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International University of Business Agriculture and Technology

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Report on

Compensation system of BRAC Bank Limited

Prepared for:

Mr.

Faculty of Business Studies

Sec: d Course Id: MGT 102

Prepared by

Letter of transmittal

Date: 30/11/2011

Mr. Monzoor Morshed

Lecturer

School of Business

International University of Business Agriculture and Technology

Subject: Submission of Transmittal.

Dear Sir,

It is a great pleasure for us to submitting the report to you entitled by “Compensation System of an Organization Operating in Bangladesh" as the fulfillment of the partial requirement of the whole program. This report is done to find how compensation system operating in Bangladesh. We are working on bank name BRAC Bank Ltd. we find how employee get compensation.

The Compensation System is an essential part of banks all over the world. The Compensation System is used in a bank to increase the performance and efficiency of the individuals and the bank as a whole. It has been a great pleasure for us to work on this report as it provides many opportunities to gain insights about the Policies of BRAC Bank ltd.

We are grateful to you for your continuous guidance in preparing this project. Finally, I also believe that this report will satisfy you. If you need any further clarification interpreting our analysis please feel free to ask.

Yours sincerely,

Md. Tausiff Hossain -------- ID# 0921051

Nazmun Nahar Sayema -------- ID# 0720183

Zohra Zakir Jyoli -------- ID# 0920775

Md. Kamron Mollah -------- ID# 0920256

Digjoy Talukder -------- ID# 082044

By the cordial mercy of Allah, now we are able to submit our report to our honorable Sir Mr. Monzoor Morshed. He has been patient and understanding of all our queries and problems, and we are very grateful to him for his help. We strongly believe that it would not be possible for us to prepare such a report without Almighty’s grace.

This acknowledgment will remain incomplete if we don’t thanks to those people who helped and being corporate with us. So we would like to thank all the employees of BRACK Bank Ltd specially Mr.Mohiuddin for his help and valuable advice. They have been very helpful throughout the preparation of the report & responding to all our queries.

We would also like to express gratitude to my university faculty members. They should be remembered because they produced the platform of our knowledge. Again, we would like to thank our honorable sir for giving us such a chance in completion of the report.

Finally, our special thanks to each of our group members who made our paper more informative.

Table of content

❖ Executive summery----------------------------------------------------------------------------

❖ Introduction

• Reason for this term paper--------------------------------------------------

• Objective of the study--------------------------------------------------------

• Scope of the study------------------------------------------------------- ----

• Methodology------------------------------------------------------------------

• Limitation----------------------------------------------------------------------

❖ Introduction of the organization (Company profile) --------------------------------------

❖ Organizational overview-----------------------------------------------------------------------

• Investment summery, BRAC Bank vision, mission, core values-----------------------

• Organizational goal, Function, Organizational structure, Chain of command---------

❖ Compensation Management of BRAC Bank

• Compensation strategy-------------------------------------------------------------------------

• Pay structure of BRAC Bank-----------------------------------------------------------------

• The Reward system----------------------------------------------------------------------------

▪ Compensation components-------------------------------------------------

• Non- compensation components----------------------------------

• Compensation package of BRAC Bank----------------------------------------------------

• Motivational Activity-------------------------------------------------------------------------

• Job evaluation, Performance appraisal-----------------------------------------------------

• Incentive------------------------------------------------------------------------------------

❖ Conclusion---------------------------------------------------------------------------------

❖ Recommendation-------------------------------------------------------------------------

❖ Survey on the compensation management of BRAC Bank Limited---------------

❖ References---------------------------------------------------------------------------------

BRAC Bank is a leading private commercial bank in Bangladesh. Its headquarters are based in the capital Dhaka. As one of the fastest growing and modern banks of Bangladesh, BRAC Bank Limited is playing a vital role as financial intermediaries linking economic policies of the government with rest of the economy. The bank is constantly serving people and the economy of the country by raising aggregate demand, production and thus creating wealth for the economy. To maintain the resilience in doing growth oriented profitable and socially responsible business in the fiercely competitive banking industry of Bangladesh.

Since BRAC Bank Ltd” are the leading Bank in the bank business and are efficiently broadening their horizon, we thought it would be interesting to know about their practices and their strategies which they apply in their day to day activities in controlling the compensation system and human resource and also planning policies to reach the goals in time. This organization maintains a competitive compensation program to ensure employee motivation and satisfaction. They also organize training programs and workshops to improve the skill of the employee. The performance reward system which rewards the most efficient branch. BRAC Bank Ltd. has a very strong culture which reflects their mission, vision, achievement and core values. In addition, the employees of BRAC Bank Ltd are very motivated because the bank provided various benefits such as bonus, personal reward, motivational and professional training programs. This organization design their compensation package such a way so the employee will be benefited. BRAC Bank Ltd. uses an effective job evaluation process. This process helps this organization to find out the detail job description and responsibility of each employee. BRAC Bank Ltd. Use rating scale to find out the productivity and efficiency of the employee.

BRAC Banks reward and benefits practices aim to support in attracting and retaining the best people for the organization. To maintain an attractive salary and benefit package, they regularly compare themselves to a select group of other businesses and reward higher performance by individuals and teams. They want their employees to feel rewarded by the challenge of their roles, career opportunities, learning new job tasks, and positive team relationships.

Reason for this Term Paper:

As students of the School of Business, we are required to do a Term Paper in this Compensation (HRM-370) course & this Term Paper is authorized by our honorable instructor Mr.Monzoor Morshed. This report is assigned on, 2011 and the submission date is 27th November 2011. As we’re required to do our term paper on the compensation strategy of any chosen institution, we preferred BRAC Bank Ltd and present their compensation strategy on our Term Paper.

Objective of the study:

The main objective of the study is to discover the Practice of Compensation System in BRAC Bank Ltd.

Scope of the Study:

In this “Compensation Strategy” report we are going to cover following areas of BRAC Bank Ltd:

✓ Company Profile

✓ Compensation Strategy

Although we hear people saying that they do not care for money but they do care for the feeling of belongingness to their organization it goes without saying that money is a major motivator. It is through compensation by which a relatively effective and satisfied working force is sustained. The maintenance of employee co-operation is largely dependent upon the answers of following questions:

➢ Whether the company’s compensation rates are better than those of the segment market?

➢ What indirect plans of compensation are commonly used in the organization?

➢ What specific plans are available from which to choose?

➢ What benefits, incentives and rewards are provided?

➢ Whether these policies are transparent to the employees and practiced without any distortion?

We have basically judged the organizations on the basis of the above criteria. Beyond our scope to focus on each and every bank, we have chosen BRAC Bank Ltd.

Methodology:

Data are collected from both primary and secondary sources. Necessary information is collected from Face to face conversation with the bank officers & staffs Conversation with the clients, the daily newspapers, relevant journals, annual reports of BRAC Bank, survey using questionnaires and their web site.

Limitation:

Though we are lucky to get the chance to prepare this report but unfortunately we have faced some difficulties. We tried to overcome the difficulties and gave our best effort.

When preparing this report, some difficulties we faced:

➢ The officers were so much busy with their work and did not able to give us enough time.

➢ As the pay grade and compensation detail information is completely secreted for the organization BRAC Bank Ltd. So they do not provide us detail information about it.

BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established in Bangladesh under the Banking Companies Act, 1991 and incorporated as private limited company on 20 May 1999 under the Companies Act, 1994. The primary objective of the Bank is to provide all kinds of banking business. At the very beginning the Bank faced some legal obligation because the High Court of Bangladesh suspended activity of the Bank and it could fail to start its operations till 03 June 2001. Eventually, the judgment of the High Court was set aside and dismissed by the Appellate Division of the Supreme Court on 04 June 2001 and the Bank has started its operations from July 04, 2001. The Chairman of the Bank is Mr. Muhammad A[Rumee] Ali. Now the Managing Director and & CEO of the bank is Mr. Syed Mahbubur Rahman. The bank has made a reasonable progress due to its visionary management people and its appropriate policy and implementation.

BRAC BANK LTD. has a reputation of serving the best possible service to their clients. All of their employees should have some unique qualities to keep going on with the reputation. They believe that to maintain this reputation quality employee is must. To acquire employees they have a staffing process. They have divided their staffing process in Employment planning and job analysis, Recruitment, Selection process, Training (if needed). As we know from the theoretical part that the first step of developing employment-planning system is job analysis, BRAC BANK LTD. also performs that. They also develop a set of clearly defined job description and job specifications. In their job analysis, BRAC BANK LTD. focuses on what the job holder requires to do and the skills they needed to do it. In their job analysis they also provide the analysis of the activities that an employee performs.

|Name of the bank | BRAC Bank Ltd |

|Status | Public company Ltd. |

|Incorporated at | 20 May 1999 |

|Inauguration of the first branch | 4th July 2001 |

|Inauguration of the CDA Avenue Branch | 24th December 2007 |

|Head Office | 1, Gulshan Avenue |

| |Gulshan, Dhaka-1212 |

| |Bangladesh |

|Chairman | Mr. Muhammed A Rumee Ali |

|Managing Director | Mr. Syed Mahbubur rahman |

|Asset growth by | 103 % |

|Liabilities growth by | 65 % |

|Find Under Management growth by | 80 % |

|Number of Deposit Account | 300000 |

|Number of Advance Account | 50000 |

|Number of Branches | 57 |

|ATM Booth | 177 |

Organizational Overview

Basically BRAC Bank Limited performs major four types of functions – Term Loans to Industries, Full-fledged commercial banking service, Technical Support to Small Scale Industries (SSIs), and Micro-credit to rural poor.

BRAC Bank Limited is totally strict in its goal and for completing its objectives it has a strong management system.

Investment summary:

Share price BDT 792 million

Ordinary shares 15.8 million

Free float 50%

Average daily volume (shares) 97838

Market capital BDT 12656.16 million

Reserve & surplus 902.03

12wk high/low (shares) BDT 746.25/1690 million

Vision of BRAC Bank :

Building profitable and socially responsible financial institution focused on Market and Business with Growth potential, thereby assisting BRAC and stakeholders to build a just, enlightened, healthy democratic and poverty free Bangladesh. BRAC Bank will be a unique organization in Bangladesh. It will be a knowledge-based organization where the BRAC Bank professionals will learn continuously from their customers and colleagues worldwide to add value.

Corporate Mission:

➢ Sustained growth in Small & Medium Enterprise sector

➢ Continuous low-cost deposit Growth with controlled growth in retail assets.

➢ Corporate Assets to be funded through self-liability mobilization. Growth in Assets through syndications and investment in faster growing sectors.

➢ Continuous endeavor to increase non-funded income

➢ Keep our debt charges at 2% to maintain a steady profitable growth

➢ Achieve efficient synergies between the bank’s branches, SME unit offices and BRAC field offices for delivery of remittance and Bank’s other products and services

➢ Manage various lines of business in a full controlled environment with no compromise on service quality

➢ Keep a divers, far flung team fully controlled environment with no compromise on service quality

➢ Keep a diverse, far flung team fully motivated and driven towards materializing the bank’s vision into reality

Core Values:

Our Strength emanates from our owner BRAC. This means, we will hold the following values and will be guided by BRAC as we do our work.

➢ Value the fact that one is a member of the BRAC family

➢ Creating an honest, open and enabling environment

➢ Have a strong customer focus and build relationships based on integrity, superior service and mutual benefit

➢ Strive for profit & sound growth

➢ Work as team to serve the best interest of our owners

➢ Relentless in pursuit of business innovation and improvement

➢ Value and respect people and make decisions based on merit

➢ Base recognition and reward on performance

➢ Responsible, trustworthy and law-abiding in all that we do.

Organizational goals:

➢ BRAC Bank will be the absolute market leader in the number of loans given to small and medium sized enterprises throughout Bangladesh.

➢ It will be a world - class organization in terms of service quality and establishing relationships that help its customers to develop and grow successfully.

➢ It will be the Bank of choice both for its employees and its customers, the model bank in this part of the world.

➢ To undertake project promotion on identify profitable areas of investment.

➢ To search for newer avenues for investment and develop new products to suit such needs.

➢ To establish linkage with other institutions which are engaged in financing microenterprises

➢ To cooperate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.

Functions:

The Bank Offers:

a. Term loans to industries especially to small-scale enterprises.

b. Full-fledged commercial banking service including collection of deposit, short-term trade finance, working capital finance in processing and manufacturing units and financing and facilitating international trade.

c. Technical support to Small Scale Industries (SSls) in order to enable them to run their enterprises successfully.

d. Micro credit to the urban poor through linkage with Non- Government Organizations (NGOs) with a view to facilitating their access to the formal financial market for the mobilization of resources.

In order to perform the above tasks, BASIC Bank works closely with its clients, the regulatory authorities, the shareholders (GOB), banks and other financial institutions.

Organizational structure:

To achieve its organizational goals, the Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body. The day to day operation of the Bank is looked after by the management.

A. BOARD OF DIRECTORS

As stated earlier the Government holds 100 percent ownership of the Bank. All the

Directors of the Board are appointed by the Government of Bangladesh. The secretary of the Ministry of Industries is the Chairman of the Bank. Other Directors of the Bank are senior Government and central Bank executives. The Managing Director is an ex-officio member of the Board of Directors. There are at present 7 Directors including the Managing Director.

B. MANAGEMENT

The management is headed by the Managing Director. He is assisted by the General Managers and Departmental Heads in the Head Office. BASIC Bank is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief Executive is concerned. The Branch Managers of the Bank report direct to the Managing Director and, for functional purposes, to the Heads of Departments. Consequently, quick decision making in disposal of cases is ensured.

Resources & Capabilities:

BRAC Bank Limited is well prepared to and capable of meeting the demand for a broad range of banking services. It has got adequate resources, both human and physical, to provide the customers with the best possible services.

A. Physical and technological resources

A great deal of investment for developing the physical resource base of the Bank has been made. The Bank has its presence in all the major industrial and commercial hubs of Bangladesh in order to cater to the needs of industry and trade.

Major features of these branches are:

❖ Fully computerized accounts maintenance.

❖ Well decorated air conditioned facilities.

❖ A fully operational computer network which is currently being implemented.

The work of Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and secured communication between the branches and the Head Office is in progress to facilitate any Branch Banking and ATM Services.

❖ Money counting machine for making cash transactions easy and prompt. Fifteen out of twenty six branches are authorized dealers of foreign exchange. This facilitates speedy disposal of transaction of export and import trade.

B. Human resources:

BRAC Bank Limited has a well-diversified pool of human resources which is composed of people with high academic background. Also, there is a positive demographic characteristic - most employees are comparatively young in age yet mature in experience.

As of December 2003 the total employee strength is 523. The strength is 435 excluding the menial staff. BRAC bank Limited has been investing its resources with a view to developing an efficient and professional work force. Two approaches are mainly used in this regard.

C. Recruitment of New Officers:

The Bank follows a strict recruitment policy in order to ensure that only the best people are recruited. The Bank, so far, has recruited four batches of entry-level management staff, all of whom have excellent academic background.

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Chain of command

|Person |No. of person |

|CHAIRMAN |1 |

|BOARD OF DIRECTORS |6 |

|MANAGING DIRECTOR |1 |

|EXECUTIVE VP |3 |

|SENIOR VP |7 |

|VICE PRESIDENT |9 |

|ASSISTANT VP |11 |

Compensation strategy

Compensation Strategy is one of the most important strategies in the HRM Function as it influences the costs of the organization and potential bad decision can lead to very serious damages to the organization. The compensation strategy drives the compensation policies and compensation processes in the organization. The compensation strategy provides the organization with the vision of its compensation drives the effort of HR employees and manages the investments into the human capital. The compensation strategy sets the limits for the compensation and benefits section, provides the business with the predictability of the personnel expenses and helps to control the personnel expenses efficiently. The compensation strategy defines the priorities in compensation and benefits section. The well managed compensation increases the performance and satisfaction of employees. The employees have the assurance of being rewarded the same manner and using the same principles across the organization.

We all know that BRAC Bank Limited is a leading and fastest growing private commercial bank in Bangladesh. To ensure employee motivation and satisfaction BRAC Bank Ltd maintains a competitive compensation program. BRAC Bank awards bonus with its employees from the profit it earns every financial year. BRAC Bank won many prestigious awards which is the indicator of good management skill and effort of the employee. The bank always acknowledged the valuable contribution made by its employees for the continuous superb achievement every year. The bank created a sense of community among the employees by encouraging communication with each other in the Management committee Meeting and across the department and divisions. This discussion helped the employee to learn each other jobs and roles and develop an understanding about the bank as a whole. They also organize training programs and workshops to improve the skill of the employee. BRAC Bank Ltd has entered into agreement with some good medical center for providing service to the bank’s employee and family members at concession rate. Staff welfare fund has been created for securing the employees form accidental loss. There is some interesting activity that normally a bank cannot do but BRAC Bank do. The Bank arrange annual picnics, family nights where employee participate along with their family members. In this benefit scheme the branch managers can travel to neighboring countries with their family members. BRAC will bear their expenses. Various attractive retirement benefits are in place. BRAC bank offers festival bonus during EID, and on other different occasions. Deserving candidates are given a regular basis promotions and increments. To promote entrepreneurial skill and actions, encourage people to assume responsibility and to encourage people to assume responsibility and to encourage compliance culture, some of the remuneration which was paid indiscriminately earlier has been made performance based and result oriented. As such the annual assessment process has gone through major changes. It is hoped that new system will provide sustained support for Bank’s contentious success. BRAC Banks reward and benefits practices aim to support in attracting and retaining the best people for the organization. To maintain an attractive salary and benefit package, they regularly compare themselves to a select group of other businesses and reward higher performance by individuals and teams.

Pay Structure of BRAC Bank Limited

The pay structure of BRAC Bank LTD. is well organized. BRAC Bank Ltd. takes special care about their employee and they maintain the pay equity and fairness. They not only give the salary they also give some additional benefit like mobile facilities , medical allowances, Loan at lower interest, arrange picnic and family night, give reward to the employee (based on their performance), transport facility and so on. Pay structure of BRAC Bank LTD is give below:

|Position |Title |Pay Range (In Tk. A month) |Average |

|MD |Managing Director |700000-800000 |750000 |

|AMD |Additional Managing Director |400000-450000 |425000 |

|DMD |Deputy Managing Director |300000-350000 |325000 |

|SEVP |Senior Executive Vice President |170000-190000 |180000 |

|VP |Vice President |100000-105000 |102500 |

|SAVP |Senior Assistant Vice President |85000-90000 |87500 |

|AVP |Assistant Vice President |65000-75000 |70000 |

|SEO |Senior Executive Officer |50000-55000 |52500 |

|EO |Executive Officer |40000-45000 |42500 |

|PO |Principal Officer |35000-37000 |36500 |

|SO |Senior Officer |30000-32000 |31000 |

|MT |Management Trainee |25000-28000 |26500 |

|Officer |Officer |24000-25000 |24500 |

|JO |Junior Officer |16000-17000 |16500 |

|AO |Assistant Officer |13000-14000 |13500 |

|TA |Trainee Assistant |10000 |10000 |

Structure: Shareholding structure

|Name of Shareholder |Total Shares |% of Total Share |

|BRAC |76,55,265 |37.18 |

|Mr.Quazi Md.Shariful Ala |204 |0.001 |

|Dr. Hafiz G.A. Siddiqi |204 |0.001 |

|Ms. Nihad Kabir |171 |0.001 |

|Mr. Syed Mahbubur Rahman |171 |0.001 |

|Mr. Shib Narayan Kairy |204 |0.001 |

|Mr. Md. Aminul Alam |204 |0.001 |

|Ms. Tamara Hasan Abed |171 |0.001 |

|Dr. Saleh uddin ahmed |156 |0.001 |

|Shorecap International Ltd. |14,38,949 |6.99 |

|International Finance Corporation (IFC) |12,00,547 |5.83 |

|General Shareholders |102,95,754 |50.00 |

|Total |205,92,000 |100.00 |

The Reward System

The reward system of an organization includes anything that an employee may value and desire and that the employer is able or willing to offer in exchange for employee contributions on top of compensation. BRAC Bank Ltd provides reward to attract and retain people who have certain knowledge, skill, aptitude and attitudes. This reward may be paid in the short term or in the long term. Understanding how rewards effect motivation or modify behavior has been the aim of behavior scientists. One great difficulty they face is that the value an individual attaches to a specific reward or a reward package may vary significantly over time span need not be too long. Rewards provided by the employer can be two types:

(1) Compensation components

(2) Non-compensation components

Compensation components

The compensation strategy and compensation policy includes several compensation components and the ownership and the responsibilities have to be defined for them. The compensation components should not have just one owner; the components should be distributed to all the business leaders, as they need a financial tool to motivate their employees. The HRM Function tends to centralize the compensation components ownership to one place, but this approach can work just for a limited period of time and then it fails and hurts the business.

The top management of the organization has to make a clear decision about the components included in the compensation strategy and compensation policy. The compensation policy has to define the roles and responsibilities of different departments and the general rules applied to each compensation component in the organization. Let see a diagram of compensation components:

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Compensation components provide by the BRAC Bank Ltd to all level employees which include:

➢ Pay for work performance: is money paid to someone relating to how well one works. It includes money provided in the short term can be weekly, monthly and annual bonus. BRAC Bank Ltd provides 2 annual bonuses, 2 performance increments (varies on performance) to all level employees.

➢ Pay for time not worked: This compensation dimension include holiday, vacation, sick leave, emergency leave etc. Workers have enjoyed more days off with pay for holidays, longer paid for vacations and time paid off for a wide variety of personal reasons. BRAC Bank Ltd provides 50 paid holidays and 2.5 months maternity leave for women employee.

➢ Loss of job income continuation: Varity of components such as unemployment insurance, supplemental unemployment benefits, severance pay help unemployed workers subsist until new employment opportunity arise. BRAC Bank Ltd provides insurance; provide fund form the Employee welfare foundation if the employee became sick and grantee annual income.

➢ Disability income continuation: Varity of components include Short-term disability, sickness, accident, Long-term disability, worker compensation, accidental death and family care, group life insurance. BRAC Bank Ltd provide sick leave to employees both short term and long term disability. BRAC Bank also provides group life insurance to board of directors.

➢ Deferred Income: This compensation dimension include Pension plan, long-term profit sharing, Individual retirement account, stock purchase plan, long-term performance award. BRAC Bank Ltd have pension plan for their employee. A certain amount they cut every month to their employee salary and return all the money when an employee left the organization. They also provide award to those people who work in the organization for long time.

➢ Income Equivalent Payments: Popularly known as PERKS. Most common perks include use for company car, use for company credit card for dining, subsidized food service. BRAC Bank provide company car facility for the board of directors, they have dining room in most of the branches. They have some agreement with some good hospital and diagnostic center to provide service to the employee and their family in lower cost. BRAC Bank also provides transport facility for their employee. They also give home allowance to the executives.

Non-compensation components

Non-Compensation rewards are all the situation related rewards not included in the compensation package. These rewards have an almost infinite number of components that relate to the work situation and to the physical and psychological well-being of each worker.

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Non-Compensation components provide by the BRAC Bank Ltd

➢ Enhance dignity and satisfaction from worked performed: It is the least costly and one of the most powerful rewards an organization can offer to an employee is to recognize the person as a useful & valuable contributor. This kind of recognition leads to employee feeling of self-worth and pride in making a contribution. Every compensation and non-compensation reward component should carry with it the massage “We need you and appreciate your efforts”. BRAC Bank Ltd provides a safe and well decorates workplace for their employee. Their all branches are air-conditioned and secured by good security companies.

➢ Enhance Physiological Health, Intellectual Growth, and Emotional Maturity: BRAC Bank Ltd. has agreement with some well-known medical diagnostic center and hospital to provide health service to the employees and their families in low cost.

➢ Promote constructive social relationships with coworkers: An organization success depends on a good relationship with the coworker. BRAC Bank Ltd. always tries to maintain such an environment so that all the employees feel like to be same member in a large family.

➢ Offer supportive leadership and management: BRAC Bank ltd. provides promotion to employees who have good skill and knowledge. So those employee who shown some efficient activity they can get a good position in the organization.

➢ Grant sufficient resources to perform work assignments: BRAC bank Ltd. provides sufficient resource to perform work assignment. Each executive have a personal desk, computer, file cabinet, credit card etc. These types of resources help the employees to perform job properly and efficiently.

Compensation Package of BRAC Bank Limited

By ensuring benefit for employee BRAC Bank design their compensation package. The top executive to the operating level employee and their compensation package information is given below:

• Profit Sharing: BRAC Bank awards bonus with its employees from the profit it earns every financial year.

• Gain Sharing: BRAC Bank awards bonus to the employees for surpassing predetermined performance goals.

• Lump-Sum Bonus: BRAC Bank pays onetime bonus or sometimes gives opportunity to buy shares of the bank based on the competitive performance of the employee.

• Festival Bonus: BRAC bank offers festival bonus during EID, Pohela Boishak and on other different occasions.

• Loan Facilities: BRAC bank also proves Car loan, Housing loan and also other certain allowances such as car allowance, mobile and free transport service.

• Cost of Living Adjustments: They also have a service plan for the employees called "COLA" (Cost of Living Adjustments) in which the employees get cost of living adjustments if inflations occur.

Some Special Compensation that BRAC Bank provide for their top executives:

➢ The compensation package of Managing Director is very attractive. This type of jobs is mainly based on contract basis.

➢ The MD of BRAC Bank limited get a house, one car, driver for the car, a security guard, Mobile phone, telephone bill, medical allowances and so on. As MD is the key person of BRAC Bank Limited he gets the most benefit.

➢ DMD (Deputy Managing Director) do not get house form the bank but he get one car, telephone bill, driver for car, loan facility, and so on.

➢ The Senior Executive Vice President gets car loan, car maintenance, home loan, limited telephone bill, gratuity, insurance facility.

➢ The Executive Vice President and Senior Vice President get same kind of facility. The Vice President get car loan, car allowance, home loan, gratuity and some other facility.

Job Evaluation

Job evaluation is the process of systematically determining a relative internal value of a job in an organization. In all cases the idea is to evaluate the job, not the person doing it. Job evaluation is the process of determining the worth of one job in relation to that of the other jobs in a company so that a fair and equitable wage and salary system can be established.

Reasons for job evaluation:

➢ To assist in setting pay rates those are comparable to those of similar jobs in other organizations. This enables the organization to compete in the marketplace for the best available talent and also allows employee to compare the pay receive with that received by employees doing similar works in other organization –to be externally competitive.

➢ To establish an orderly, rational, systematic structure of jobs based on their worth to organization.

➢ To justify an existing pay rate structure or to develop one that provides for internal equity (consistent and ethical treatment).

➢ To provide a rational basis for negotiating pay rates when bargaining collectively with a recognized union.

➢ To comply with equal pay legislation and regulations determining pay difference according to job content.

This process helps BRAC Bank Ltd to find out the detail job description and responsibility of each employee. BRAC Bank Ltd use rating scale to find out the productivity and efficiency of the employee. BRAC Bank Ltd has job description for each employee. They used a four level rating process to find out the output of the employee. To maintain an attractive salary and benefit package, they regularly compare themselves to a select group of other businesses and reward higher performance by individuals and teams. They want their employees to feel rewarded by the challenge of their roles, career opportunities, learning new job tasks, and positive team relationships. BRAC Bank Ltd not only take care about the employees but also take care about the family of their employees that’s why they arrange family night, picnic and presentation for those employees sons and daughters who have a very good result in their academic carrier. They give promotion the employees who have good contribution on the success of the organization.

Performance Appraisal:

A performance appraisal, employee appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding manager or supervisor. A performance appraisal is a part of guiding and managing career development. It is the process of obtaining, analyzing, and recording information about the relative worth of an employee to the organization. Performance appraisal is an analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training. It is also the judgment of an employee's performance in a job based on considerations other than productivity alone.

Performance appraisal is very important for an organization. Performance appraisal helps organization to take decision about the employee. It finds out which employee requires training and which employee requires promotion. In BRAC Bank Ltd performance appraisal is done mainly by the manager and immediate supervisor.

BRAC bank helps its employees better themselves by providing feedback about the particular employees past performance. They evaluate performance of their employees by appraising performance which is comparing actually result with one desired outcome and also 360 degree performance review.

Comparing actual with the benchmark:

BRAC bank's manager of an employee's respective functional area will play a key role in this and it depends on the employee developing their careers. BRAC bank evaluates on the basis of performance appraisal every six months or annually in one year and the performance is judged by 5 main words of expressions:

1. Outstanding.

2. Excellent [pic]

3. Superior.

4. Proficient.

5. Marginal.

Incentive

An incentive is any factor (financial or non-financial) that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way. Since human beings are purposeful creatures, the study of incentive structures is central to the study of all economic activity (both in terms of individual decision-making and in terms of co-operation and competition within a larger institutional structure.

Incentive Pay Targets

Top Executives 50-100% of base

VPs and Directors 30-50% of base

Mid-Management 20-30% of base

Supervisors 10-20% of base

Others 0-10% of base

Today banking business becomes more competitive than before. Now people are more aware and become smart to compare between the banks. And then choose the most convenient bank for them.

Considering the fast moving and altering business era in the world each and every business organizations need to upgrade their ways of business to keep pace in the changing situation. There are some components that are taken into consideration during pay in our country, but it varies significantly among banks regarding pay. So Compensation strategy is very important for an organization to be successful and competitive in the market. If the compensation strategy is effective then it ensures the employee satisfaction & organization success. BRAC Bank has a very strong culture which reflects their mission, vision, achievement and core values. In addition, the employees’ of BRAC Bank Limited are very motivated because the bank provided various benefits such as bonus, personal reward, motivational and professional training programs. The MD is the key person of the organization. BRAC Bank has efficient pay administration and auditing system. The management takes care about the employee. BRAC bank offers its employees a range of options form which they can choose the type of benefits they want to receive. They want their employees to feel rewarded by the challenge of their roles, career opportunities, learning new job tasks, and positive team relationships. BRAC BANK is committed in creating an environment where employees at all levels feel that they can speak honestly about the company and issues important to them. So these types of work make their employee more efficient to work better which consequently make BRAC bank as a leading private bank in Bangladesh.

By the grace of Almighty ALLAH, our study finally ended up. We all hope that it helped us to identify the best way of applying the theoretical knowledge to practical field.

Recommendations

However the satisfaction level of BRAC Bank is good enough. But some employees have expressed their dissatisfaction about the BRAC bank in various aspects. It has a profound effect on the overall satisfaction level of the bank.

We make some recommendations based on the findings that we have got from our research. We hope the recommendation will help the bank to take necessary steps in order to increase the satisfaction level of employee of BRAC Bank. The following are some recommendations for the company:

➢ The remuneration package for the entry and the mid-level management is considerably low. Under the existing low payment structure, it will be very difficult to attract and retain higher educated employees.

➢ BRAC Bank should increase its branches and ATM booth number.

➢ Absence of Islamic Banking System.

➢ BRAC Bank followed 360 degree method which is time consuming and costly.

➢ They should make their Training program more effective.

Topic: Compensation & Benefits Survey Questionnaire

Please put the tick mark into your choices and write your opinions where necessary:

1. State how long you have been working in your organization?

• Less than one year

• 3years

• 5 years

• 5- 9 years

• More than 10 years

2. What is your job description including designation & department?

3. Do you believe that your job profile is benchmarked with the same jobs in the industry and market place?

4 .How many hours do you work per day?

• 5-6 hours

• 6-7 hours

• 8-9 hours more

5. How the company gives promotion to their employees?

• Based on time

• Performance

• Other

6. Does your company utilize a traditional salary grade system?

• Yes

• No

If yes, please answer the following questions. What was your starting salary?

• 15-25

• 25-35

• 35-45

• more than 45

Does your company offer salary increment?

• Yes

• No

How often is the salary structure reviewed? ____________________

When was the last time it was adjusted? ____________________

By what percentage? ______________%

Does your company give a general increase?

• Yes

• No

Does your company give a cost of living increase?

• Yes

• No

7. What criteria does your human resource department use to arrive at giving allowances and benefits to employees? ____________________________________________________________

8. Please mark the benefit plans offered by the organization:

|Benefits |Offer |Not-offer |

|Pension Plan | | |

|Retirement Profit Sharing | | |

|Medical | | |

|Short Term Disability | | |

|Long Term Disability | | |

|Life Insurance | | |

|Vacation | | |

|Holidays | | |

|Personal Days | | |

|Sick Time | | |

9) How BRAC Bank Limited compensate if any employee provide any good suggestion which may enhance bank’s profitability?

Thank you very much for your co-operation in our survey. This information will remain confidential.

REFERENCES

❖ Books

Compensation Management in a knowledge-based world, Richard I. Henderson, Ninth Edition, Pearson education

❖ Websites

•

•

•

• Wikipedia

❖ Annual Report

Annual Report of BRAC Bank Ltd 2009

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Acknowledgement

Executive Summary

Introduction

Introduction of the organization

Organizational structure

Board of Directors

Mr. Muhammad A. (Rumee) Ali

Chairman

Mr.Quazi Md.Shariful Ala

Director

Ms. Nihad Kabir

Director (Independent)

Mr. Shib Narayan Kairy

Director

Ms. Tamara Hasan Abed

Director

Dr. Hafiz G.A. Siddiqi

Director

Management Committee

Mr. Syed Mahbubur Rahman

Managing Director & CEO

Mr.Md.Mamdudur Rashid

Deputy Managing Director

Mr. Nawed Iqbal

Chief Technology Officer

Mr. Nabil Mustafizur

Chief credit officer

Mr. Rais Uddin Ahmad

Company Secretary & Head of Legal, Regulatory & Internal Control

Mr. Syed Faridul Islam

Head of SME Banking

Mahmoodun Nabi Chowdhury

Head of Corporate Banking

Mr. Khwaja Shahriar

Head of Cash Management

Custodial Services

Mr. Firoz Ahmed Khan

Head of Retail Banking

Mr. Shah Alam Bhuiyan

Head of Operations& Acting Head of Operational Risk Management

Mr. M. Sarwar Ahmed

Head of Special Assets Management

Ms. Tahniyat Ahmed

Head of HR division

Mr. Zeeshan Kingshuk Huq

Head of Corporate Affairs

Conclusion

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