Case Study for Personnel Finance

Review of Compensation Plan for Management Staff

M/s Pragmatic Group engaged in manufacture of Matchboxes has their plants in
Mumbai.Chennai, Kolkatta and Bareilly. Each division is run by General Manager of unit
who is accountable for all activities and reports to Managing Director in Mumbai. Each
Unit has strength around 700 in Mumbai, 500 in Chennai, 800 on Bareilly and 900 in
Kolkatta. Besides this group has their forestry activity having strength of 250 in
Uttarachal which supplies wood as Raw Materials to Bareilly and Kolkatta. Out of this
the Management staff in total are 350 at various levels. The review of Management staff
takes place always in the month of April and all exercise start from January, of the year.
The Company has appraisal system based on traditional system and their salary structure
is divided in to Basic, HRA, Peronal Allowances, City Allowance, Special Allowance
and other allowances include L.T.A., Medical allowance, Ex-Gratia, Reimbursement of
Petrol Expenses to those Senior Management staff for their car and to Jr.Management
staff for their two wheelers. The company also pays gratuity to its entire management
staff as per the Payment of Gratuity Act. The company further pays superannuation to its
Senior Managerial People across the country.
In each division, except forestry division at Uttarachal, Workers and Staff are governed
by the agreement with the Union/s, which are always signed with 3 yrs terms. Recently
all Units signed the agreement with their unions giving on and average Rs.800/- to each
workmen/staff, which included all cost.
The Management has following levels for Management staff across the country:
G.M.
Sr.Mgr.
Mgr.
Asstt. Manager
Executives
Officers
The Revision of Management staff is controlled and carried out from Head-HR Mumbai.
At Mumbai, Finance, Sales, Legal and Materials Divisions are located and each
department except Sales do not strength exceeding 3-4 in management grade Total
strength in HO is around 20 including MD.
The Management staff expects some rise as all unionized staff have got the rise in their
pay package besides they also expects that management should take care of their Medical
expenses on Hospitalization in case of major sickness or accident.

The company has faced threats from small scales industries in South as they cannot
afford to run the unit in view of price level of the products besides Chennai unit has been
facing striking situations most of time in the year in spite of wage rise.

In the light of the above situation, as representative of Management and Head –HR how
you will proceed in Revision of Management Salary for current year and next what
thoughts you would share to evolve Medical Schemes applicable to Management staff
across the country and satisfy the managerial employees of the company.
*****************************