mc_salary analysis project_transformer sales
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MANAGERIAL COMPENSATIONSALARY ANALYSIS- TRANSFORMER SALES
BY:
Anshu Sethia
Anurag Anand
Ayushi Anand
M. Kavita
Rohit Mittal
Shweta Shukla
Sugam Malhotra
Vineet Gijre
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Table of Contents
ENTRY LEVEL ................................................................................................................................................. 3
LARSEN & TOUBRO ................................................................................................................................... 3
SALARY COMPONENTS .......................................................................................................................... 3
INCENTIVES AND ALLOWANCES............................................................................................................ 3
SIEMENS .................................................................................................................................................... 4
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 4
SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED .................................................................................... 5
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS ..................................................................... 5
COMPARATIVE ANALYSIS .......................................................................................................................... 5
MANAGER LEVEL ........................................................................................................................................... 7
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS ................................................................... 7
COMPARATIVE ANALYSIS .......................................................................................................................... 8
GM LEVEL .................................................................................................................................................... 10
SALARY STRUCTURE OF LARSEN & TOUBRO ........................................................................................... 10
RECOMMENDATIONS ................................................................................................................................. 13
BASIC SALARY .......................................................................................................................................... 13
ALLOWANCES .......................................................................................................................................... 14
VARIABLE PAY ......................................................................................................................................... 14
SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE ............................................................................. 14
SALARY STRUCTURE OF A MANAGER ..................................................................................................... 15
SALARY STRUCTURE OF A GENERAL MANAGER ..................................................................................... 16
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ENTRY LEVEL
LARSEN & TOUBRO
SALARY COMPONENTS
Components of the salary Amount (INR) Percent of CTC
Basic 120000
HRA 60000 50
Conveyance 36000 6.07
Special Allowance 180000 30.35
Team Performance Bonus 75000 12.64
Total Base (A) 471000
INCENTIVES AND ALLOWANCES
Components Amount (INR) Percent of CTC
LTA 20,000 3.37
Telephone 6,000 1.01
Medical 36,000 6.07
CCA 60,000 10.11
Total Incentives (B) 1,22,000
Total (A+B) 5,93,000
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SIEMENS
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS
ComponentsAmount
(INR p.m.)
Amount
(INR p.a.)
Percent
of CTC
(A) Basic Salary 11696 140352
Allowances / Benefits
House Rent Allowance 5,848 70176 50Based on Basic
pay
Conveyance Allowance 1,100 13200 3.3
Based on target
Pay
Medical Allowance 1,250 15000 3.75
Special Allowance 6,048 72576 18.14
Leave Travel Allowance (#) 1,333 15996 3.99
(B) Total Allowances/Benefits 15,579 186948
Base Pay (A+B) 27,276 327300 (C) 81.82
Retiral Benefits (Annual)
Company's Contribution to PF (12%
of Basic Salary)16,843 4.21
Company's Gratuity Provision
(4.81% of Basic Salary)6,751 1.68
Total Retiral Benefits 23,594 (D) 5.89
(E) Total Fixed Pay (TFP) (C+D) 3,50,904
(F)Performance Pay @ 100% p.a. on
Base49,096
(G) Target Pay p.a. (E+F)
4,00,000
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SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED
SALARY, ALLOWANCES AND INCENTIVES COMPONENTS
EARNINGS Amount (INR p.m.) Amount (INR p.a.) Percent of CTC
Basic 14,455 1,73,460
HRA 7,227 86,724 49.99
CONVEYANCE ALLOWANCE 800 9,600 2.59
SPECIAL ALLOWANCE 10,456 1,25,472 33.90
Total Rs. 32,938 3,95,256
DEDUCTIONS
PF 1,735 20,820 5.62
CANTEEN 360 4,320 1.16
Total 2,095 25,140
Net Salary Rs. 30,843 3,70,116
COMPARATIVE ANALYSIS
Schneider Electric Infrastructure Limited, L&T and Siemens are in transformer industry but still their
compensation structure varies.
Particulars L &T Siemens Schneider
HRA 50% 50% 50%
Conveyance 6.07% 3.3% 2.6%
Special allowance 30.35% 18.14% 34%
Medical Allowance 6.07% 3.75 N\A
Leave Travel Allowance 3.37% 4% N\A
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From the above table it can be seen as in HRA all the companies have a standard of 50% of Basic, but
variance is there w.r.t. conveyance and special allowance. Where in L&T conveyance is 6% in Schneider
it is 2.6% only.
Siemens pays a special allowance of only 18.14% as compared to other to companies which pay a
significant amount of 30%-34% of total pay.
Schneider as compared to other two companies does not pay Medical allowance and LTA.
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MANAGER LEVEL
SALARY STRUCTURES OF LARSEN & TOUBRO AND SIEMENS
SNo. Heads of PaymentAmount (INR)
L&T Siemens
(A) Basic Salary p.m. 25,000 29,241
Allowances / Benefits p.m.
House Rent Allowance 10,000 14,621
Conveyance Allowance 15,000 1,100Medical Allowance 3,000 1,250
Special Allowance 25,000 20,645
Telephone 1,000 -
CCA 7,500 -
Education Allowance 1,500 -
Loan 8,333.33 -
Leave Travel Allowance (#) 30,000 1,333
(B) Total Allowances / Benefits p.m. 10,1333.33 38,949
(C) Base Pay p.m. (A+B) 12,6333.33 68,190
(D) Base Pay p.a. (C*12) 15,16000 81,8280
Retirals (Annual)
Company's Contribution to PF (12% of Basic Salary) 36,000 42,107
Company's Gratuity Provision (4.81% of Basic Salary) 14,430 16,878
(E) Total Retirals p.a. 50,430 58,985
(F) Total Fixed Pay (TFP) p.a (D+E) 15,66,430 8,77,265
Ecal & Reptation Pay 10,00,000 -
Performance Bonus 1,50,000 1,22,741
(G) Max Variable Component 11,50,000 1,22,741
(H) Target Pay p.a. (F+G) 27,16,430 10,00,006
(I) Target Pay p.m. 2,26,369.16 83,333.83
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COMPARATIVE ANALYSIS
S.No Heads of Payment
As % Of Basic Salary
(per month)
As % Of Target Pay
(per annum)
As % Of Target Pay
(per month)
L&T Siemens L&T Siemens L&T Siemens
(A) Basic Salary p.m. 11.04 35.09
Allowances / Benefits p.m.
House Rent Allowance 40.00 50.00 4.42 17.55
Conveyance Allowance 6.63 1.32
Medical Allowance 1.33 1.50
Special Allowance 11.04 24.77
Telephone 0.44 0.00
CCA 3.31 0.00
Education Allowance 0.66 0.00
Loan 3.68 0.00
Leave Travel Allowance (#) 13.25 1.60
(B)
Total Allowances / Benefits
p.m. 44.76 46.74
(C) Base Pay p.m. (A+B) 55.81 81.83
(D) Base Pay p.a. (C*12) 55.81 81.83
Retirals Annual
(E) Total Retirals p.a. 1.86 5.90
(F)
Total Fixed Pay (TFP) p.a
(D+E) 57.67 87.73
Ecal & Reptation Pay
Performance Bonus
(G) Max Variable Component 42.33 12.27
(H) Target Pay p.a. (F+G)
(I) Target Pay p.m.
The composition of the salary structure of manager sales in transformer industry varies with the
company they are working in. For example, as illustrated above, the HRA varies between 40% and 50%
in Larsen and Tourbo and Siemens. The ratio of variable to fixed pay also varies from company to
company. Larsen and Tourbo emphasize more on variable pay, which is similar to industry pattern for
sales whereas in Siemens the fixed component is more. The max variable component in LNT is around
43% while in Siemens its only 12%.
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GM LEVEL
SALARY STRUCTURE OF LARSEN & TOUBRO
Components of the salary Amount (INR) Percent of CTC
Basic 6,00,000
HRA 2,40,000 40
Conveyance 2,40,000 5.384
Special Allowance 4,00,000 8.973
Performance Bonus 3,00,000 6.729
Ecal & Reptation Pay 2,00,0000 44.86
Total 37,80,000(A)
Incentives and Allowances Amount (INR) Percent of CTC
Uniform Allowance
LTA 50,000 1.122
Telephone 24,000 0.538
Medical 1,00,000 2.243
Food Coupons
TOTAL 1,74,000(B) 3.903
Education Allowance 24,000 0.538
CCA 1,80,000 4.038
Loan 3,00,000 6.729
TOTAL 5,04,000(C)
TOTAL SALARY (A+B+C) 44,58,000
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SALARY STRUCTURE MADE BY THE GROUP
ENTRY LEVEL
Components Amount (In Rs. p.a) % of CTC
Basic 1,62,000 36
HRA 81,000 18
Conveyance 96,00 2.13
Spl. Allowance 47,113 10.46
Variable
Team Performance Bonus
54,000 12
40%
organisational
performance
60% Unit
performance
Allowance Kitty
Food Coupons 48,000 10.66
Medical Allowance 15,000 3.33
LTA 12,000 2.66
Telephone 0
CCA 0
Total Incentives 0
0
PF 13,495 2.99
Gratuity 7,792 1.730
0
0
39,321 4,50,000
Special Allowance
Uniform Allowance 40,000
Entertainment Allowance 5,000
Messing Allowance 2,713
Total 47,713
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Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market leader
and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we decided to
keep ourselves at 112th
percentile of the median.
The team performance bonus is a total of 12% of the total pay. This 12% is further divided into 40%
organizational performance and 60% unit performance. This gives us the internal alignment for the role.
Calculate Tax if you can.
MANAGER LEVEL
Heads of Payments Individual Components Amount (In Rs. p.a) % of CTC
Basic Salary p.m. 400000 25.00
Allowances / Benefits p.m. 0.00
House Rent Allowance 200000 12.50
Conveyance Allowance 9600 0.60
Medical Allowance 15000 0.94
Special Allowance 78160 4.89
Telephone 25000 1.56Food Coupons 48000 3.00
Education Allowance 25000 1.56
Loan 200000 12.50
Leave Travel Allowance (#) 12000 0.75
Total Allowances / Benefits p.a. 612760 38.30
Base Pay p.a. 1012760 63.30
Retirals Annual
Company's Contribution to PF
(12% of Basic Salary) 48000 3.00
Company's Gratuity Provision
(4.81% of Basic Salary) 19240 1.20
Total Retirals p.a. 67240 4.20Total Fixed Pay (TFP) p.a 1080000 67.50
Performance Bonus 520000 32.50
Comment [V1]: Something on these
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Max Variable Component 520000
Target Pay p.a. 1600000
Special Allowance
Uniform Allowance 40000
Fuel 30000
Entertainment
Allowance 5000
Messing Allowance 3160
Total 78160
RECOMMENDATIONS
With the analysis of salary structures, we have come up with the salary structure for an entry
level employee, manager and general manager for a company involved in transformer sales.
The components across the levels are divided into following buckets
Basic salary Allowance kitty Special allowance Variable component Retiral Benefits
The components would vary across the levels.
We have adopted a Flexible compensation plan (Cafeteria plan) for the compensation
structure across levels. This would allow the employee to design his allowance according to his
needs, which would lead to employee satisfaction.
BASIC SALARY
Every employee would be paid a fixed amount of basic salary depending on the level he falls.
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ALLOWANCES
Every employee will be given fixed amounts for
Allowance kitty Special allowance List of allowances for allowance kitty & special allowance
The employee will have the discretion to opt for allowances of his choice in the allowance
kitty and special allowance. Employee may also restructure the amoun t between the
allowances in each bucket. The components in each of the bucket would vary across every level.
VARIABLE PAY
The variable pay across the levels will be disbursed based on the following to factors:
Unit Performance Company performance
Weight age for the Unit performance would be 60 % while that of the companys performance
would be 40 %. This was a common trend observed across organizations involved in transformer
business.
SALARY STRUCTURE OF AN ENTRY LEVEL EMPLOYEE
COMPONENTS Amount (INR) % OF CTC
Basic 1,62,000 36.00
Allowance Kitty
HRA 81,000 18.00
Conveyance 9,600 2.13
Food Coupons 48,000 10.67
Medical Allowance 15,000 3.33
LTA 12,000 2.67
Total Allowance kitty 1,65,600 36.8
Special Allowance Special Allowance 47,113 10.47Total Fixed Salary 3,74,713 83.27
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Variable Team Performance Bonus 54,000 12.00
Retiral BenefitsPF 13,495 3.00
Gratuity 7,792 1.73
CTC 4,50,000
Special Allowance Amount (INR)
Uniform Allowance 40,000
Entertainment Allowance 5,000
Messing Allowance 2,713
Going by the industry analysis at the entry level, we come to a conclusion that L&T is the market
leader and the median pay for the entry level is hovering somewhere around Rs. 4,00,000. So, we
decided to keep ourselves at 112th percentile of the median.
The team performance bonus is a total of 12% of the total pay. This 12% is further divided into
40% organizational performance and 60% unit performance. This gives us the internal alignment
for the role.
SALARY STRUCTURE OF A MANAGER
COMPONENTS INR % OF NET SALARY
Basic Salary p.m. 4,00,000 25.00
Allowance Kitty
House Rent Allowance 2,00,000 12.50
Conveyance Allowance 9,600 0.60
Medical Allowance 15,000 0.94
Telephone 25,000 1.56
Food Coupons 48,000 3.00
Education Allowance 25,000 1.56
Loan 2,00,000 12.50
Leave Travel Allowance (#) 12,000 0.75
Total Allowance Kitty 5,34,600 33.41
Special Allowance Special Allowance 78,160 4.89
FIXED SALARY 10,12,760 63.30
Variable Salary Performance Bonus 5,20,000 32.50
Comment [V2]: Something on these
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Retirals Annual
Company's Contribution to PF
(12% of Basic Salary) 48,000 3.00
Company's Gratuity Provision
(4.81% of Basic Salary)19,240 1.20
Total Retirals p.a. 67,240 4.20
CTC 16,00,000
Special Allowance Amount (INR)
Uniform Allowance 40,000
Fuel 30,000
Entertainment Allowance 5,000
Messing Allowance 3,160
SALARY STRUCTURE OF A GENERAL MANAGER
Heads of Payments Individual Components
Amount (In Rs.
p.a)
% of
CTC
Basic Salary 4,80,000 15
Allowances Kitty
House Rent Allowance 2,40,000 7.5
Conveyance Allowance 9,600 0.3
Medical Allowance 15,000 0.47
Telephone 40,000 1.25
Food Coupons 48,000 1.5
Education Allowance 25,000 0.78
Loan 4,00,000 12.5
Leave Travel Allowance (#) 12,000 0.38
Total Allowances Kitty 149600 24.68
Special Allowance Special Allowance 4,09,712 12.8
Retirals Annual
0
Company's Contribution
to PF
57,600 1.8(12% of Basic Salary)
Company's Gratuity
Provision23,088 0.72(4.81% of Basic Salary)
Total Retirals p.a. 80,688 2.52
Performance Bonus 14,40,000 45
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CTC 32,00,000
Special Allowance Amount (INR)
Uniform Allowance 40,000
Fuel 50,000
Entertainment Allowance 5,000
International travel allowance 2,00,000
Driver Allowance 1,14,712
Total 4,09,712