A_472_CO_ECSDH08-3_S_DH08103.doc

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1








on


Employee compensation for

Reliance Life Sciences


by



Pankaj N Gursahani


I.D.: 2212126


Centre: Vashi, Mumbai


Faculty :
Dr. Gurunathan L


Course:
ECS

(PGCHRM
-
6)






2


INDEX


1. Intro
duction

& over view of Reliance Life Sciences

................................
...........................

3

2.
Organizational Comepensation Strategy

................................
................................
..........

4

3.
Organizational
pay level


................................
................................
................................
..

5

4.
Organizational
’s Jobs & pay g
rades

................................
................................
..............

5
-
7

5.
Pay Mix

................................
................................
................................
.........................

8
-
9

6
.
Incentive System

................................
................................
................................
.........

9
-
11




























3



Introduction & Overview of Reliance Life Sciences

Reliance Life Sciences (RLS) is a new millennium initiative

of the Reliance Group. It was
incorporated in the year 2001. Reliance Life Sciences is a research
-
driven, biotechnology
-
led,
life sciences organization. Reliance Life Sciences participates in medical, plant and industrial
biotechnology opportunities. Spec
ifically, these relate to biopharmaceuticals,
pharmaceuticals, clinical research services, regenerative medicine, molecular medicine,
novel therapeutics, biofuels, plant biotechnology and industrial biotechnology. From a
domain perspective, these opportuni
ties cover the
5 business verticals


Organizational Structure



The business model of RLS, involving diversity and integration, is unique ‘n’ complex.



All the functions / verticals are comprehensively integrated


Horizontally & vertically.






Bio

Pharmaceuticals

Clinical

Research

Services

Biofuels

Research &

Development

Biopolymers

Industrial

Bio
-

Technology

Bio

chemicals

Plant Tissue

Culture

Plant

Bio
-

Technology

Plant
Metabolic

Engineering

Plant

Products

Embryonic

Stem Cells

Medical

Bio
-

Technology

Hematopoitic

Stem Cells

Cord Blood

Repository

Skin and

Tissue Engg.

Molecular

Diagnostics

Geneti
cs

Agronomy

Plant Tissue

Culture

Plant
Metabolic

Engineering

Trans
-

Esterification

Farm

Advocacy

Contract

Biology

Pre
-
clinical

Studies

BA/BE

Studies

Phase 1

Stu
dies

Phase 2/3/4

Studies

Clinical Data

Management

Biosimilars

Recombinant

Therapeutic

Proteins

Novel

Proteins

Monoclonal

Antibodies

siRNA

Molecules

Plasma

Proteins

Natural

Therapeutic

Proteins

Pharmaceuticals

API

Formulations

Generics

Drug

Discovery

Enzymology

Regenerative

Medicine

Molecular

Medicine

Reliance Group

Central

Leadership

Corporate

Services

Corp.
Development

Finance & commercial

Human resources

Information technology

Project management

Legal & IPR

Corp.
Communication

Administration

Talent

Development


Reliance School

of
Life Sciences



4

Organizational Compensation strategy

RLS o
ffer a competitive compensation package with a salary comparable to what that
particular job position is worth within the same/similar industry. The incumbent being
considered for the position
i
s

evaluated for his/her compensation based on their critical skills,
qualifications & expertise gained over the years of experience that he/she brings to the
organization. We maintain Internal equity in the
b
usiness, so that the incumbent is not
offered an
ything (neither below 25th percentile nor above 50th percentile) that may threaten
the compensation matrix (minimum or maximum for that grade) and lead to internal
discontent for existing employees.


Current process & methodology

1. All grade fitments fo
r the job position are based on the “Qualification & Experience band
s”
& a
ll compensation/s are based on t
he “Compensation Grade bands”.

2
. As a compensation guideline, all new hires are offered fitments close to the 25th percentile,
and as the individual
grows tenure the compensation follows the natural progression by
virtue of increments and the employee is taken away from the 50th percentile (median) so
that they can naturally move to the next band, when promoted to the higher grade. This
process helps i
n retaining
& developing
the good talent
pipeline
.


3
. All costs attached to the new hire are adjusted from the “manpower budget” for the
respective
business;

therefore t
he business head
& H
R
team collectively evaluate the
necessities

to bring in talent at

costs higher than the current structure to ensure the overall
costs are within the budget for the forecasted headcount requirement.

However
,

to meet the
business criticality for positions that are difficult to source and that have a direct impact to
busi
ness continuity through either top line growth or the bottom line savings, higher
compensations can be considered (beyond the 50th percentile)
after getting
a sign off from
the Head HR or any person authorized by him.

4
.
While working out a fitment that i
s stretching a reasonable percentile, we
also
have an
option for one time payout like Joining/relocation bonus etc rather than recurring cost
towards a higher CTC. This mode is normally used more as a “delight” for the candidate
rather than a rule applicab
le to all new hires. Hence we exercise our collective judgment with
utmost caution while awarding this instrument as all such costs are mapped as “cos
t per
hire” and

linked to the recruitment cost budgets.

5
. The Corporate HR team
annually
reviews the comp
ensation structure / range
by acquiring

the market data

for desired
revision
s

in the current compensation bands by grades for the
business

with

new salary grid
s which
will be used for creating the offers, there after.



5

Organizational Pay level

Our overall

compensation
philosophy
revolves around three basic fundamentals:

1.

To be competitive in the market place (within & outside the industry)

2.

Build a transparency in a process in order to be fair with our employees

3.

Ensure uniformity & compliance among all 5 b
usiness verticals to meet business
requirements


The RLS compensation pay levels is in line with the above philosophy i.e. to attract, retain
and motivate the best talent based on their competencies and encourage a role based
growth.

O
ur compensation packa
ge is
fairly
among the best in the industry and aimed at
offering compensation based on performance, criticali
ty of the role and market value.


M
oving forward, competency based pay structure
is required
to be
included
as this is the
way to reward capabili
ty / potential of individual
and

building them towards
bigger &
demanding role in times to come
.




Organizational Pay
grades

Our Job grades are as given below and mapped based on the job descriptions, role, relevant
experience & qualifications. The Pay gr
ades are based on CTC bands with CTC fitment
based on existing percentile data.


Current
Cadres & Grades

with relevant pay levels:


S.no.

Cadre

Grades

Pay level

Current no. of
Employees

1

Office Cadre (OC) /

Management Trainees (MT)

M8A, M8

150000
-
225000

269

2

Junior management Cadre (JMC)

M7A, M7, M6A, M6,
M5A, M5

200000
-
850000

739

3

Middle management Cadre (MMC)

M4A, M4

780000
-
1600000

88

4

Senior management Cadre (SMC)

M3A, M3, M2A, M2

1400000
-
9000000

110

5

Top management Cadre (TMC)

M1

7500000
-

5
5000000

7




6

Qualification & Experience bands
:

Table 1: General (Graduates & Post Graduates)


GENERAL
-

(Basic Stream)

Experience

Graduates

Post Graduates


B.Sc, B.Com, B.A,
B. Vet Sc

B.Sc Engg (3 yrs) /
B.Pharma

M.Sc, M.Com, M.A

M. Pharma, M.Sc
(Tech)

F
resher

M8A

M8

M8

M7

1
-

2 years

M8

M7

M7

M7

3
-

4 years

M7

M7

M7

M7/M6

5
-

7 years

M6

M6

M6

M5

8
-

10 years

M5

M5

M5 / M4A

M4A

11
-

13 years

M4A

M4A

M4

M4A/M4

14
-

16 years

M4

M4

M3A / M3

M3A


Table 2: Professional Courses (Graduates & Post Graduat
es)


Experience

Professionals
-

Engineering / Medicine / CA / LLB / Management

Graduates

Post Graduates

Doctorates



B.E,
B.Tech.,
B.Sc (Engg
-

4/5 years)
(Non
Premier
Inst)

B.E,
B.Tech.
-

Premier
Institutes
(IIT /
REC)

M.B.B.S

C.A ,
I.C.W.A,
C.S

M.E,
M.Tech.,
MS,
MCA
(non
premier
Inst)

M.E,
M.Tech.(IIT
/ REC)

MBA,
MMS,
PGDBM
-

non
premier
Inst

MBA,
MMS,
PGDBM
-

Premier
Inst

Ph.D

M.D

Fresher

M7

M6

M7

M7

M7

M5

M7

M6/M5

M6

M6

1
-

2 years

M7

M6

M7

M7

M7

M5

M6

M5

M6

M6

3
-

4 years

M6

M5

M6

M6

M7/M6

M4A

M6

M4A

M6/M5

M5/M4A

5
-

7 years

M6/M5

M5/M4A

M5/M4A

M5

M5

M4A

M5/
M4A

M4A

M5

M4A

8
-

10 years

M5/ M4A

M4

M4A/M4

M4A

M4A

M4/M3A

M4A/M4

M4/M3A

M4A/M4

M4

11
-

13 years

M4/M3A

M4/M3A

M4

M4

M4A/M4

M4/M3A

M3A

M4/M3A

M4

M4/M3A

14
-

16 years

M3A

M3

M4/M3A

M3A

M3A

M3A/M3

M3

M3A/M3

M4/M3A

M3A/M3

17
-

18 years

M3

M2A

M3

M3A

M3

M2A

M2A

M2A

M3

M2A

19
-

20 years

M2A

M2A

M2A

M3/M2A

M2A

M2

M2A/M2

M2

M2A

M2A

20
-

22 years

M2

M2

M2

M2A

M2



M2


M2

M2

M2

> 22 years







M1


M1




M1


M1

M1

M1 *



* Should have D.M
degree as well



7

Broad salary (CTC) ranges have been created for each band to accommodate the
diversity of jobs and the wide range of values the market places on them.

Within each
band, three to four pay zones have been created to:



Recognize jobs having diff
ering levels of complexity, responsibility and skill



Capture appropriate market differentials between jobs



Ensure that internal equity relationships are preserved

(among all 5 organizations)



Provide employees with the opportunity for growth within the zone




Guide supervisor to place the employee’s salary in the band based on market


Rationale in the broad banding for pay grades



Reduces the number of job levels into a few wide pay bands.



Usually combines three or more existing salary grades with narrowly def
ined pay
ranges into one pay band with a wider salary spread.



Increase management flexibility



Emphasize individual pay for performance



Provide alternative promotions and a flatter organizational structure



Simplify position classification

RLS

routinely part
icipate on Compensation Surveys by Mercer, Hewitt, Watson Wyatt and
Hayes Group. The markets data is maintained for the benchmarked positions and based on
the
same
;

we plot the compensation for the other positions. The surveys also comprise of
Benefits, sa
lary trends and annual increments and market corrections
.



Having said that, the above mentioned
data call for

some revisions/ corrections in order to
maintain
employee morale
and

to meet
organizational goals
like


1.

The salary band width is too hugely spr
ead across in case of TMC & SMC unlike the rest
of cases which has lead to high man power cost.

2.

The current attrition is high in case of JMCs & MMCs unlike the case of SMC/TMC, thus
gives a scope to modify their salary band width.

3.

The current no. of SMC
s are more than MMCs which is not the
ideal scenario, we have
been fitting new hires in higher cadre because of their pay level even though the role
does not demand for SMC. This calls for modifying the salary band width MMC.

4.

Last but not the least
, exper
ience

as
criteria

can not be overplayed
for Compensation &
promotions as potential of an individual go beyond the experience he/she has. Besides,
people

don’t tend to wait so long to become GM/VP (
up to 20
-
22 years).

I
t
demands
for
robust competency based
Compensation structure to be
built in

the current system
.



8

Pay Mix; constituents of CTC

Cost to Company (CTC) is the term used to describe how RLS compensates its employees.
An employee’s compensation is more than just his or her take home pay. It also in
cludes the
benefits RLS provides in terms of offering a work environment conducive to growth and
learning. CTC is primarily divided into
3

parts:


1.

Base Pay
: Base Pay is made up of compulsory components like Basic, Provident Fund


12% (Employer’s Contribu
tion)

of Basic salary and Gratuity
-
4.81
% of basic salary.

2.

Choice

Pay:
Choice Pay is made up of optional components like Superannuation,
Medical Reimbursements, Leave Travel Allowance (LTA), Office Wear Allowance, Child
Education Allowance, Conveyance, F
uel & Maintenance, Food Coupons, Gift Vouchers,
House Rent Allowance and Special Personal Allowance (Compulsory balancing
component of choice pay).

3.

PLI:

Performance inked incentive; which is
10% of (Base Pay + Choice Pay) or 9.09% of CTC




An example to illustrate the above:



Amount

Percentage

CTC

100,000

100%

Base Pay + Choice Pay

90,909

91%




Base Pay

36,364

36%

Choice Pay

54,545

55%




Basic

31,131

31%

PF

3,736

4%

Gratuity

1,497

1%

Base Pay

36,364


Compulsory D
ebits

As per cadre & components


Optional Debits

As per cadre & components


Choice Pay

54,545

55%

PLI
*

9,091

9%

Total Cost to Company

100,000






9

The objective of keeping
choice pay option
open to the employee is to suite individual needs
of employees
and also works out tax compliant salary structure for them.
The Rationale for
the weights of the various components are based on:


1.

Statutory Acts and policy


e.g PF, Gratuity, Superannuation

2.

Income Tax rules for exemptions


e.g. Basic, HRA, LTA, Medical
Reimbursement,
Fringe Benefit Tax, Food Coupons, gift coupons.

3.

Market data of salary components across industry


i.e. percentage of Base Pay,
Choice Pay & Variable Pay.


In addition,
RLS

also offer Benefits like Company Car facility, Mediclaim, Group Acci
dent
Insurance, comprehensive Leave policy etc.



Incentive System

Currently the only incentive
system in RLS is
Performance Linked Incentive

(PLI)
, which
is a
defined percentage o
f the CTC i.e. 10%
.
The PLI is normally paid out in beginning of new
financ
ial year along with annual increments.

PLI pa
y off is

based on Individual, department
and Company performance

as 1/3
rd

of
total
PLI amount is
kept
under each head

for every
employee
. E.g.
: If

employee achieves

his/her plan but dept. & company fails to achi
eve their
respective plans then employee is entitled for 1/3
rd

of its
entitled
PLI.


From m
anagement perspective

while d
esigning PLI scheme
, the intent
was to link each ‘n’
every employee with organizational
goals & to promote collaborative culture

within
inter and
intra depts., thus they had
kept

the PLI amount under 3 heads

i.e. 1/3
rd

for self, 1/3
rd

for dept.
& 1/3
rd

for organization. From employee perspective
, it has lead to
major
discontentment
.

S
ince last 3 years
,

employees

have not earned their full
entitled
PLI

due to these factors
.
Infact, their current motivation with PLI scheme is negligible as the same came out in our
recent employee survey.


Based on
survey outcomes,
the following
changes
have been incorporated
this year
to make
it as motivating

factor for all employees (with out diluting the management perspective
).
While re
-
designing it, we have kept in mind the Maslow level of Hierarchy from employee
point of view like lower the cadre, more accountability lies with individual performance to
ea
rn more PLI but as one move upto ladder,
focus is increasing towards higher order needs
like team & organization performance.



10

Performance Linked Incentive Components

Grade

Performance Linked Incentive

Own
Performance


(%)

Group
Performance
(%)

Organiza
tion
Performance
(%)

Total
(%)

Employee
-
Organization Relationship

Junior Management

M8a

100

0

0

100

Function / business unit they represent

M8

95

5

0

100

Function / business unit they represent

M7

90

10

0

100

Function / business unit they represent

M6

85

15

0

100

Function / business unit they represent

M5

80

20

0

100

Function / business unit they represent

Middle Management

M4a

75

20

5

100

Function / business unit they represent

M4

70

25

5

100

Function / business unit they represent

Senior Managem
ent

M3a

60

25

15

100

Function / business unit they represent

M3

55

20

25

100

Function / business unit they represent

M2a

50

25

25

100

Function / business unit they represent

Senior Management (Group Head)

M3a

NA

50

50

100

Business unit they represent

M3

NA

50

50

100

Business unit they represent

M2a

NA

50

50

100

Business unit they represent

M2

NA

50

50

100

Business unit they represent

Top Management

M1

NA

50

50

100

RLS Group


Moving forward, we are
in the process of suggesting
a comprehensive Rewa
rds &
Recognition
plan

to the management which
addresses the following

objectives:



To improve employee productivity and quality of work



To improve customer service

orientation



To recognize and promote positive behaviors
(discipline, Customer service, Produ
ctivity,
Teamwork
, Coaching / Mentoring,
Project completion
,
suggesting a new or modified
business practice
)
that support
individual, Organization unit &
Team
s

in their business
goals and objectives



11



To provide timely recognition to employees either as pla
nned or immediate recognition;



To provide multiple
-
levels of monetary and non
-
monetary recognition based on the
si
gnificance of the contribution

Monetary Awards


Level 1


This will be the first level of award to recognize a superb job on a project, task

or
activity including outstanding support of day
-
to
-
day business operation/process, or for
suggestions leading to the improvement of a work process, workflow, or in customer service.

Award limit is up to Rs 5000 c
ash and/or 1 day of Recognition leave
.


L
evel 2


This will be the second level of award intended to recognize sustained outstanding
achievement and/or contribution beyond standard job requirements
that has impacted the
entire department or function
.

Award limit is u
p to Rs 10
000 cash and/or
upto

3

day
s

of
Recognition leave.


Level 3


This will be the third and highest level of award that may be given to an employee
or team to recognize a major extraordinary achievement or contribution requiring maximum
effort that significantly i
mpacted the ent
ire organization
.

Award limit is u
p to Rs 25000 Cash
and/or up to 5 days of recognition leave


Mode of
payment
:

Will be paid as direct deposit in salary and will be taxed.

Monetary
awards will not be added to the CTC of the employee.

Non
-
monetary Awards
:



M
eals / Trips



Trophies / Plaques / Gift certificates



Desk Items like mugs , T
-
shirts with RLS logo



Small electronics / Time pieces


Recommended d
uration & frequency

of above awards
: every quarter

Total no. of award given in every quarter
: 2% of existing em
ployee strength i.e. 20
-
25
employees