Term paper

Compensation system of an Business organization of Bangladesh

(A case study of sanofi-aventis Bangldesh limited)

By

Md. Jawad Ahmed

Roll -214

MBA -12th batch

HRM-513: Compensation Management

Department of Management Studies

University of Dhaka

Dhaka, Bangladesh

2011

Table of Contents

Particulars Page number

Background

Product profile

Employee structure

Competitive status

Organization structure

Compensation system

Components of monetary rewards

Components of non-monetary rewards

Impact of pay on performance

SWAT analysis of Compensation system

Possible measures to improve compensation system

Concluding remarks

Background of Sanofi-aventis:

Sanofi-aventis, a leading global pharmaceutical company, discovers, develops and distributes therapeutic

solutions to improve the lives of everyone. It is the one of world’s leading Pharmaceutical companies and

the largest in Europe. Our Global headquarters are in Paris, France. The world's fourth-largest by

prescription sales. It engages in the research and development, manufacturing and marketing of

pharmaceutical products for sale principally in the prescription market, but the firm also develops over-

the-counter medication. The company covers 7 major therapeutic areas: cardiovascular, central nervous

system, diabetes, internal medicine, oncology, thrombosis and vaccines .it is a full member of the

European Federation of Pharmaceutical Industries and Associations (EFPIA).

The company was formed as Sanofi-Aventis in 2004 by the merger of Aventis and Sanofi-Synthélabo. It

changed its name to Sanofi in May 2011. Present in more than 100 countries, with around 11,000

scientists, we have around 100,000 employees working to improve health and wellbeing.

Sanofi-aventis Bangladesh Limited

Sanofi-aventis Bangladesh Limited is the entity that has been formed due to the amalgamation of three

legal entities- Aventis Limited, Fisons (Bangladesh) Limited and Hoechst Marion Roussel Limited .

The legal integration process has taken few years after the global merger between sanofi-synthalebo and

Aventis in 15 September 2004 and finally the existing three legal entities have amalgamated as sanofi-

aventis Bangladesh Limited on December 11, 2007.

Sanofi-aventis Bangladesh Limited is strongly committed as a socially responsible organization. Projects

like “My child matters” carried out in partnership with UICC (International Union against Cancer) to

fight against child cancer is one of the numerous examples of the organization’s commitment to the

society. 

Corporate Information’s at a Glance

Name of the Organization : Sanofi-aventis Bangladesh Limited

Status : Private Limited Company

Date of Incorporation : 15 September 2004.

Amalgamated as sanofi-aventis Bangladesh Ltd. December 11, 2007

Changed its name to Sanofi :May 2011

Chairman : Mr. Md. Nazrul Islam Mazumder.

Managing Director : Mr. Md. Lakiot Ullah.

Authorized Capital : TK.350 crore.

Loan : TK. 3264 crore

Number of Employees : More than 1200 in Bangladesh

Corporate Office : 6/2/A Segun Bagicha

Dhaka 1000

Bangladesh

Service of EXIM Bank :

Accounts, Current, FDR, PDS, Deposit, Internet Banking

Home Banking , Automated Teller Machine

Corporate Banking , Tele Banking

Hierarchy of Position Structure of EXIM Bank

Chairman Advisor Board of Director

Managing Director

Deputy Managing Director

Senior Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Executive Officer

Management Trainee officer

Assistant Officer

Junior Officer

Classifications of grade and number of employees of Exim Bank

Sl.

No.

Class number of

employees

1. Executive

class

66

2. Officer 727

3. Sub-staff

(Casual)

227

Total =

1020

Source: Annul report 2006

Performance of EXIM Bank Limited

The year 2004 was remarkable year simultaneously for development and achievements of continuous

growth rate in all the areas of banking operations. The bank has successfully been marching ahead with

its prime business objective by earning a pre-tax profit of Tk. 64 crore registering an annual growth of

34.93% than that of the previous year. It has successfully mobilized Tk. 1908 crore deposit from

depositors and and arranged disbursement of Tk. 1932 crore as Investment to 10091 accounts as on 31 st

December 2005 through its 28 Branches. The total Income and expenditure of the Bank of the Bank were

Tk. 264 crore and Tk. 181 crore respectively during the period under review. The return on assets (ROA)

was 3.44% well above the industry average. achievements were possible because of he service excellence

of management the with support from a very resourceful and skilled workforce who are rendering

efficient and specialized services.

Compensation system of Exim Bank

Compensation, today, is one of the most obvious, persistent and troublesome responsibilities of managers

because it concerns everyone in the organization and in the economy. Truly speaking, scarcely any

subject is as important as is compensation. It determines the wage earners buying power, his standard and

scale of living, his status, prestige and worth in the social system. It is the single most significant tool in

the hands of management to attract, to retain and to stimulate human element which activates, operates,

promotes and keeps going the organization. The organizational destine is never achieved without the help

of satisfied workforce, which is a direct result of fair compensation.

Components of compensation

Base Salary: Base salaries for executives are determined based upon job responsibilities, level of

experience, individual performance, comparisons to the salaries of executives in similar positions

obtained from market surveys, internal comparisons, and competitive data obtained from consultants and

staff research. The goal for the base salary component is to compensate executives at a level that

approximates the median salaries of individuals in comparable positions and markets

Fringe benefit: Provident fund, gratuity, medical care, recreation, canteen, uniform, insurance coverage,

etc.

Perquisites: Allowed to executives company vehicle, club membership, paid holidays, furnished house,

stock option plan, etc.

Annual Incentives: Annual cash incentives are provided to executives to promote the achievement of performance objectives

Retirement Benefits

The Bank operates a contributory provident fund for its eligible employees. The provident fund is contributed on monthly basis and operated by separate Board of Trustee of the Bank. The fund is recognized by the National Board of Revenue.

The optimum level of payment of EXIM Bank

Grade Position Payment (Taka)

I Senior Executive Vice President 195,000

II Executive Vice President 155000

III Senior Vice President 135000

IV First Vice President 98000

V Vice President 90000

VI Senior Assistant Vice President 115000

VII First Assistant Vice President 92000

VIII Assistant Vice President 80000

IX Senior Principal Officer 70000

X Staff Officer 63000

XI Officer Grade I 50000

XII Probationary Officer 35000

XIII Officer Grade II 25000

XIV Cash/ Computer Officer 18000

XV Trainee Assistant officer 13700

XVI Driver 9000

XVII Security Staff 8500

XVIII Office Attendant 8000

Source: Revised Pay Structure of the Bank.

Compensation in the EXIM Bank Bangladesh Limited

Basic Salary

Allowances

Housing Allowances

Leave Others incentives

Task Allowance

Convey Allowance

Study Leave

Sick Leave

Casual Leave

Bonus

Heath Insurance

Profit Sharing

Award

Basis/Foundation of compensation setting of EXIM Bank

Internal Alignment: It means compassion among jobs and skills within organization

External Competitiveness: It refers to compensation relationship external to the organization.

Employee contribution: Here emphasis is placed on employees contribution.

Management of the pay system: it means ensuring the right people get the right pay for achieving objective in the right way

Exim Bank mainly follows the Traditional Pay:

Job evaluation is done in every six month of the year. They emphasize on performance

based payment and typical profit sharing is done is baking sector. Time to time training to

equipped with the new situation and also with the new designation.

SWOT Analysis:

SWOT analysis is the detailed study of an organizations, exposure and potential in perspective

of its strength, weakness, opportunity and threat. These methods used the organization to make

their existing line of performance and also foresee the future to improve their performance in

comparison to their competitors. By SWOT analysis an organization can also study their current

position it can also be considered as an important tool for making changes in the strategic

management of the organization.

Strengths:

Exim Bank Limited has already established a favorable reputation in the Banking industry of the

country. It is one of the leading private commercial Bank in Bangladesh. Exim Bank established

a competitive salary structure.

The Human Resource Department and Research department of the bank proposes the

compensation policy and system.

It provides retirement benefits to the employee.

It provides training package workshops to the employees and has own training institute to

make employees competent and innovative.

Weaknesses:

Compensation of employee is totally depend on authority.

The bank failed to provide a strong quality recruitment policy in the lower and some mid

level position.

Lack of incentives and rewards from the management section.

Opportunities:

Growth of global economy and Bangladesh's foreign trade in the coming years can provide huge

growth opportunities.

Exclusive compensation system can provides good opportunity for growth by skilled HR.

Talent employees can create a strong competitive advantage.

Expansion of banking services into other different services through skilled manpower.

Threats :

To keep the selected employees with the organization.

To stay in competition with competitive salary structure.

To reduce the gap between the upper and middle level on the issue of promotion.

Analysis

From a strategic and tactical perspective, the quality and quantity of organizational output depend directly

on the skill, interest and effort of employees. Certainly, the more highly paid workers might be more

critical contributors, but the productive effort of all employees is essential. Compensation is the most

effective process for attracting qualified personnel. Compensation system plays a vital role retrains

qualified personnel. Since bank is a service industry, only the qualified employees can provide the best

services to the customers. Standard compensation system influence employees to do their activities

effectively. In Bangladesh Banking sector is very important sector. Most of the qualified personnel mast

to involve in the Banking sector because banking sector compensation is better than the other sectors the

export import Bank of Bangladesh limited has already develop a high salary structure. This structure is

competitive in the market.

In comparison between 1995 to 2011 compensation package in the Banking sector is satisfactory. In

1995 probationary officer of private commercial Banks in Bangladesh salary is Tk 6000. But 2011 these

officer salary is Tk 35000. So I said that compensation package of private commercial Banks in

Bangladesh is high than the other sector. EXIM Bank compensation Package is competitive in the market.

From the among analysis I get many findings. These findings are as follows

Findings

1. The bank is paying a very high salary and other fringe benefits to the executive class. But comparative benefits of lower level employees are not satisfactory.

2. There is no equitable relation of payment and compensation system at different level of scales is not satisfactory

3. There are some levels, where house rent and conveyance allowances are not at all motivating. Both of the amounts paid by the present salary structure are not at all fair.

4. A smooth hierarchical relationship should exist between and among different compensation grade.

5. Just and fair representation of the lower levels in the compensation fund is an essentiality to the higher organizational productivity and effectiveness.

6. Employees in this organization have to wait many years to arrive at a good salary range. This has led mid-level managers in particular to leave the organization.

7. The increment policy of the bank also calls for change, though it is totally based on performance.

References

Annual Report of EXIM Bank 2011

Prospectus of EXIM Bank

Website of Bank-

Www.Eximbd.Com

Www.Bangaldeshbank.Gov.Bd

6. Henderson R.I. (2003) “Compensation Management In A Knowledge – Based World”, Ninth Edition, Pearson Education )