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This Report is Submitted as a Course Requirement of Performance Management.
A Report on:
PERFORMANCE AND COMPENSATION MANAGEMENT
OF
Submitted to:
Sir Saad Usmani
Dated: 22th December’2013
Submitted by:
Faiza Ambreen (024-11-10713) Shumaila Kalar (024-11-10795) Syeda Fatima-al-Zahra (024-11-10394) Muniza Nasir (024-11-10714) Hareem Akhtar (024-11-10712) Syeda Madiha Mushir (024-11-10936)
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Acknowledgement:
Our respected teacher Sir Dr.Saad Usmani has assigned us a project to study the Performance
Management System of the organization. We are very much thankful to our beloved teacher to
assign us this project and give us the opportunity to relate what we have learned in the class with
the practical world. We selected Pakistan beverages limited to carry on our project. We are also
very thankful to the general manager of Pakistan beverages limited-Mr. Sultan Mughal to give
his complete assistance during the project.
Table of Content
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s
Introduction of Pakistan Beverage Limited:................................................................................................6
Mission:...................................................................................................................................................7
Vision:.....................................................................................................................................................8
Organization Statistics and Industry Parameters:.....................................................................................8
Reasons of Low Turnover Rate:..............................................................................................................9
Values:.....................................................................................................................................................9
Guiding Principles:................................................................................................................................11
Workforce of Pakistan Beverage Limited:.............................................................................................14
Organizational Culture of Pakistan Beverage Limited:..........................................................................14
Acknowledgement of Performance:......................................................................................................14
Human Resource Model of Pakistan Beverage Limited:...........................................................................15
Organogram of Pakistan Beverage Limited:..............................................................................................17
Hierarchy Of Human Resource Department:.........................................................................................17
Introduction of Interviewee-Mr. Sultan Mughal:.......................................................................................18
Responsibilities:....................................................................................................................................18
Achievements in Pakistan Beverage Limited:.......................................................................................18
Job Analysis:.............................................................................................................................................19
Performance Management Process in Pakistan Beverage Limited:...........................................................20
Performance Management Planning:.....................................................................................................20
Performance Management Process:.......................................................................................................20
Frequency of Employee Review:...........................................................................................................22
Tools for Performance Measurement / Parameters of Rating Scale:......................................................22
Performance Appraisal Form:................................................................................................................23
Appraisal Interview/Meeting Duration:.................................................................................................24
3600 Feedback Method:..........................................................................................................................24
Performance Appraisal Trainings:.........................................................................................................24
Recognition of Superior Performers:.....................................................................................................24
Promotion Mechanism in Pakistan Beverage Limited:..........................................................................25
Alignment of Performance Management Process with the Strategic Goals of the Organization:..........26
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Causes of Poor Performance:.................................................................................................................26
Job Evaluation:..........................................................................................................................................27
Compensation Management System:.........................................................................................................28
Pay Mechanism of Pakistan Beverage Limited:....................................................................................28
Pay Grades:........................................................................................................................................28
Division of Grade ‘S’:...........................................................................................................................28
Strategy behind Pay Mechanism:...........................................................................................................29
Externally Competitive:.....................................................................................................................29
Internally Equitable:..........................................................................................................................29
Compensable Factors in Job:.....................................................................................................................30
Skills:.................................................................................................................................................30
Efforts:...............................................................................................................................................30
Responsibility:...................................................................................................................................30
Working Conditions / Geographic’s:.................................................................................................30
Base – Pay:............................................................................................................................................31
Cost – of – Living Adjustments and Contingent Pay:............................................................................31
Team Based Awards:.............................................................................................................................32
Salary Level of Critical Position:...........................................................................................................32
Employee Assistance Program (EAP):......................................................................................................33
Benefits:....................................................................................................................................................33
Vehicle:.............................................................................................................................................33
Fuel:...................................................................................................................................................33
Life Insurance:...................................................................................................................................34
Health Insurance:...............................................................................................................................34
Air – Travel:......................................................................................................................................34
Cell Phone (Set and Usage):..............................................................................................................34
Bonus:...............................................................................................................................................35
Gratuity:............................................................................................................................................35
Collective Bargaining and its Impact:....................................................................................................35
Compensation Management System and its Alignment with Pakistan beverage limited:......................36
Rehiring Policy:.........................................................................................................................................37
Exit Interviews:.........................................................................................................................................37
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Recommendations:....................................................................................................................................38
Conclusion:...............................................................................................................................................38
Executive Summary:.................................................................................................................................38
Appendix:..................................................................................................................................................39
Table 1:..................................................................................................................................................39
Table 2:..................................................................................................................................................40
Table 3:..................................................................................................................................................43
Table 4:..................................................................................................................................................46
Table 5:..................................................................................................................................................46
Performance Appraisal Form.....................................................................................................................48
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Introduction of Pakistan Beverage Limited:
Pakistan beverage limited the name of one of the giant in beverage manufacturing and
distribution industry of Pakistan which has the lion’s share of beverage industry of Pakistan
since 1950. Pakistan beverage limited is the biggest bottlers of Pakistan and had a great
experience of beverage industry that’s why Pepsi co offered its franchise to Pakistan
beverage limited in 1979.Pakistan beverage limited has its own brand of Pakola Ice cream
soda which still has a unique position in the minds of all the natives of Pakistan but they
handed over Pakola to any of the family of Pakistan beverage limited after acquiring Pepsi co
franchising to one of the group company of Pakistan beverage limited to avoid direct
competition with Pepsi. With its passionate employees, skilled workers, best equipment,
ideal site, huge and well managed and well equipped warehouses this relationship benefited
both the parties for almost 34 years. There are two core businesses of Pakistan beverages
others are supporting functions like Human Resource, Finance etc.
Production
Sales
There are six manufacturing plants of Pakistan beverage limited in Pakistan covering the
whole Sindh and Baluchistan. The sites are Karachi site (2 plants in Karachi), Yasir Fruit
Juice - a subsidiary company of Pakistan beverage limited, manufacturing juice named Slice
in bottles and Tetra packs, Hyderabad Plant, Quetta Plant and Aquafina Plant - a plant
located on super highway manufacturing bottled drinking water which is another well-known
brand of Pepsi co and is PSQCA certified-Pakistan Standards and Quality Control Authority.
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Pakistan beverage limited guiding principles and values stem from their mission and vision
which ultimately leads towards the individual and organization goals. These guiding
principles and values make the organizational culture friendly and cooperative for everyone.
These principles help in aligning employees with the organization mission and vision and to
achieve success. That’s why Pakistan Beverages able to capture the attention of most of the
multinational companies of Pakistan. People are the most important asset for the
organization. They value their people more than anything which is the main reason of
commitment and dedication of the employees due to which the employee turnover rate is
very low which is almost 2% as compared to the acceptable market turnover rate which is
almost 5% . The brands associated with Pakistan beverage limited include:
Pepsi
7 up
Miranda
Mountain Dew
Slice
Aquafina
Sting
Mission:
“Pakistan beverage limited will provide branded products and services of superior quality
and value that fulfills the needs, imagination and aspirations of the consumers we serve. As a
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result, consumers will reward us with leadership sales and profit, allowing our people, our
principle shareholders, and the communities in which we live and work to prosper.”
Vision:
“Pakistan beverage limited aspires to be recognized as, the largest beverage manufacturing
service and selling company in Pakistan with the most diverse portfolio of branded beverages
and cutting edge superior customer.”
Organization Statistics and Industry Parameters:
Industry: Food and Beverage.
Approximate Annual revenue: 20 billion.
HR Personnel: 25
Total Workforce: 5000 employees including approximately 250 top management personnel,
most of the employees are permanent only 5% to 6% employees on contractual basis.
ERP System: SAP- Systems Applications and Products in Data Processing implementing
from 2011.
Total manufacturing plants: Six plants.
Each case of Pepsi priced at Rs.324.
Accumulative area under manufacturing and warehousing: almost 60 acres.
Accumulative market share of sindh & Baluchistan: 75%.
Annual growth rate: 10% to 15%.
Annual employee turnover rate: 2%.
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Reasons of Low Turnover Rate:
The employee turnover of Pakistan beverage limited is very low as compared to the
acceptable industry turnover rate which is 5%. The reasons behind the low turnover rate are
as follows:
The employees are satisfied with the pay level. The basic pay is lower than the market
but the incentives, bonuses and perks are more than enough to satisfy their needs.
Collectively an employee gets 18 salaries a year (including 3.5 bonuses).
Salaries paid every month till fifth day of the month.
Overtime paid next to next day to the employees.
Career development opportunities provided to them.
Trainings have been given to them if any employee doesn’t perform up to the mark
continuously rather than fire them.
Employees have an access to the MD of the company.
The supportive management facilitates employees in times of grievances.
The company values their people more than anything which is the main reason of
commitment and dedication of the employees.
Values:
Integrity:
Pakistan beverage limited always tries to do right things and always follow the law of land,
in any case their first priority is to follow the law and implement this law in their
organization, either it’s a case of fraud in their organization or any other matter they always
follow the law and take actions according to law of the land. They draw their principle and
guide lines and they follow them to avoid any kind of dispute against the law of land or any
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individual. The leadership is straight forward and bold that is the reason that employees trust
them and follow them.
Leadership to Sustain:
Pakistan beverage limited have leaders in the all area of responsibilities, they all have clear
vision and have capability to deliver the organizational goals effectively to the individuals
and try to control all the external barriers which are coming to the way of organizational
goals and vision. They are well behaved and well educated in their fields and have excellent
leadership qualities.
Honesty and Candor:
Pakistan beverage limited expresses their point of view very honestly without being under in
any influence; they always are unbiased to anyone within the organization and take their
decisions rationally, they whatever do is for the betterment of the organization, and they do it
very honestly for the organization and the people of the organization. This is the reason their
employees trust them and trust their decisions and they have full faith on the leadership of the
organization.
Passion to Win:
Pakistan beverage limited believes in the hard work and to achieve what are their goals at any
way, they were passionate to provide best quality to their customers for this they do market
surveys and try to capture huge market share by knowing the customer needs and desire.
They make their as per the customers desire to fulfill their need, that is the reason they
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improving their product and compete in the market by their competitive nature and
improving quality attitude.
Ownership:
Pakistan beverage limited believes in personal accountability they improve their system and
then improve the individual’s performance and make their performance efficient and
effective for the organization which helps in achieving the organizational goals. They treat
company assets as their own and behave in a manner to keep the organizational goals in their
mind. They do what is better for the organization; this is the organization citizenship which
increases in employees by the confidence given by the organization and the independence
which is given by the organizational heads.
Trust:
Pakistan beverage limited believes that people work best when there is the foundation of trust
they respect each other, their customer, their consumers, and all the people who are directly
or in directly related to them and treat them as they wanted to be treated, because they
believe that when there is trust between the employees and the management, employees
confidence will increase and they work more effectively and efficiently. They have full
confidence in each other’s capabilities and they respect each other’s intentions, this respect
makes their relationship strong and creates a mutual relationship.
Guiding Principles:
Their principles and behaviors flow their mission and values.
Practice and Show Respect for all Individuals:
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Pakistan beverage limited believes that all individuals should respect each other views and
individuals ideas, the management of the Pakistan beverage limited practices this also they
show respect of every individuals ideas and their opinion and listen to them carefully and
consider that is the employee’s idea is considerable or not and if it suits them they will
consider it and practice it.
Focus on Strategic Work:
Pakistan beverage limited focuses on employee’s performances and reviews their
performance quarterly and to assure that their objectives and performance is strategically
aligned to the goals and vision of the organization. Their major focus is on employee’s
performance that at the end of the year they don’t face any kind of miscommunication
between the worker and the management so for this reason they believe that performance
should be reviewed quarterly, because from this they can evaluate performance easily and
can correct any one and aligned their performance to organizational goals.
Both the Company and the Individual have Undividable Interests:
Pakistan beverage limited encourages the ownership behavior of the employees, they said
that growth and success is not possible without aligning the company’s goals to individual’s
goals and needs, for this they provide them family environment they try to facilitate their
employees in any manner, they provide them interest free loan, build their houses to make
them feel a part of the family. That is the one reason the employees of the company feel
ownership and responsibility towards their jobs and they enjoy their work. They feel secure
working here and prefer the organizations goals first then their individual’s goals.
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External Focused:
Pakistan beverage limited also focuses on its external environment and reacts as per the
response they took from the environment, they identify the needs of the customer,
convenience of them and tries to provide them the quality goods and services that is the
reason of their good brand equity among the customer and well established brand image
which encourages them to do more for their customers to provide them their best which they
can provide. They also believe in mutual relationship with their customers and suppliers, they
develop mutual understanding relationship with them and provide their suppliers best
services.
Mutual Interdependency is their Way of Life:
They follow mutual interdependency between their business units as well as in their
geographic dispersion, they try to make a linkage between all and they were successes in this,
they build superior relationship to their customer who contribute to their corporate purpose
and support them in to achieve their strategic goals and mission, rather they were their
suppliers, customers, distributers or universities and governments.
No Procrastinate:
They do not delay their decisions; their culture is to take prompt action to any mischievous
action or anything which needs their first attention they try to give their full and first
attention to this kind of matter. They listen to their employees and try to get logical reasoning
to everyone’s idea or opinion and they reapply those ides which they think are right and
applicable in their organization. They encourage the new ideas and encourage those too who
take part on this it makes their working environment better and develop organizational
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ownership in their employees and employees take part on the responsibilities of the
organization and try to put their best efforts.
Workforce of Pakistan Beverage Limited:
Pakistan beverage limited has a flexible workforce, honest, self-managed, hardworking,
committed and dedicated who are ready to serve the company even on festivals like Eid,
overtime in holidays, cooperative and always ready to adopt change for the betterment of the
organization.
Organizational Culture of Pakistan Beverage Limited:
The organizational culture of Pakistan beverage limited is very friendly and cooperative.
They encourage the innovative ideas of individuals, always appreciates the initiates taken by
the individuals, every employee has a right to give his/her suggestion for the benefit of the
organization, they support individuals in their decisions which promotes a risk taking culture
in the organization so that the employees are ready to accept the challenges they faced, the
company assigned them difficult tasks which they accept as a challenge. The company is just
like a family for every individual, the management supports their subordinates in times of
grievances.
Acknowledgement of Performance:
The management acknowledged the performance of the employees. The company categorizes
each intrinsic and extrinsic reward into three classes as high, medium and low based on the
contribution towards accomplishment of the company’s goals to motivate the employees
through:
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Intrinsic Awards:
Employee of the month award (it’s a medium level reward).
Arrange family dinner/lunch with MD (high level reward).
Pictures of the employees are pasted on the notice board (low level reward).
Extrinsic Awards:
Cash prices-divides:
50% of the base pay_ high level reward.
25% of the base pay middle level reward.
10% of the base pay high level reward.
Human Resource Model of Pakistan Beverage Limited:
Human resource model is all related to your organizational goals and philosophy your human
resource model is drive from the organizational goals, leaders of the organization were set
these goals and then shift these goals to department to department and then these goals were
shift toward to each individuals in terms of their objects of the year. Now from their onwards
its human resource departments work is started they have to ensure that all the objective of
the departments should be strategically aligned with the organizational goals and philosophy
otherwise it is impossible to achieve the organizational goals.
The human resource model of Pakistan beverage limited is also like this they feel that the
objective of the department and the individuals should be “SMART” and should be
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strategically aligned to the organizational goals. Performance of the employees should be
reviewed quarterly then you can analyze that how your employee is performing and is he
performing to achieve the individual’s goals as well as organizational goals. They also
focusing on that their employees get that environment that motivate them to work they
somehow have an open door policy if any employee has any problem he/she can directly go
to the MD and share issues and problems that’s the one reason that employees feel the
ownership in the company and they try to put their 100% efforts in the company. They
provide them a family environment which motivate them and feel ownership and
responsibility about the organization. This environment provides a positive impact on the
organization and which results in high growth and high profitability in the industry, which is
the ultimate goal of any organization. They continuously communicate with their employees
to help them and guide to achieve their individuals goals, because if they were failed to
achieve their individual’s goals they also failed to achieve the organizational goals so they
communicate them and guide them properly to meet their targets and exceed their
performance, and make them effective for the organization.
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Organogram of Pakistan Beverage Limited:
Hierarchy Of Human Resource Department:
Gm-HR
Assistant Manager HR
AssistantManager HR
Assistant Manager HR
Assistant Manager HR
Assistant Manager HR
HR Manager
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Introduction of Interviewee-Mr. Sultan Mughal:
Presently, he is working as Group General Manager HR at Pakistan beverage limited. He is
with Pakistan beverage limited since 2009. He is looking after the Pepsi plants of Pakistan
beverage limited in Karachi, Hyderabad, and Quetta along-with the mineral water, juice and
dairy products plants that make a total of six plants and more than 5,000 permanent
employees.
Qualification:
He is Masters in Business Administration in Human Resource Management from Szabist,
Intermediate Science. Also he is able to use SAP as well.
Responsibilities:
Some most important responsibilities of him:
Preparing strategic recruitment and selection plans.
Prepare training and development strategies.
Making compensation plans.
Responsible for employee performance appraisal and also monitor and guide employees on
the basis of their contribution as well as against the values of the company.
Coordinate effectively with CBA-Collective Bargaining Agent and Labor Unions.
Align HR policies with the company’s strategic goals.
Achievements in Pakistan Beverage Limited:
Implementing SAP from FOXPRO application-arrange employee training, make them (i.e.
Employees as well as management) ready for this change.
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Introducing performance management in the organization (beyond the boundaries of
performance appraisal) started in 2011 in the company due to his efforts.
Job Analysis:
Understand the Job:
They first understand the job that which type of job it is, which type of responsibilities and
duties of this job, Authority, scope level everything should be known in depth to analyze the
job.
Behavior and Performance:
They identify that which type of performance they required for which type of the job and
what should be the behavior followed by the employee of that position.
Competencies Required:
On the basis of behavior they identify the competencies which are required for the job and
which are critical and essential for the job and then rate them most important to least
important and then finalize 6-10 competencies and develop competencies for the job.
Education, Experience and Trainings Needed:
They set the level of education needed for the job and then set the experience which required
for the job, after that they analyze that which type of job required which kind of training and
set the parameters for the certain job.
Review and Finalize:
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Then review all the data they collected from their respective departments, review every detail
critically, and then finalize the details for all the jobs.
Job descriptions and job specifications are the results of job analysis.
Job Descriptions and Specifications:
Job descriptions and specifications are revised after every year but Pakistan beverages do this
exercise in 2011 when they implemented S.A.P, they analyze all the jobs in depth and then
develop the job description for all jobs, and maintain the job specification to match the
candidates for the job, through this they find out the right person for the right job.
Performance Management Process in Pakistan Beverage Limited:
Performance Management Planning:
The planning of performance management starts from December and the first step is to set
the individual objectives. In the planning stage the Human Resource Manager, head of the
concerned departments as well as employee himself takes part so that the objectives of the
employee for the next year is set which are realistic and smart as much as the objectives are
smart the chances of achievement of objectives as much high. The direction of objectives
setting is as follows:
The top management formulates the strategic goals of the business which then communicates
to the senior management from which drives the departmental goals and ultimately shapes
into individual goals.
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Performance Management Process:
By November development of business plans starts on the basis of strategic goals of the
business by top management. On the basis of which smart objectives are set for the
individuals by the end of December, these objectives should be objective in nature because
those objectives which are subjective in nature are difficult to evaluate which creates
biasness when appraised. Managers provide complete guideline to their subordinates through
preset objectives. The accountability of employees depends on the employee’s individual
objectives which are set by managers. The managers keep records of the employee’s
performance during the period in the middle of the year by July which is called mid-year
review. At the end of the year by December or January the annual review of employee’s
performance starts. Individual’s strengths and weakness are identified on the basis of
competencies and identify the areas of improvements such as the need of training and
development for further future growth. 80% appraisal based on objectives accomplished
during the period and 20% based on behavioral aspects as how the given tasks performed
during the period. Out of 100, managers marked the performance of the employees. After this
phase the employees concerns are obtained, if the employee is not satisfied from his appraisal
so his appraisal is done by manager’s manager to ensure the safety of employee’s concerns.
But this occurs rarely in Pak Beverages because the company believes in continuous
monitoring and feedback to the employees and don’t believe in giving surprises to the
employees on annual appraisal meeting, the employee is fully aware of his performance and
ratings and negotiate with his manager or supervisor during the whole year. In the absence of
continuous monitoring the employees are unable to find where they make mistakes and
ultimately their efforts are not aligned with the companies objectives in result increase the
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cost for the company and the employees are not satisfied with their appraisals as they want to
compensate as per their efforts made for accomplishment of his tasks and he has no concern
whether the company’s objectives are met or not. He made efforts but his contribution to the
company’s objectives is equal to zero. Once the ratings have been completed the next move
is to see the further career moves for the employees, the areas of improvement of the
employees and reward them either in terms of salary or recommend the potential employees
for promotion if the slot is available for promotion, sometimes enrich or enlarge their
responsibilities accordingly.
Frequency of Employee Review:
Employee review is a continuous process. Continuous monitoring of employee performance
is necessary to keep the employee at the right track. The supervisors give their daily feedback
to their subordinates so that employees are totally aware about their direction towards the
objectives. Appraisal meeting is conducted once in a year but quarterly formal reviews done
to inform employees about their performance.
Tools for Performance Measurement / Parameters of Rating Scale:
Employee appraisal form is used to measure the employee performance which consists of
behavioral aspects and objective aspects. 20% behavioral aspects in which employee
performance is assess against the company ethics, guiding principles and values and 80%
performance is measured against the objective set by the individual and his immediate
supervisor. If the employee completes its targets/ objectives on time then the appraiser see
the quality aspect of the work done by the employee. Then assess the employee performance
in term of trainings given current year. What is the impact of trainings which the employee
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gets in current year on his performance, whether the training has any effect on employee
performance or not.
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Performance Appraisal Form:
The employee appraisal is a three pager form consists of Sections A to F:
Page 1 contains the personal information of an employee and Section A which contains the
employee evaluation in terms of objectives or to what extent the employee achieves his
objectives on time. Allot weightage to the objectives which is based on the level of
importance and its relative importance to the company’s performance. 80% appraisal based
on objective based.
Page 2 contains Section B which measures the employee’s achievement of objectives against
the behavioral terms that is how the employee achieves their objectives. Evaluate the
employee’s performance against the values of the organization. 20% appraisal based on
behavioral terms. The ratings of an employee is done by using likert scale format that is 0 is
rated for Never, 1 is for Sometimes and 2 is for Always.
In Page 3 contains Section C which measures the employee’s performance in terms of
training given to him during the year. Rate the employee as filled the requirement, no major
impact on the performance and significant impact on the performance. Section D contains the
performance summary and remarks and signature of appraiser and appraisee, Section E
contains performance up gradation and Section F contains remarks and signature of
Appraiser’s Manager. And at the end on the basis of ratings the employee falls on which
category:
Outstanding Performance (95-100)
Commendable Performance (85-94.5)
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Satisfactory Performance (70-84.5)
Un-Satisfactory Performance below 70
Appraisal Interview/Meeting Duration:
Appraisal interview should take minimum of 30 to 45 minutes one to one meeting between
appraiser and appraisee. In this meeting the appraiser points out the areas of improvement in
appraisee.
3600 Feedback Method:
3600 feedback appraisal method is used to evaluate the performance of the employees in
which supervisors, subordinates, peers; employee himself takes part in the performance
evaluation process. But this type of evaluation creates many types of biasness like halo effect
and recency effect etc. To solve this problem continuous monitoring and preset smart
objectives are the remedial steps. Continuous monitoring of employee performance on daily,
weekly and monthly basis is necessary to reduce these types of biasness.
Performance Appraisal Trainings:
Pakistan beverage limited only arranges general on-the-job & off-the-job trainings, appraisal
trainings are not arranged for the HR personnel.
Recognition of Superior Performers:
The performance is appraised on the basis of objectives and behaviors and those who score
more out of total scores or those whose performance exceeds the expectations are the
superior performers. The performers are classified as:
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Significantly exceeds expectations_ only 2-3% employees in an organization who
significantly exceed expectations.
Exceeds expectations_20% employees in an organization are those who exceed
expectations.
Just meet expectations_75% employees of an organization just meet expectations.
Below expectations_2-3% employees are those who perform below expectations and
require on-the-job and off-the-job trainings to improve their performance.
Those employees whose performance exceeds expectations are the superior performers of the
organization who contributes significantly in achieving the organizational goals.
Promotion Mechanism in Pakistan Beverage Limited:
Promotion of employees depends on:
Availability of slot for promotion
Potential employee
If slot is available but potential employee is not then goes for recruitment.
If slot is not available but potential employee is available then job enrichment or job
enlargement is usually preferred or communicate him that he is eligible for promotion as the
slot is available he should be promoted, or sometimes generate a new position for a potential
employee by dividing a part of job into two to create a new position in which he is able to
perform better than in the existing position or acknowledge him for his efforts and salary
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increment etc are the available choices in this situation to encourage or motivate the
employee to work hard. Every year the business grows or new positions arises which demand
new expertise or potential individuals and thus increase new slots for promotion.
Alignment of Performance Management Process with the Strategic Goals of the
Organization:
It is the most important job of an HR manager to align the performance management system
with the strategic goals of the organization. The employees are rated as honestly and fairly as
possible without any biasness; continuous review of the performance avoids the possible
biasness. The company tries to fulfill the employee’s needs to motivate and retain them.
Managers acknowledge the performance of their subordinates; equal promotional
opportunities are given to every individual. The objectives set for the individuals are smart
and every individual takes part in objective setting process. Employees have a right to arise a
question on the ratings of the managers if they are not satisfied with the ratings of their
managers and ask for re-appraisal from the manager’s manager. The employee appraisal
form is designed in such a way which ensures the employees concerns and provides further
career moves to them and also provide them more opportunities to develop their skills
through relevant on- the-job and off-the-job trainings which is beneficial for the individual as
well as for the company so that the employees are able to contribute in achieving the strategic
goals of the organization.
Causes of Poor Performance:
The causes of failure of delivering required outcome by the employee as:
Objectives are not smart.
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Objectives are not realistic, organizational and individual or group objectives are clear,
specific and realistic. Objective setting is the base of the performance management
system if it is not set properly so the whole process doesn’t give the desired objectives.
Continuous monitoring and feedback of objectives are not done by the managers.
Continuous monitoring and feedback gives the clear picture of the employee’s
performance whether the employee is on the right direction or not.
Trainings given to the individuals are not appropriate and also not beneficial for the
individual as well as for the organization. These types of trainings only increase the cost of
the company.
Job Evaluation:
The job evaluation process of Pakistan beverage limited consists of following steps:
Step 1:
Job analysis takes place and on the basis of job analysis; job description has been made.
Step 2:
Pakistan beverage limited does not formally participate in any salary survey process. They
rely on secondary data i.e. Salary survey reports from the market and industry. They know
about the happenings in industry, market and economy from those reports and get to know
the salary for particular grades and jobs. Furthermore, they intervene with people by the help
of feedback and know what people want and thus they play smart this way.
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Step 3:
At last, grades that consist of pay bands are being made by HR manager after considering job
description and salary survey reports. Their salary bands are updated yearly which are always
in accordance with the market, industry and economy.
Compensation Management System:
Pay Mechanism of Pakistan Beverage Limited:
Pay mechanism of Pakistan beverage limited lies in pay grades that consist of pay bands that
are given to employees for certain jobs. It differentiates the level of compensation given to
certain ranges of jobs. The lower the grade levels the small the band is whereas, the higher
the grade level the bigger the band exists. In Pakistan beverage limited; salaries are granted
even before the 1st of every month and even before holiday. People work to earn money
therefore they should be rewarded well and rewarded on time. So, in order to motivate them
they must be rewarded properly without being late. The office workers are being paid once in
a month whereas labors are being paid twice in a month.
Pay Grades:
The pay grades that are being classified in Pakistan beverage limited are in shown in table 1.
Division of Grade ‘S’:
Grade ‘S’ has been divided into the categories in accordance to skills and responsibilities.
This division has been shown in table 2 & 3.
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Strategy behind Pay Mechanism:
The strategies behind the pay mechanism of Pakistan beverage limited are discussed below:
Externally Competitive:
Pakistan beverage limited’s has endeavored to get external competitiveness in
terms of its pay that is being provided to its employees. External competency can
be achieved when pay rate in one company becomes equivalent to the pay rate in
other company for the same job. Pakistan beverage limited seems to be far behind
in market in comparison of its pay but when incentives are being compared; pay
mechanism seems to be quite competitive.
Internally Equitable:
Pakistan beverage limited has strategy to provide internal equity to its workers.
According to their pay mechanism, employees having same qualification and
same experience cannot be paid similar because those employees will differ from
each other by means of objectives that they are being provided. Furthermore, in
such cases degree to which employee performance also varies because one’s work
could be more complicated or critical as compared to the other that is entirely
regardless of their qualification and their performance level will be different from
each other. In this case, one’s performance could get better than the one who even
has same level of qualification and experience but his performance is not better
than the other employee of same level. In short, it’s all about the contribution one
has made towards the growth of company. If the pay for such cases is same then
there will exist biasness in pay mechanism. Therefore, in order to achieve internal
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equity in pay mechanism, bands are remained same but salary levels are
differentiated from one another.
Compensable Factors in Job:
Pay mechanism of Pakistan beverage limited compensates on the basis of following factors:
Skills:
Jobs are categorized by level of qualification, experience and certification ones’ possess.
The level of qualification required for departments are being specified and the level of
experience is also required for certain jobs. Furthermore, certifications in relevant criteria
are also seen as important factor in the job
Efforts:
As the level of education, experience and certification are of great importance that we
have mentioned above; the next compensable factor in job is considered to be the efforts
or the worth one is contributing in the growth and uplifting of the company.
Responsibility:
It is the job responsibility of the employee that causes increase in salary. As we have
gone through the pay grades and pay bands, it has been made obvious that one could
remain in the same grade but according to the minima and maxima of pay bands one is
being paid in accordance with the responsibility for which one is accountable for.
Working Conditions / Geographic’s:
According to the information that has been gathered, it has become quite obvious that
there exists no hazardous work in Pakistan beverage limited. It has always remained the
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priority of Pakistan beverage limited to hire employees from the same city to decrease the
hassle about the accommodation. But, as we all know that exceptions exist. Therefore,
whenever an employee (usually at managerial level) has been transferred to any other
city, company makes sure about his ease of living by providing accommodation or rental
and an additional increase in salary.
Pay Structure:
Pakistan beverage limited has 5000 workforce; therefore, it is not easy to revise their pay
structure. Hence, Pakistan beverage limited takes one department and enhances its salary per
year. For example: last year, the pay of sales and distribution department was enhanced and
this year, the pay of manufacturing department has been enhanced.
Pakistan beverage limited’s pay structure consists of following:
Base – Pay:
Base pay is given to employees in exchange of work performed. The base pay, which
includes position of an employee and duties performed. Thus, the base pay is usually
the same for all employees performing similar duties having same level of
qualification and experience. However, difference within the base pay range may
exist based on experience and differential performance
Cost – of – Living Adjustments and Contingent Pay:
Cost – of – living adjustments (COLA) imply the same percentage increases for all
employees regardless of their individual performance. Cost – of – living adjustments
are given to employees to combat the effects of inflation in an attempt to preserve the
employees’ buying power. Therefore, Pakistan beverage limited adjusts cost – of –
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living adjustments that is in accordance with the market and thus it has been added in
the base pay.
Contingent pay is an addition to the base pay that is based on the individual’s past
performance. Pakistan beverage limited provided contingent pay to their employee
who is based on the level of performance of an employee and this pay are usually
granted from the month of February.
Team Based Awards:
In Pakistan beverage limited, Sales & Distribution department and Production
department are given certain annual targets that they have to achieve. When these
targets are being achieved, the employees are awarded accordingly.
Salary Level of Critical Position:
The people assigned at critical positions are needed to be intervened in the company.
Therefore, Pakistan beverage limited keeps a keen look at the benchmark that is given
to that position and then formulates its pay structure i.e. Total cash benefits. At face
value, the base pay could be considered as low in accordance with the market but
when benefits and facilities are being encash, the total cash benefits increase the
amount of pay. The company believes that the people who are at critical position they
must be taken care of. The more employees are delivering and ensuring results and
the more business is growing due to their efforts, they are rewarded accordingly.
Even in some cases 100% increments are given to employees.
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Employee Assistance Program (EAP):
Pakistan beverage limited gives Employee Assistance program (EAP) to provide employees
with financial services. In this program, employees are being given interest free loan to fulfill
their needs i.e. Employees can build / purchase house. More than 80% employees are being
provided with this loan. In this way, employee commitment towards Pakistan beverage
limited has increased and employees strongly believe that the organization cares for them.
Benefits:
Pakistan beverage limited provides several benefits to its employees to make its compensation
plan more attractive and motivating towards employees. These benefits are being provided in
accordance with the respective grades that are being given to the employees. These benefits are
discussed below and are also shown in table 4 & 5.
Vehicle:
Pakistan beverage limited provides vehicle (cars) to its employees to ease their
transportable hassles and make them more motivated towards the work that they
perform. The vehicle allotment starts from the ‘Assistant Manager’ and goes up to the
‘Director’. The attributes of the vehicles vary according to the respective grades.
Fuel:
Pakistan beverage limited provides fuel to its employees to lower the burden of their
transportation cost. Fuel that has been provided to the employees starts from the grade
‘Staff’ and goes up to the grade ‘Director’. The quantity of fuel that is provided varies
according to the respective grades.
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Life Insurance:
Pakistan beverage limited provides Life Insurance to its employees to increase the
employee commitment towards the company. Life insurance starts from the grade
‘Staff’ and goes up to the grade ‘Director’. The amount of the insurance varies
according to the respective grades.
Health Insurance:
Pakistan beverage limited provides Health Insurance to its employees. Life insurance
starts from the grade ‘Staff’ and goes up to the grade ‘Director’. The amount of the
insurance varies according to the respective grades.
Air – Travel:
Pakistan beverage limited provides air – travel facility to its employees for
professional visits as well as for vacations (once in a year in winters). Air – travel
facility starts from the grade ‘Staff’ and goes up to the grade ‘Director’. The air –
travel class varies according to the respective grades.
Cell Phone (Set and Usage):
Pakistan beverage limited provides cell phone sets and their usage to a certain level to
its employees. Cell phone sets and their usage facility starts from the grade ‘Assistant
Manager’ and goes up to the grade ‘Director’. The amount of the cell phone set and
usage varies according to the respective grades.
In the following table, benefits given to the employees are illustrated with the help of
their respective grades and range.
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Bonus:
Pakistan beverage limited provides bonus to its employees every year. Bonus starts
from the grade ‘Staff’ and goes up to the grade ‘Director’. The amount of the bonus is
30% of gross salary that is being provided to all the respective grades.
Gratuity:
Gratuity is actually a benefit for services rendered in the past. It is a reward of good,
efficient and faithful service for a substantial period of time. It is provided to from the
grade ‘Staff’ and goes up to the grade ‘Director’ in proportion to their respective
salary per year.
Leave Encashment:
Pakistan beverage limited grants 44 days sick leave and casual leave annually to its
employees. In order to make employees motivated, leave encashment is the option
that is available for the employees.
The amounts of benefit that are being provided by Pakistan beverage limited are
illustrated in a table in terms of their respective grade:
Collective Bargaining and its Impact:
Collective bargaining is the process through which representative of management and the union
meets to negotiate a labor agreement. In Pakistan beverage limited, negotiation meeting takes
place in every 2nd year to negotiate wage, hours and terms and conditions of employment. The
management and union in Pakistan beverage limited both are conjunctive and cooperative to
each other. Therefore, there has never been a time when strike or lock outs ever had to happen in
the company. HR manager personally gets involved in the negotiation meeting. At the end of the
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meeting, within deadline or timeline, agreement between both parties takes place and win – win
situation occurs.
Compensation Management System and its Alignment with Pakistan beverage limited:
Pakistan beverage limited has achieved strong employee commitment by providing number of
benefits and employee assistance programs. Therefore, compensation management system is
aligned with the company by motivating and satisfying the employees so then these employees
become dedicated and motivated towards their work. Company takes care of every task that they
perform. Compensation management system provides work life balance to its employees by
offering them holidays, vacations, eid bonuses. Therefore, compensation management system is
aligned with Pakistan beverage limited because due to these fair and equitable compensation
systems motivate employees to achieve their individual/team goals and thus contributing in
achieving organizational goals.
Employees Satisfaction, Organizational Commitment & Compensation Mechanism:
Employees were satisfied with their jobs when they think they were paid what they want and
they think to deserve, you cannot satisfy your employee unless you can understand what makes
them satisfy and committed to organization, and there are several techniques to satisfy your
employee and make them committed to your organization, Pakistan beverage limited also tries to
this and somehow they are successful in this, they have a very attractive compensation plan for
their employees which attracts employee as well as motivate them and increase their productivity
as well as their organizational commitment. They give their employees 17 salaries, with other
benefits, including team rewards, bonuses, Cold drinks crate at minimum cost on festivals, loans
(interest free or interest bearing), medical facilities, fuel, over time, phone bills, they make
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homes for their employees to facilitate them because Pakistan beverages take their employees as
their family and they do whatever they can do for them to facilitate them and feel like family, all
this increase the organizational commitment and then employees treat organizational assets as
their own and they work hard for the organization, that is the one reason that Pakistan beverage
limited haven’t faces the lockouts situation because their employees were treat their loss as their
loss. The benefits they provide their employees also satisfy them and they work with efficiency.
The level of their satisfaction Is high that is why they have the employees whose working in this
organization sine 20 years and their all relative including son, son-in-law etc were also working
there, this is the trust on the organization and their commitment towards the organization that
they may not move anywhere.
Rehiring Policy:
Pakistan beverage limited rehires only those employees who for the time being left the
organization for training and development purposes like for getting any technical education,
degree or certification programs which is beneficial for the individual as well as for the
organization itself. The rehiring of those employees who left the organization for any other
reason than above mentioned won’t be rehired in any situation.
Exit Interviews:
Besides the fact that the turnover rate is very low so the HR manager himself conducts exit
interviews informally with the employees and make every effort to satisfy and retain them and
also to keep the turnover rate low.
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Recommendations:
The recommendations are as follows:
Proper job evaluation shall be conducted for which Pakistan beverage itself conducted salary
surveys. On-the-job trainings shall be preferred more than off-the-job trainings. Limit the age of
retirement of employees. Appraisal trainings have been given to the employees.
Conclusion:
Performance management and compensation plan is important for every organization. They
increase satisfaction and motivation level of every employee. PBL focus on employee
requirements and their need and customer satisfaction and they have done it successfully.
Moreover, PBL is continuously improving its PM methods to increase the satisfaction level of its
employees towards the organization.
Executive Summary:
The Human Resource department of Pakistan Beverage Limited is not a well-established
department as compared to other departments of the company like sales, marketing, finance,
operations and productions department. HR department needs improvement. General Manager-
HR of Pakistan beverage tried their best to make this department more and more effective. By
his efforts the company had been able to implement technological advancements in the company
to compete in the market.
The performance appraisal is now changed into performance management system by his efforts
since 2011. Before 2011 performance is evaluated only on the basis of what the employee did
during the particular period but now the performance of the employees are evaluated in the basis
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of preset objectives of the employees. Continuous feedbacks on the employee performance help
employees to relate their performance with the strategic goals of the organization. Continuous
monitoring of employee’s performance as well as the continuous feedback ensures the employee
satisfaction and ultimately the company’s success.
The compensation mechanism of Pakistan Beverage Limited ensures the employee’s needs to
motivate them and ensure their commitment towards the organizational goals. The pay structure
designs in such a way which motivates them. The base pay is low as compared to the market but
other incentives, allowances and bonuses which collectively make 18 salaries a year to make it
internally equitable and externally comparable. Almost 3.5 bonuses are given to the employees
in a year on different occasions and festivals so that they are able to make these occasions
special.
Company provides soft loans to the employees so that they are able to meet their emergency
needs. Company ensures job security to their employees. Company doesn’t have any rehiring
policy, only rehires those employees who left the organization for training and development
purposes.
Due to these effective policies of the company the turnover rate of the company is very low. But
to retain their employees and ensures this rate to be as low as possible exit interviews conduct
informally to the employees and make all the efforts to satisfy and retain them .
Appendix:
Table 1:
No# Grade Classification Pay Band
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1 D Director – Look after the whole group at all
locations.
250,000 and
above
2 G General Manager – Look after the respective
operation for the whole group or for major
businesses.
125,000 –
300,000
3 M1 Manager 1 – A senior manager looking after the
operation of a specified location / business.
50,000 –
125,000
4 M2 Manager 2 – A manager looking after the
operation of a portion of a specified location /
business and possessing 3 – 5 years of
experience.
30,000 –
74,999
5 AM Assistant Manager – Entry Level Managers
with 2 – 3 years of experience.
20,000 –39,999
6 S Staff – All those working below Assistant
Manager Cadre (In-charge – Supervisors –
Clerks, etc).
Below 20,000
Table 2:
Grade S1
Grade S2 Grade S3 Grade S4
(Assistant Mechanic
Level)(Mechanic Level) (Senior Mechanic Level)
Car Washer Clerk Account Clerk AC Mechanic
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Checker Office Assistant Boiler Operator Data Entry Operator
Gardner ReceptionistDistribution
ProcessorExport Officer
Guard Assistant Mechanic Electrician Merchandiser
Helper Assistant WelderMaintenance
Mechanic / DriverProcurement Assistant
Labor / Loader Forklift Driver Mechanic Sales Recorder
Messenger Head GardenerPainter /
Builder / MasonSenior Electrician
Office boySafety Maintenance
OfficerBottle Inspector Senior Mechanic
Photocopy Operator Cook Sales Collector Senior Fitter
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Sweeper Driver Service Mechanic Senior Machine Operator
Safety Operator Storekeeper Senior Storekeeper
Telephone
Operator
Senior Telephone
Operator
Transport Office
Assistant
Share Transaction
Processor
Fitter Van Salesman
MasonVan Salesman /
Merchandiser
Plumber Junior Foreman
Welder
Machine Operator
Turner
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Table 3:
Grade S5 Grade S6 Grade S7 Grade S8
(Technical Level)(Senior Technician
Level)(Supervisor Level)
(Professional
Level)
Account Assistant Accountant Line Supervisor Account Supervisor
Cashier Admission AssistantCustomer Service
Supervisor
Mechanical
Engineer
Electric TechnicianCost and Inventory
AccountantData Entry Supervisor Electronic Engineer
Electronic TechnicianCustomer Service
Officer
Distribution
SupervisorMicrobiologist
Foreman
Export
Documentation
Processor
Electrical Maintenance
Supervisor
Quality Control
Chemist
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Local Buyer Payroll AccountantExport Credit
Controller
Quality Control
Officer
Dispenser Computer OperatorExport Shipping
Coordinator
Quality Control In
charge
Mechanical
Technician
Senior Accounts
Assistant
Mechanical
Maintenance
Supervisor
Maintenance
Engineer
Sales DistributorSenior Electrical
Technician
Mechanical Services
Shop SupervisorSenior Chemist
Senior Procurement
AssistantSenior Foreman Personnel Supervisor Shift In Charge
Senior Quality
Inspector
Senior Sales
DistributorProduction Supervisor
Production In
Charge
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Senior Welder Senior Technician Regional AccountantBlow Mould In
Charge
Stores In Charge Safety Supervisor Electrical Engineer
Technician Sales Coordinator
Senior Designer
draughtsman
Asst. Quality Control
chemist
Technical Supervisor
Utilities Supervisor
Van Sales Supervisor
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Table 4:
Grade Vehicle Fuel* Life
Insurance
Health
Insurance
(Room Limit)
D 1600 / 1800 Actual 2000,000 15,000
G 1300 Automatic /
Fully Loaded
Actual 1800,000 13,000
M1 1000 – Cultus 150 kg 200,000 5,000
M2 1000 – Alto 120 kg 200,000 4,000
AM 800 Mehran 80 kg 200,000 3,000
S - - 200,000 1,500
*Fuel for field staff as per Actual.
Table 5:
Grade Air Travel
(Class)
Cell
Phone
Set
Cell
Phone
Usage
Bonus Gratuity
D Economy + 35,000 Actual 30% *
Gross
1 Gross /
YearG Economy 25,000 Actual
M1 Economy 15,000 2,000
M2 Economy 10,000 1,500
Am Economy 6,000 1000
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S Economy
Cell Phone And Its Usage For M1 And Below Is Subject To The Nature Of Job.
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Performance Appraisal Form
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