It is my summer internship report on compensation management and benefits.

1. Page | 1
SUMMER INTERNSHIP PROJECT REPORT
ON
“Employees Behavior towards Compensation
Management and Benefits
SUBMITTED IN PARTIAL FULFILLMENT
TOWARDS THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION
(2014 – 16)
SUBMITTED BY:
Deependra Singh
148410061
MBA II YEAR (IV TRIMESTER)
INSTITUTE OF BUSINESS MANAGEMENT

2. Page | 2
PREFACE
It gives us immense pleasure to submit the Summer Internship Project Report on the
project entitled “Employees Behavior towards Compensation Management and
Benefits” as part of our curriculum for Masters in Business Administration (MBA).
The report is short simple and presented in lucid language so that the reader can grasp
the contents at ease. This report presents about the company profile and compensation
policy and benefits.

3. Page | 3
EXECUTIVE SUMMARY
Human Resource plays an important in any organization. The success of every
organization depends on human resources. Compensation management is the
important field in human resource management department. To motivate the
employee, attract employee, retain employee and increase the satisfaction of
employee towards the job, organization has to compensate for the employee. It is also
useful for workers’ participation towards organization, performance appraisal system
and increasing the strength and productivity of the organization.
Compensation referred as rewarding employees for their performance of
assigned tasks. Reward systems on their own have a great capacity and serve the
purpose of attracting, motivating and retaining people. The wages paid to employees
are based on complex set of forces.
In this report, I am studying the behavior of employees in XYZ Pvt. Ltd. towards
compensation policies using multivariate techniques i.e. Factor Analysis. On the basis
of survey data collected from employees who were engaged at various departments
like IT& Networking, Risk & Audit, Finance and Account, Human Resource and
Social Performance, six factors are identified. This report shows the opinion of
employees for compensation policy and effectiveness of compensation factors. I hope,
this report will be beneficial for the company for further use to determine the
compensation policies to improve employee’s performance and working environment
in the company.

4. Page | 4
DECLARATION
This is to certify that Summer Internship Report entitled “Employees Behavior
towards Compensation Management and Benefits” carried at XYZ Pvt. Ltd. which
is being submitted by me towards partial fulfillment for the award of degree Master of
Business Administration from Institute of Business Management, GLA University,
Mathura comprises only my original piece of work and due acknowledgement has
been made in the text to all other material used.
No part of this project has been submitted elsewhere for whatever purpose concerned.
Date: Name: Deependra Singh
Roll No.: 148410061
Batch: 2014-16

5. Page | 5
TABLE OF CONTENTS
Preface i
Executive Summary ii
Acknowledgement iii
Declaration iv
List of Tables and Figures vi
Sr. No Chapter Page No.
1. Chapter-1 Introduction to the Topic
1.1 Introduction about topic and Compensation
1.2 Compensation and Types of Compensation
1.3 Relevance of Compensation Management
1.4 Recent Trends In Compensation Management
1
1
5
7
2. Chapter-2 Introduction to the Organization
2.1 Company Profile
2.2 Product & Services
2.3 Organization at a glance
2.4 Promoters and Competitors
2.5 Industry Position In Market
9
12
13
14
15
3. Chapter-3 Objectives and Methodology
3.1 Research Objectives
3.2 Research Methodology
(Problem Identification, Research Gap, Types of Study, Data Collection,
Sample Unit, Size & Technique, Research Tool, Data Presentation)
17
17
4. Chapter-4 Data Analysis and Interpretation
( Reliability Statistics, Summary Item Statistics, Factor Analysis,
Descriptive Statistics)
21
5. Chapter-5 Conclusion
5.1 Conclusion
5.2 Findings
5.3 SWOT Analysis
5.4 Limitations of Study
40
40
43
44
References 45
Annexure ( Questionnaire) 48

6. Page | 6
List of Tables
S.
No.
Tab.
No.
Particular Page
No.
1 4.1 Reliability Statistics 21
2 4.2 Summary Item Statistics 21
3 4.3 KMO & Bartlett’s Test Analysis 22
4 4.4 Communalities 23
5 4.5 Total Variance Explained 27
6 4.6 Extracted Factor 29
List of Figures
S.
No.
Fig.
No.
Particular Page
No.
1 1.1 Classification of Compensation 2
2 1.2 Types of Direct Compensation 3
3 1.3 Salary Structure of Company 8
4 2.1 Organization Hierarchy 10
5 2.2 Products 12
6 2.3 Organization at a Glance 13
7 2.4 Industry Positioning 16
8 3.1 About Demography Factor-Gender 20
9 3.2 About Demography Factor-Age 20
10 4.1 Screen Plot in Exploratory Factor Analysis 28
11 4.2 Analysis on Compensation as Motivational Tool 37
12 4.3 Analysis regarding effectiveness of Company’s Periodic
review on Compensation Factors
38
13 4.4 Analysis regarding most favourable Compensation
Factors for employees
38
14 4.5 Analysis regarding effect of current Compensation
Policy
39
15 4.6 Analysis regarding satisfaction of employees for current
compensation structure
39

7. Page | 7
1.1 Employee Behavior towards Compensation Management
& Benefits
For every organization,
compensation management is very
important component of Human
Resource Management for
increasing the morale and
motivation of the employee. It is an important tool for attracting employees and
increase the satisfaction of employee towards the job, organization has to compensate
for the employee. This report emphasizes on the behavior of employees towards
compensation policy that is executed by the organization. This report is all about that
how employees feel about compensation management and benefits and what they
have opinion about compensation packages and benefits for them provided by the
organization.
1.2 Compensation Management
1.2.1 Compensation
Compensation is all about financial and non-financial benefits that are provided to an
employee for his work in the organization. Compensation includes salary, monetary
and non-monetary benefits and incentives.
An employee’s salary is an amount that is received by the employee for his
work and efforts.
Benefits may be monetary and non-monetary compensation both for the
employee. It includes training and development program, Retirement Policy, Health
Policy etc.

8. Page | 8
1.2.2 Types of Compensation
Compensation is divided into monetary and non-monetary compensation on its
financial nature. Monetary Compensation is further divided into direct and indirect
compensation. This classification is shown following below with the help of diagram:
Figure 1.1 (Classification of Compensation)
Monetary Compensation
Monetary Compensation refers all financial benefits
those are provided to employees for their services
towards the organization. It may be direct and
indirect.
Direct Compensation
Direct compensation refers to monetary benefits
offered and provided to employees for putting their
efforts for the organization. The monetary benefits
Compensation
Monetary
Direct Indirect
Non-Monetary

9. Page | 9
include basic salary, house rent
allowance, conveyance, leave travel allowance, medical reimbursements, special
allowances, bonus, Pf/Gratuity, etc. The components of Direct Compensation are
following below in the diagram.
Figure 1.2 (Direct Compensation)
Wages and Salaries
Wage and salary are the most important component of compensation management.
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.
Direct
Compensatio
n
Incentives and
Bonus
Financial
Benefits
Allowances
Wages and
Salaries

10. Page | 10
Incentives and Bonus
Incentives are the additional payment to employees besides the payment of wages and
salaries. Incentives are linked with the performance of employees. These incentives
may be given on individual basis or group basis.
Financial Benefits
Financial benefits include such
benefits which are provided to the
employees either having long-term
impact like provident fund, gratuity,
medical benefits etc. These benefits
are in term of monetary benefits for
the employees.
Allowances
Company provides various allowances to employee like house rent allowance (HRA),
Medical Allowance, Leave and Travel allowance, Conveyance Allowance, Special
Allowances etc. Somewhere organization allowances is also provided to employees in
the organization.
Indirect Compensation
Indirect Compensation includes
 Insurance (health, eye),
 Leaves (sick leave, casual leave,
earned leave),
 Clothes, Company parties, Phones/laptop etc.

11. Page | 11
Non-Monetary Compensation
Non-Monetary Compensation refers all non-financial benefits given to employees by
the organization. Some all are following below:
 Enhance dignity & satisfaction from work
performed.
 Promote social relationship with co-workers.
 Allocate sufficient resources to perform work
assignments.
 Offer supportive leadership & management.
 Enhance physiological health, intellectual
growth.
1.3 Relevance of Compensation Management
Compensation Management refers as the management practice in an organization
performed by human resource department of the organization for establishing and
balancing the relationship of employees with the job and organization by providing
monetary and non-monetary benefits to employees for their work in the organization.
Compensation is an integral part of human resource management which helps in
motivating the employees and improving organizational effectiveness. Compensation
is a tool for an organization to attract people towards the organization. It is used also
as retention tool to retain the employee in the organization. Relevance of
Compensation Management for an organization is following below:
I. Improves Efficiency: An effective compensation system helps to improve
efficiency and effectiveness of employees towards their job in the
organization. Components of Compensation encourage the employees to
perform the job efficiently for attaining organization goal and achieve the
standards.

12. Page | 12
II. Job Evaluation: Compensation management is also useful for job evaluation.
It helps to set up effective job evaluation.
III. For Recruitment: Compensation Management is also effective for attracting
people towards the organization. It helps in recruitment process in an
organization.
IV. Job Satisfaction: The satisfaction of employee is very important factor for
efficient and effective job in the organization. Compensation factors are very
useful to satisfy employees and improve job satisfaction.
V. Motivation: Compensation is useful to motivate employees. Employees feel
motivated when incentives
and various benefits are
provided to employee for
their job. Compensation
factors affect the employees’
motivation.
VI. Reduce Attrition and
Absenteeism Rate:
Compensation is also
effective to reduce employee turnover rate in the organization. It helps also to
reduce absenteeism rate and improve productivity.
VII. Works as Retention Tool: Compensation factors work as retention tool.
Using effective compensation package the organization can retain the best
talent of the organization.
VIII. Employee Engagement and Welfare: Compensation management is also
useful for workers’ participation towards organization and increasing the
strength of organization. It is an effective tool for employee engagement.
Compensation Management helps to provide employee welfare facilities also.

13. Page | 13
1.4 Recent Trends in Compensation Management
i. Flexible Benefits: Flexible benefits are linked with the need of employees.
Employees can pick benefits on the basis of their need and requirement. The
idea is to allow each employee to choose a benefit package that is individually
tailored to his or her own needs and situation.
Flexible benefits meet with the diverse needs and
requirements of employees.
ii. 3 P Compensation Concept: There are 3P
approaches of developing a compensation policy.
These 3Ps are named as Position, Person and Performance. Compensation
package of an employee is totally based on his job status, performance and
responsibilities. Before setting compensation structure every organization
evaluates the job of an employee. Compensation is provided to employees on
the basis of the worth of their job in the organization.
iii. Training and Development Program: At present time every organization
gives importance to training and development for employees. It is also a part
of compensation management. Training and development programs are mutual
benefits for employer and employees both.
iv. Variable Pay: It is known as incentive. It can be given to individual or a
group. These incentives are paid to employees for their performance.
Incentives may be provided on monthly, quarterly, half-yearly or annual basis.
v. Reward and Recognition: The success of organization is based on the
satisfaction and motivation of employees. Reward and recognition program
are helpful to motivate and satisfy employees in the organization. Reward and
recognition is also helpful to enhance the efficiency of employee and improve
productivity of the organization.

14. Page | 14
vi. Employee Welfare Facilities: Now a days organizations focus on employee
welfare. Various facilities like as broadband service, telephone service, laptop
facility, family security, catering facilities, medical facilities etc.
vii. Allowances: Organizations provide various allowances to employees of the
organization like as house rent allowance, conveyance allowance, leave and
travel allowance, special allowances. These allowances are useful to attract
people towards organization and retain employees in the organization.
viii. PF, Gratuity and ESI Scheme: Employer provides 13.36% of basic pay of
employee as provident fund to employees. Gratuity i.e. 4.81% of basic pay of
employee is also provided to employee. Organization gives to employees
4.75% of gross salary of employee also if gross salary is less than INR15000/-.
Salary Structure for the employee of the organization
DESIGNATION
Basic Xxxx
HRA Xxxx
Medical Xxxx
Conveyance Xxxx
Special Allowance Xxxx
Organisation Allowance Xxxx
Gross Xxxx
Retrials
PF Xxx
ESI Xxx
Fixed Total Xxxx
Variable
CLI @100% Ach Up to INR x,xxx/-
Cost to Company Xxxx
Net Salary Xxxx
Figure 1.3 (Salary Structure of Company)

15. Page | 15
2.1 Company Profile
2.1.1Evolution of Company
2.1.2 Departments
Figure 2.1 (Organization Hierarchy)
2.2 Product & Services
Figure 2.2 (Products)
2.3 Organization at a Glance
2.3.1 Working Area of Organization
2.4 Promoters & Competitors
Promoters
Competitors
2.5 Industry Position in Market
Figure 2.4 ( Industry Position)

16. Page | 16
3.1 Objectives
 To identify the underlying compensation factors affecting satisfaction of
employees.
 To study about satisfaction level of employees towards compensation factors.
 To know the opinion of employee towards compensation policy and benefits.
3.2 Methodology
Type of Study
The research design is exploratory research in nature. This study would help to
understand the behavior of employees at the company towards compensation structure
and this research will be beneficial for the company for further use.
Sampling
Universe of Study
Sample Unit
Sample Size
A total of 95 questionnaires were distributed to the various employees of the company
in which 75 questionnaires were returned after filling up the questionnaire. In these 75
questionnaires some questionnaires had insufficiency about the information and some
were not appropriate for applying statistical tools, after abandoned such
questionnaires 60 questionnaires were adequate for such research. So the appropriate
sample size for this research was 60 in which 34 were male respondents and 24
female respondents.
Sampling Technique
Convenience sampling technique was use as sampling technique for analysis.

17. Page | 17
Data Collection
The data is collected from both primary and secondary sources.
Primary Data
A questionnaire was developed to know the employee behavior that which
compensation factor they like more. It is a self designed questionnaire with the some
reference of a questionnaire mentioned in a research paper written by Md. Rifayat
Islam, Md. Tauhid Rasul & G. M. Wali Ullah published in European Journal of
Business and Management. This questionnaire is based on 5 point Likert scale,
ranging from 1 (strongly disagree) to 5 (Strongly agree) and nominal scale.
Secondary Data
To study, secondary data was also collected from fact sheets, HR policies and the
various research papers and books. This data was very beneficial to design my
questionnaire also.
Research Tool
Three tools would be applied to analyze the data and it would be factor analysis,
descriptive statistics and other would be percentage tools, wherein we would study
about employee behavior. Using factor analysis we would study about compensation
factors. Using Descriptive statistics it will be analyzed that which compensation factor
has need of more attention for employee satisfaction. Percentage tool using MS-Excel
was applied only on five questions designed on nominal scale. Using percentage tool,
it was simply explained the opinion of employees in an organization about the
effectiveness of compensation factors that is beneficial for the company.
Data Presentation
Demographic Features:
In the questionnaire, I used two demographic factors for research. These are:
i) Gender: In the questionnaire I mentioned the space for gender on nominal
scale i.e. Male and Female. In this research we got 60 questionnaires for
the analysis. In these 60 respondents, 34 were male respondents and 24

18. Page | 18
were female respondents. i.e. 60% Male and 40% Female employees of the
organization.
ii) Age: Additionally, I mentioned second demographic factor in the
questionnaire that is Age. I mentioned the space for age group on ordinal
scale i.e. Below 30 years and 30 & Above 30 years. In this sample size of
60 respondents, 45 were below 30 years and 15 were 30 and above 30
years. i.e. 75% Below 30 years and 25% were 30 and above 30 years.
Both Demographic Factors are shown in pie chart:
Figure 3.1 (About Demography Factor- GENDER)
Figure 3.2 (About Demography Factor-AGE)
60%
40%
Male Female
75%
25%
Chart Title
Below 30 years 30 and Above 30 years

19. Page | 19
After collection of data, data analysis and interpretation phase is started. This chapter
comprises all about data analysis.
Reliability Analysis
First, we test the reliability of questionnaire. To check the reliability of
questionnaire we use SPSS (Statistical Package for social sciences) and find the
reliability statistics on the basis of Cronbach’s alpha value.
The analyzed reliability statistics table is given below:
Table 4.1
Reliability Statistics
Cronbach's Alpha
Cronbach's
Alpha Based
on
Standardized
Items
N of
Items
.850 .849 19
The analyzed Cronbach’s Alpha value is .850. Cronbach’s alpha should be more than
0.7 (Van de Ven & Ferry,1980). The analyzed Cronbach’s Alpha value is .850 (> 0.7).
So the questionnaire is reliable and consistent.
Item Statistics
The summary of Item Statistics is given below:
Table 4.2
Summary Item Statistics
Mean Minimum Maximum Range
Maximum /
Minimum Variance
N of
Items
Item Means 3.211 2.383 3.683 1.300 1.545 .166 19
Item Variances .971 .604 1.461 .856 2.417 .051 19
Inter-Item
Covariances
.223 -.206 .675 .880 -3.280 .029 19
Inter-Item
Correlations
.228 -.258 .663 .920 -2.573 .030 19

20. Page | 20
KMO and Bartlett’s Test
Before conducting factor analysis, we need to first check whether factor analysis can
be applied on the concerned data set or not. These tests are just like qualifier test for
conducting factor analysis. These tests are KMO test and Bartlett’s test of sphericity.
KMO test is used to check the sample adequacy to conduct factor analysis and
Bartlett’s test of sphericity was used to check scale items correlation. As for factor
analysis the scales items should be correlated to each other, therefore to make sure
about the correlation among scale items this test was used. Bartlett’s test of sphericity
hypothesizes that the correlation matrix of the scale items is unity matrix (H0: Scale
items are not correlated significantly with each other). The Table of Analyzed KMO
and Bartlett’s Test is given below:
Table 4.3
KMO and Bartlett's Test
Kaiser-Meyer-Olkin
Measure of Sampling
Adequacy. .744
Bartlett's Test
of Sphericity
Approx.
Chi-
Square
448.356
Df 171
Sig.
.000
It is the rule that the KMO value should be more than 0.5. The higher KMO value
shows the appropriateness of factor analysis. Kaiser has presented the range as
follows: KMO value>0.9 is marvelous, >0.8 meritorious, >0.7 middiling, >0.6
mediocre, >0.5 miserable and <0.5 is unacceptable. The analyzed KMO value is 0.744
that is more than 0.5 and in the middiling range. So we can say that data is adequate
for factor analysis.

21. Page | 21
The significance level in Bartlett’s Test of Sphericity is .000 that is less than .05
so it shows that correlation matrix is significant. After testing of these two test, it is
analyzed that factor analysis can be applied for this research on this sample size.
Factor Technique:
When the objective of the factor analysis is to summarize the information in a larger
set of variables into fewer factors, the principal component analysis is used (Aaker et
al.,2000). So in this research, principal component method with varimax approach is
used as factor technique.
Communalities:
Table 4.4
Initial Extraction
Company has
fair and adequate
compensation
and benefits
policy
1.000 .745
I am satisfied
with the existing
salary structure
of the company 1.000 .770
Company gives
appropriate
salary according
to my
responsibilities
1.000 .639

22. Page | 22
Employees are
recognized and
rewarded for
accomplishments
in company
1.000 .700
I receieve
incentives and
bonus when I
meet to the
expectations of
company
1.000 .660
The company
offers incentives
and bonus based
on the
performance of
employees 1.000 .668
The incentive
and bonus
system is
satisfactory for
me
1.000 .529
I am satisfied
with the training
and development
program offered
by company 1.000 .781
The company
efforts to
identify my
strenghts and
weaknesses
1.000 .633

23. Page | 23
Proper Training
and
Development
Programs
offered by
company are
helpful for me
to do my job
efficiently
1.000 .743
Company
provides
necessary
resources for
efficient working
on the job
1.000 .823
I am satisfied
with leave policy
of the company 1.000 .658
Paid leaves
given by the
company are
satisfactory 1.000 .591
Paid holidays
and vacation
leaves are
helpful to
improve
efficiency and
effectiveness in
productivity
1.000 .713
Promotions in
the company are
fair and
equitable
1.000 .770

24. Page | 24
Promotion
policy influences
me to engage
with my job and
company
1.000 .782
I have
opportunity for
internal job
promotion
1.000 .815
PF and ESIC
schemes are
beneficial for me
and my family 1.000 .634
I am satisfied
with EPF and
ESIC deduction
from my salary
1.000 .567
In the above table, Initial communalities determine the variance for each variable with
all other variables. Extraction communalities estimate the variation in each variable
and determine thathow much the variable is accounted for by the factors in the factor
solution. Small values indicate variables that do not fit well with the factor solution,
and should possibly be dropped from the analysis. In the above table it can be seen
that there are no smaller values, thus these variables are of importance and should not
be dropped from analysis.
Total Variance:
To find the Eigen Value for Factors, the total variance table is given below. It shows
the percentage of variance and cumulative percentage of Variance.

25. Page | 25
Table 4.5
Total Variance Explained
Co
mpo
nent
Initial Eigenvalues
Extraction Sums of
Squared Loadings
Rotation Sums of
Squared
Loading
s
Total
% of
Varianc
e
Cumulat
ive % Total
% of
Varianc
e
Cumula
tive % Total
% of
Varian
ce
Cumul
ative %
1 5.568 29.307 29.307 5.568 29.307 29.307 2.824 14.862 14.862
2 2.388 12.569 41.875 2.388 12.569 41.875 2.517 13.248 28.110
3 1.668 8.780 50.656 1.668 8.780 50.656 2.337 12.299 40.409
4 1.333 7.015 57.671 1.333 7.015 57.671 1.979 10.415 50.824
5 1.148 6.040 63.711 1.148 6.040 63.711 1.933 10.175 60.999
6 1.115 5.867 69.578 1.115 5.867 69.578 1.630 8.579 69.578
7 .839 4.416 73.994
8 .785 4.130 78.123
9 .691 3.635 81.758
10 .558 2.935 84.693
11 .525 2.762 87.455
12 .461 2.429 89.883
13 .428 2.250 92.134
14 .339 1.786 93.919
15 .312 1.643 95.562
16 .281 1.480 97.043
17 .226 1.188 98.231
18 .213 1.121 99.352
19 .123 .648 100.000
To extract the factors, principal component analysis with varimax rotation was used.
Varimax rotation is widely used as an orthogonal rotation in psychological research
(Fabriger et al., 1999). Eigen value≥ 1was used for determining the number of factors
(Sharma, 1996). The result of extraction generates six factors; by following Eigen
value ≥ 1. The total variance explained by these factors was 69.578 %. From the
above table, the initial eigenvalues section of the tables shows the variance explained
by the initial solution.Only 6 factors in the initial solution are more than 1and total
they account for 69.578 % of variance. The second section of this table shows the
variation between the variables of extracted factors before rotation. The cumulative
percentage determined by these six factors in the extracted solution is about 69.578%
and there is no difference from the initial solution. The third section of this table

26. Page | 26
shows the variation between the variables of extracted factors after rotation. The table
of total variance determines that out of 19 constructs that were included in
questionnaire, only 6 factors have importance or are crucial for compensation
management in the organization.
Screen Plot
Screen Plot is a plot of the Eigen values and factor according to the order of
extraction. The screen plot shows the elbow shape of the various variables that were
initially identified. Screen Plot for this factor analysis is given below:
Figure 4.1 (Screen Plot)

27. Page | 27
Extracted Factors
On the basis of rotated component matrix, the six factors are extracted. These six
factors are given below in the table with sample mean for variables.
Table 4.6
Extracted Factors
Variables
Component
Mean1 2 3 4 5 6
Company provides
necessary resources for
efficient working on the job
.696
3.65
I am satisfied with leave
policy of the company
.666
3.68
Paid leaves given by the
company are satisfactory
.677
3.65
Paid holidays and vacation
leaves are helpful to
improve efficiency and
effectiveness in
productivity
.811
3.48
Promotions in the company
are fair and equitable
.814
3.30
Promotion policy
influences me to engage
with my job and company
.667
3.47
I have opportunity for
internal job promotion
.854
3.42
Employees are recognized
and rewarded for
accomplishments in
company
.781
3.07
I receieve incentives and
bonus when I meet to the
expectations of company
.762
2.98
The company offers
incentives and bonus based
on the performance of
employees.
.723
3.05

28. Page | 28
The incentive and bonus
system is satisfactory for
me
.526
2.78
Company has fair and
adequate compensation and
benefits policy
.711
2.68
I am satisfied with the
existing salary structure of
the company
.781
2.38
Company gives appropriate
salary according to my
responsibilities
.760
2.42
I am satisfied with the
training and development
program offered by
company
.839
3.30
The company efforts to
identify my strenghts and
weaknesses
.645
3.17
Proper Training and
Development Programs
offered by company are
helpful for me to do my
job efficiently
.593
3.47
PF and ESIC schemes are
beneficial for me and my
family
.530
3.65
I am satisfied with EPF and
ESIC deduction from my
salary
.773
3.42
On the Basis of This extracted factor table, six factors are found and named as Leave
Policy, Promotion Policy, Reward & Recognition, Salary, Training &
Development, and Provident Fund (PF) & ESIC Scheme respectively.
Descriptive Statistics
These data are extracted with the help of SPSS (Statistical Packages for Social
Sciences) Software. This is about the response of sample for questions given in
questionnaires one by one. These frequency tables generated by SPSS Software are
given below respectively:

29. Page | 29
Company has fair and adequate compensation policy
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
3 5.0
38.3
40.0
16.7
100.0
5.0
Disagree(2) 23 43.3
Neutral(3) 24 83.3
Agree(4) 10 100.0
Total 60
I am satisfied with the existing salary structure of the company
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
14 23.3
35.0
21.7
20.0
100.0
23.3
Disagree(2) 21 58.3
Neutral(3) 13 80.0
Agree(4) 12 100.0
Total 60
Company gives appropriate salary for my responsibilities
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
8
13.3
46.7
26.7
11.7
1.7
100.0
13.3
Disagree(2) 28 60.0
Neutral(3) 16 86.7
Agree(4) 7 98.3
Strongly
Agree(5)
1 100.0
Total 60

30. Page | 30
Employees are recognized and rewarded for accomplishments
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
5 8.3
21.7
30.0
35.0
5.0
100.0
8.3
Disagree(2) 13 30.0
Neutral(3) 18 60.0
Agree(4) 21 95.0
Strongly
Agree(5)
3 100.0
Total 60
I receieve incentives and bonus when I meet to the expectations
of company
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
6
10.0
23.3
30.0
31.7
5.0
100.0
10.0
Disagree(2) 14 33.3
Neutral(3) 18 63.3
Agree(4) 19 95.0
Strongly
Agree(5)
3 100.0
Total 60
The company offers incentives and bonus based on the
performance of employees
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
7
11.7
23.3
21.7
35.0
8.3
100.0
11.7
Disagree(2) 14 35.0
Neutral(3) 13 56.7
Agree(4) 21 91.7
Strongly
Agree(5)
5 100.0
Total
60

31. Page | 31
The incentive and bonus system is satisfactory for me
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
11
18.3
25.0
21.7
30.0
5.0
100.0
18.3
Disagree(2) 15 43.3
Neutral(3) 13 65.0
Agree(4) 18 95.0
Strongly
Agree(5)
3 100.0
Total 60
I am satisfied with the training and development program
offered by company
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
3
5.0
18.3
26.7
41.7
8.3
100.0
5.0
Disagree(2) 11 23.3
Neutral(3) 16 50.0
Agree(4) 25 91.7
Strongly
Agree(5)
5 100.0
Total 60
The company efforts to identify my strengths and weaknesses
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
2
3.3
18.3
40.0
35.0
3.3
100.0
3.3
Disagree(2) 11 21.7
Neutral(3) 24 61.7
Agree(4) 21 96.7
Strongly
Agree(5)
2 100.0
Total 60

32. Page | 32
Proper Training and Development Programs offered by
company are helpful for me to do my job efficiently
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
4
6.7
8.3
30.0
41.7
13.3
100.0
6.7
Disagree(2) 5 15.0
Neutral(3) 18 45.0
Agree(4) 25 86.7
Strongly
Agree(5)
8 100.0
Total 60
Company provides necessary resources for efficient working on
the job
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
3
5.0
6.7
20.0
55.0
13.3
100.0
5.0
Disagree(2) 4 11.7
Neutral(3) 12 31.7
Agree(4) 33 86.7
Strongly
Agree(5)
8 100.0
Total 60
I am satisfied with leave policy of the company
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
1
1.7
10.0
25.0
45.0
18.3
100.0
1.7
Disagree(2) 6 11.7
Neutral(3) 15 36.7
Agree(4) 27 81.7
Strongly
Agree(5)
11 100.0
Total 60

33. Page | 33
Paid leaves given by the company are satisfactory
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Disagree(2) 5 8.3
28.3
53.3
10.0
100.0
8.3
Neutral(3) 17 36.7
Agree(4) 32 90.0
Strongly
Agree(5)
6 100.0
Total 60
Paid holidays and vacation leaves are helpful to improve
efficiency and effectiveness in productivity
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
1
1.7
13.3
28.3
48.3
8.3
100.0
1.7
Disagree(2) 8 15.0
Neutral(3) 17 43.3
Agree(4) 29 91.7
Strongly
Agree(5)
5 100.0
Total 60
Promotions in the company are fair and equitable
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
3
5.0
13.3
36.7
36.7
8.3
100.0
5.0
Disagree(2) 8 18.3
Neutral(3) 22 55.0
Agree(4) 22 91.7
Strongly
Agree(5)
5 100.0
Total 60

34. Page | 34
Promotion policy influences me to engage with my job and
company
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
1
1.7
16.7
28.3
40.0
13.3
100.0
1.7
Disagree(2) 10 18.3
Neutral(3) 17 46.7
Agree(4) 24 86.7
Strongly
Agree(5)
8 100.0
Total 60
I have opportunity for internal job promotion
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
2
3.3
16.7
23.3
48.3
8.3
100.0
3.3
Disagree(2) 10 20.0
Neutral(3) 14 43.3
Agree(4) 29 91.7
Strongly
Agree(5)
5 100.0
Total 60
PF and ESIC schemes are beneficial for me and my family
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Disagree(2) 9 15.0
16.7
56.7
11.7
100.0
15.0
Neutral(3) 10 31.7
Agree(4) 34 88.3
Strongly
Agree(5)
7 100.0
Total 60

35. Page | 35
I am satisfied with EPF and ESIC deduction from my salary
Scale
Responses of
employees
Percent of
Responses
Cumulative
Percent of
Responses
Strongly
Disagree(1)
2
3.3
16.7
16.7
61.7
1.7
100.0
3.3
Disagree(2) 10 20.0
Neutral(3) 10 36.7
Agree(4) 37 98.3
Strongly
Agree(5)
1 100.0
Total 60
Additionally Five questions were also mentioned in the questionnaire on nominal
scale to study the employee opinion about the relevance of compensation
management. The responses of employees for these five questions are shown by pie
chart using MS-Excel.
1. Compensation Factors (Salary, Bonus, Benefits) motivate employees and
improve the performance of Employees.
Figure 4.2
Strongly Agree
25%
Agree
33%
Neutral
23%
Disagree
12%
Strongly
Disagree
7%
Compensation Factoras Motivational Tool

36. Page | 36
2. Company’s review on compensation policies time to time is effective for
improving compensation factors and employee performance.
Figure 4.3
3. Which Compensation Factor is more effective according to you?
Figure 4.4
Strongly Agree
8%
Agree
37%
Neutral
33%
Disagree
22%
Strongly
Disagree
0%
Effectiveness of Periodic Review of
Compensation Policy
Bonus and
Incentives
25%
Promotion
and
Increment
52%
Health and
Medical
Allowances
13%
Special
Allowances
8%
Others
2%
Most Favorable Compensation Factor

37. Page | 37
4. The current compensation policy has a positive effect on employees?
Figure 4.5
5. You are satisfied with your compensation structure at present?
Figure 4.6
Yes
33%
No
22%
Can't Say
45%
Positive Effect on Employees of Current
Compensation Policy
Yes
25%
No
42%
Can't Say
33%
Satisfaction of Employees on Current
Compensation Policy

38. Page | 38
5.1 Conclusion
On the basis of this analysis, we can see the behavior of employees towards
compensation factors. Using factor analysis, six factors are identified on the basis of
given variables those are Leave Policy, Promotion Policy, Reward and Recognition,
Salary, Training & Development and PF & ESI. This report emphasis on effectiveness
of compensation factors in the organization also. This report will be beneficial for the
organization for further use.
5.2 Findings
 To assess behavior of employees towards compensation factors in the
company, arithmetic mean was calculated for every variable of the scale,
which was based on 5 point Likert scale. Thereafter a grand average of all the
scale elements was calculated; a mean value between 2.5 to 3.4 represents a
neutral behavior, and mean value between 3.5 and 5.0 represents a positive
behavior while a mean value between 2.4 and 1.0 represents a negative
behavior (Manoah, Indoshi, & Othuon, 2011). This grand average is calculated
using SPSS. The Table of summary of item statistics shows the value of total
arithmetic mean i.e. 3.211.
It shows the neutral behavior of employees. It explains that the
employees are not much more satisfied with compensation structure of the
company.
 After conducting factor analysis, six factors are extracted on the basis of
rotated component matrix. These factors are given below respectively:
I. Leave Policy: The first factor consists of four items, those are
Company provides necessary resources for efficient working on the
job, I am satisfied with leave policy of the company, Paid leaves given
by the company are satisfactory, paid holidays and vacation leaves are

39. Page | 39
helpful to improve efficiency and effectiveness in productivity.
Grouping of these variable in one factor explain that leaves and
vacations are very important factor in compensation management.
Appropriate leave policy are necessary for efficient working in
organization.
II. Promotion Policy: From the rotated matrix table it was identified that
promotion policy plays an important role in compensation
management. Fair promotions in the organization effects positively on
the mind of employees. Every employee wants promotion after
sometimes in the organization to fulfill self esteem needs. This factor
explains that Promotions in the company are fair and equitable,
Promotion policy influences me to engage with my job and company, I
have opportunity for internal job promotion, and these all three
variables make up a single factor.
III. Reward & Recognition: In this factor, these four variables those are
Employees are recognized and rewarded for accomplishments in
company, I receive incentives and bonus when I meet to the
expectations of company, The company offers incentives and bonus
based on the performance of employees, The incentive and bonus
system is satisfactory for me are clubbed together in one factor. It is
observed that reward and recognition programs for employees in the
organization are very important for increasing the effectiveness of
productivity in the company.
IV. Salary: In this factor, three variables are combined in this factor.
These variables are Company has fair and adequate compensation and
benefits policy, I am satisfied with the existing salary structure of the
company, Company gives appropriate salary according to my
responsibilities. Salary is the primary motivational compensation factor
for each employee in the company. So this factor requires more focus
for increasing motivation and confidence of employees in the
company.

40. Page | 40
V. Training & Development: Three variables regarding training and
development are clubbed in this factor. Training and development have
an important place for compensation management in an organization.
This factor is beneficial for the employer as well as employees. This
factor comprises these three factors those are I am satisfied with the
training and development program offered by company, The company
efforts to identify my strengths and weaknesses, Proper Training and
Development Programs offered by company are helpful for me to do
my job efficiently.
VI. Provident Fund (PF) & ESIC Scheme: Provident Fund and
Employee State Insurance scheme are important tools for employee
engagement. This factor consists of these two variables those are, PF
and ESIC schemes are beneficial for me and my family, I am satisfied
with EPF and ESIC deduction from my salary.
 Most of the employees in the organization said that compensation factors can
be used as motivational tool. Management of Compensation factors is very
important to motivate the employees.
 Employees were agreed with this statement that Company’s review on
compensation policies time to time is effective for improving compensation
factors and employee performance. It shows the importance of periodic review
of compensation factors in the organization.
 Half of the sample size said that promotion and increment is most favorable
compensation factor. Half of the remaining sample raised the hand for
incentive and bonus. And half of the next remaining sample was with health
and medical allowances. It shows the employee behavior towards
compensation factors.

41. Page | 41
 Only 45% employees were satisfied with this statement that, “The current
compensation policy has a positive effect on employees”.
 42% employees were not satisfied with present compensation structure
provided by the company to them and 33% employees were indefensible to
express the opinion in yes or no for this.
 On the basis of Descriptive statistics, it is analyzed that salary factor and
reward and recognition factor require more attention and focus of company to
improve efficiency and effectiveness of employees. Company should work on
these factors for improving and increasing the productivity in the organization.
On other factors, employees’ responses are satisfactory. Employees have
positive attitude for these four factors those are leave policy, promotion
policy, training & development and PF and ESI Scheme.
5.3 SWOT Analysis
5.4 Limitations of Study
Some limitations are also for this project report. Some are given:
 The sample size of the study was 60, thus if the sample size would have been
100 or more then data collected could have been more valid..
 This study cannot be generalized because it is done only in the head office of
the organization.

42. Page | 42
References
Aaker, D. A., Kumar, V. & Day, G.S. (2000). Marketing Research (7 ed.). John
Wiley & Sons, Inc.), p 554.
Bajpai, N. Business Research Methods (4 ed.). Dorling Kindersley Pvt. Ltd., ISBN
978-81-317-5448-1
Chawla, D., & Sondhi, N. Research Methodology (4 ed.). Vikas Publishing House
Pvt. Ltd., ISBN 978-81259-5205-3
Cheema, F.A., Shujaat, S., & Alam, R. (2013). Impact of Non-monetary Rewards on
Employees’ Motivation: a Study of Commercial Banks in Karachi. Journal of
Management and Social Sciences Vol. 9, No. 2.
Chhabra, T.N., & Rastogi, S. Compensation Management (3 ed.). Sun India
Publications, ISBN 978-93-80674-40-7
Compensation, Employee Payroll & Incentive Management. Presented By Softsmith
Infotech. Retrieved from http://www.slideshare.net.
Fabrigar, L.R., Wegener, D.T., MacCallum, R.C. & Strahan, E. J.(1999). Evaluating
the use of exploratory factor analysis in psychological research, Psychological
Methods, Vol.4, No. 3, p 272-299.
Ghazanfar, F., Chuanmin, S., & Khan, M.M. (2011). A Study of Relationship
between Satisfaction with Compensation and Work Motivation. International Journal
of Business and Social Science Vol. 2 No. 1.
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. & Tatham, R.L. (2009).
Multivariate Data Analysis (6 ed.). Pearson Education, p 125.

43. Page | 43
Hameed, A., Ramzan, M., Zubair, H.M.K., Ali, G., & Arslan, M. (2014). Impact of
Compensation on Employee Performance. International Journal of Business and
Social Science Vol. 5 No. 2
Imran, A., Ahmad, S., Nisar, Q.A., & Ahmad, U. (2014). Exploring Relationship
among Rewards, Recognition and Employees’Job Satisfaction: A Descriptive Study
on Libraries in Pakistan. Middle-East Journal of Scientific Research 21 (9): 1533-
1540, 2014 ISSN 1990-9233.
Islam, M.R., Rasul, M.T., & Ullah, G.M.W. (2012). Analysis of the Factors that
Affect Job Satisfaction: A Case Study on Private Companies Employees of
Bangladesh. European Journal of Business and Management ISSN 2222-2839,Vol 4,
No.4.
Kassa, T. (2015). Employee Motivation and its Effect on Employee Retention in
Ambo Mineral Water Factory. International Journal of Advance Research in
Computer Science and Management Studies Vol.3, Issue 3, ISSN: 2321782.
Manoah, S.A., Indoshi, F.C., & Othuon, L.O. (2011). Influence of attitude on
performance of students in mathematics curriculum. Educational Research, 965-981.
Mohanta, G.C. New Trends in Compensation Management. Retrieved from
http://www.slideshare.net.
Osibanjo, O.A., Adeniji, A.A., Olubusayo, H., Heirsmac, T. (2014). Compensation
packages: a strategic tool for employees’ performance and retention. Leonardo
Journal of Sciences, ISSN 1583-0233, Issue 25.
Parvin, M.M., & Kabir, M.M.N. (2011). Factors Affecting Employee Job Satisfaction
Of Pharmaceutical Sector. Australian Journal of Business and Management Research
Vol.1 No.9 [113-123].

44. Page | 44
Patnaik, B.C.M., & Padhi, P.C. (2012). Compensation Management: A Theoretical
Preview. Asian Journal of Marketing & Management Research Vol.1 Issue 1.
Sharma, S. (1996). Applied Multivariate Techniques.Canada: John Wiley & Sons, Inc.
Singh, G. Compensation Management. Retrieved from http://www.slideshare.net.
Van de Ven, A.H. & Ferry, D.L. (1980). Measuring and Assessing Organization.
Wiley, New York .