected from two important sources. The two sources being
 Primary data
 Secondary data
PRIMARY DATA
Interviewing the managers and the operational level employees helped me to collect the primary data. They were
asked to express their opinion about the present measures and the required changes to be made to help the
organization growth.
SECONDARY DATA
Secondary data consists of all the journals, records and, which help to collect information about how to manage
compensation and its utilization in the organization.
LIMITATIONS OF THE STUDY:
The limitations of the entire study are mentioned below
 The study was limited to the organization
 The accuracy of the analysis and conclusions drawn entirely depends on the reliability of the information
provided by the employees.
 The answer given by the respondents may be biased or not true.

REVIEW OF LITERATURE
Bob (2011) Compensation processes are based on Compensation Philosophies and strategies and contain
arrangement in the shape of Policies and strategies, guiding principles, structures and procedures which are
devised and managed to provide and maintain appropriate types and levels of pay, benefits and other forms of
compensation.

Bob (2011) This constitutes measuring job values, designing and maintaining pay structures, paying for
performance, competence and skill, and providing employee benefits. However, compensation management is not
just about money. It is also concerned with that non-financial compensation which provides intrinsic or extrinsic
motivation.
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Anyebe (2003) This work however is limited to financial compensation in Anambra State Civil Service as a recent
study has shown that pay is the driving force for seeking employment in the Civil Service.

Armstrong (2005) stated that compensation management is an integral part of human resources management
approach to productivity improvement in the organization. It deals with the design, implementation and
maintenance of compensation system that are geared to the improvement of organizational, team and individual
performance.

Pearce (2010) Compensation implies having a compensation structure in which the employees who perform better
are paid more than the average performing employees.

Armstrong (2005) Compensation Management is concerned with the formulation and implementation of
strategies and Policies that aim to compensate people fairly, equitably and consistently in accordance with their
value to the organization.

Anyebe (2003) the task in compensation administration is to develop policies and the terms of attracting,
satisfying, retaining and perhaps motivating employees.

Anambra State Civil Service (1991) which the researchers examined originated from the Eastern Nigeria
Government and the old Anambra State. The creation of this state led to the set up of the Anambra State Civil
Service. Employing the tenets of traditional public administration, the state civil service was an instrument of the
government authorities as well as an impartial interpreter and implementer of the policies and programmes of the
State Government.

DATA ANALYSIS & INTERPRETATION

Table No 4.1: Aware of policies and procedures

Ratings Respondents Percentage

Large extent 20 40%
Some extent 30 60%
No idea 0 0%
Not at all 0 0%
Total 50 100%

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60%
50%
40%
30%
20%
10%
0%
Large Some No idea Not at all
extent extent

Graph No 4.1.1
Analysis: 40% of employees are aware of the policies and procedures to large extent and 60% of employees are
aware of the policies and procedures to some extent.
Interpretation: Majority of the employees aware of organization policies and procedures.
Table No 4.2: Satisfied with present policies
Ratings Respondents Percentage
Large extent 0 0%
Some extent 35 70%
No idea 0 0%
Not at all 15 30%
Total 50 100%

70%
60%
50%
40%
30%
20%
10%
0%
Large extent Some extent No idea Not at all

Graph No 4.2.1
Analysis: 70% of employees agree that they are satisfied to some extent with present policies and 30% of
employees are not at all satisfied.
Interpretation: Majority of the employees are satisfied to some extent with Present policies of organization.

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Table No 4.3: Procedures that satisfies employees

Ratings Respondents-50 Percentage
Strongly Agree 15 30%
Agree to some extent 20 40%
Dis Agree 5 10%
Strongly Disagree 10 20%
Total 50 100%

40%
35%
30%
25%
20%
15%
10%
5%
0%
Strongly Agree to Dis Agree Strongly
Agree some extent Disagree

Chart No 4.3.1
Analysis: 40% of employees agree to some extent, 30% of employees strongly agree, 20% of employees
strongly disagree and 10% of employees disagree about organization following procedures to satisfy employees

Interpretation: Majority of the employees agree that organization follows the procedures to satisfy the
employees.

Table No 4.4: Monthly incentives

Rating Respondents-50 Percentage

Satisfied 15 30%
Not Satisfied 35 70%
Total 50 100%

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70%

60%

50%

40%

30%

20%

10%

0%
Satisfied Not Satisfied

Graph No 4.4.1
Analysis: 70% of employees agree that they are not satisfied with the monthly
Incentives provided 30% of employees say that they are satisfied
Interpretation: Majority of the employees agreed that they are not satisfied by the Monthly incentives payment
provided in the organization.

CONCLUSION
After conducting an intense study on COMPENSATON in IDBI the following conclusions were derived:
 Compensation package that are provided are not understood by the employees.
 Allowance and incentives should be increased according to the employee’s performance.
 Most of the employees are interested in monetary compensation.
 The COMPENSATION in IDBI was found average.
 There is a full support given by the superior to the employees.
 Most of the employees are satisfied by the policies and procedures of the organization.

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