AMERICAN INTERNATIONAL UNIVERSITY BANGLADESHFaculty of Business Administration
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Assignment Title: Compensation Package of TNT Express BangladeshAssignment Number: 01 Due Date: 27.06.11 Semester: Summer 2011
Subject Code: Subject Name: Human Resource Management Section: A
Course Instructor: Ahmed, Neaj Degree Program: M.B.A
Group Name (if applicable):
Number SignatureAdnan, Md. Fahim 10-93954-2 27.06.11
For faculty use only
Faculty comments___________________________________________________________________________
___________________________________________________________________________________________
___________________________________________________________________________________________
Total Marks: _______ Marks Obtained: _______
Compensation package of TNT Express
Acknowledgement
During the completion of the course Marketing Management, every student in sec: A has to make several
groups to submit a term paper related to the course outline. Our course instructor Hoq, Md. Ziaul permits
us to write a report on “Marketing Plan” related to our course lecture.
Our sincere thanks go to our course instructor Hoq, Md. Ziaul who showed immense interest and
enthusiasm to help us analyze and bring out an outcome of this report. Without his help we could not do
the project properly.
Table of contentChapter Page no.Executive Summary i1.0 TNT Express-at a glance 12.0 Organization chart and number of employees 23.0 HRM functions practiced in TNT Express 34.0 Internal Alignment 65.0 Compensation Package and other benefits: 106.0 Organizational Budget of Administration 137.0 Observation 148.0 Conclusion 159.0 Reference 16
E xecutive Summary
TNT Express is the leading provider of express delivery services based in the Netherlands. They provide
on-demand time-definite and day-certain door to door delivery services for documents, parcels and
freight. TNT Express Bangladesh, a subsidiary of the TNT Worldwide Express is the third air express
industry in Bangladesh. Its main business consisted of carrying and delivering time sensitive documents
and parcels worldwide to and from Bangladesh. TNT Express can be termed as the runner up industry as
the market is already saturated by DHL and FedEx. So it follows a low cost strategy to increase its market
share. TNT Express Bangladesh has 18% market share in the air express industry in Bangladesh. DHL
Bangladesh, FedEx and other competitors are UPS, Aramex and Sky Net. Besides, it has one local
competitor which is known as ABX. TNT Express is conducting a good number of marketing strategies.
They are combined with World Food Program. TNT express is applying Low cost strategy, which is one of
the most significant Key success factors. TNT’s market size and growth potential is increasing day by
day. Over the last decade especially the garments sector has been contributing to Bangladesh’s
economic growth. TNT increased garments exports by 10-15% annually. TNT Express has quality
manpower to deliver personalized service to its clients and thereby to earn good profit and to earn its
goodwill. TNT Express' IT systems are fully geared to support the company's business goals. TNT
Express has already abandoned traditional business methods and shift to e-business technologies and
use of Internet in their business. We recommend TNT Express to follow Best Cost Provider Strategy
which is basically is a combination of both the low cost and differentiation strategy. It has the skills and
capabilities to provide attractive performance and features at a lower cost than rivals. So if they add some
value by providing extra services to customers it will definitely able to attract more customers.
1.0 TNT Express-at a glance
TNT Express is the leading provider of business to business express delivery services based in the
Netherlands. They provide on-demand time-definite and day-certain door to door delivery services for
documents, parcels and freight. Established in 1946 TNT Express is now a global integrator and offers a
range of unique international express delivery services between more than 200 countries. Market leading
national express delivery services is also provided in many of the major countries in Europe, Asia and
Australia. They employ more than 40,000 people and have a fleet of 42 jet freighter aircraft together with
19,000 road vehicles organized by a worldwide network of nearly 857 company owned depots. Our
extensive resources also include numerous state of the art sortation centers and all these efficient
facilities enable TNT Express to provide the fastest and most reliable door to door transit times in the
industry.
Mission
Exceed customers' expectations in the transfer of their goods and documents around the world Deliver value to our customers by providing the most reliable and efficient solutions in distribution
and logistics Lead the industry by instilling pride in our people, creating value for our stakeholders and sharing
responsibility for our world
Vision
Their vision strongly reflects who we are: ambitious, optimistic, result-oriented It communicates their confidence that they can always overcome obstacles and achieve our goals It is that special mark that allows them to stand out from the crowd
Standards
Aim to satisfy customers every time Challenge and improve all we do Be passionate about our people Act as a team Be honest, always
2.0 Organization chart and number of employees:
Country Manager (01)
Sales Manager (01)
Sales Territory Manager (50)
Sales Co-ordinator
(30)
Indoor Sales Executive (30)
Finance and Admin
Manager (01)
Finance Executive
(05)Cashier (05)
Asst. manager
Admin (05)
Asst. Manager Credit Control
(05)
Credit Control
Executive (10)
Billing Executive
(05)
IT and operation Manager (01)
Operation Supervisor
(15)
POD(12) Drier (12)
HR Manager
(01)
HR Executive
(10)
Customer Care
Manager (01)
Customer Care
Executive (30)
3.0 HRM functions practiced in TNT Express
The Human Resources Management (HRM) function includes a variety of activities. The
activities involved and personnel policies. Usually small businesses have to carry out
these activities themselves because whether to use independent contractors or hire
employees to fill these needs, recruiting and training the best employees, ensuring they
are high performers, dealing with performance issues, and ensuring your personnel and
management practices conform to various regulations. Activities also include managing
your approach to employee benefits and compensation; employee records they can't yet
afford part or full-time help. However, they should always ensure that employees have
and are aware of personnel policies which conform to current regulations. These
policies are often in the form of employee manuals, which all employees have.
TNT Express, one of the leading courier service providers in Bangladesh has successfully operated for
last several years. Previously they did not have any HR department and the HR activities were performed
by Country Manager himself. Later on they realized the importance of HR department and in 2007 they
appointed a HR manager. The HR activities regarding compensation management are as follows:-
Compensation Planning:
To know about the compensation planning first of all we need to know why compensation planning is so
important for the organization. The reasons are as follows-
Recruit and retain qualified employees
Increase or maintain morale / satisfaction
Reward and encourage peak performance
Achieve internal and external equity,
Reduce turnover and encourage company loyalty
The HR manager does compensation planning through different steps
Internal equity ensures that more difficult jobs are paid more.
External equity ensures that jobs are fairly compensated in comparison to similar jobs in the
labor market.
Individual equity ensures equal pay for equal work, that is, each individual's pay is fair in
comparison to that of another person doing the same or a similar job.
In this case TNT Express do compensation planning based on both the internal and external equity.
Under the internal equity they ensure performance and motivation. Similarly they ensure fewer turnovers
by balancing their pay structure with the competitors. If they do not balance their compensation package
with the competitors, employees may quit the job. They are competitors are DHL, FedEx, UPS and
Homebound. In case of managerial post their compensation package is little bit complex because some
are paying higher whereas some are paying less. What should be their salary depended on Country
Manager. And Country Manager selects their salary based on the experience and other individual skill.
Only Country Manager’s compensation management is done by the parent company Netherlands
because he is getting his salary in dollar. Rest of the Employees is getting salary in terms of TAKA.
Sometimes the HR departments do survey to know the satisfaction level of the employees in terms of
compensation. If they find any reasonable dissatisfaction they suggest the CM to increase salary.
Training:
Training, another most important task of a HR. Employees needs training in order to develop their
knowledge and skill. TNT express arranges lots of training programs for their employees. First the HR
departments do the training need analysis, if they find any need of training of a particular employees after
conducting the training need analysis, they arranges training. And all these training part is organized by
HR department. Sometimes they send the employees overseas like UAE, Netherlands and Singapore for
developing their skill.
Resolving Conflicts:
A conflict is very common in any organization. Conflict may occur within or between the organizations. If
conflict occurs among the employees of a particular organization we call it internal conflict. On the other
hand if conflict occurs among the organizations we call it external conflict. Resolving any type of conflict is
the task of HR department. If they get any complain from any employees, first they judge it then take
immediate action.
Motivation:
Another important task of the HR department is motivating employee. Without motivation productivity
cannon maximizes. So in order to increase the employee’s contribution, a HR must motivate employee.
To motivate employees they use several techniques such as creating honorary post that means changing
the designation without changing salary structure, increase salary, give non financial benefits, give
vacation for free with family, giving some authority to make decision etc.
These are the activities of HR department of TNT Express. Though they are new but they perform their
task successfully.
4.0 Internal Alignment
Internal alignment is an important policy in the strategic perspective of compensation.
The necessity for organizations to control labor costs, while at the same time increasing productivity and
enhancing quality and customer service has never been more urgent. The present competitive
environment requires new strategies toward employee compensation, new management and employee
practices, and new methods of educating employees to the shifting competitive environment that has
brought about the necessity for these changes. At the same time that companies are examining the
method and basis for compensating employees, there has been a growth in the number of companies
seeking to develop high performance, high commitment work systems. These systems, based upon
expanded roles for employees, require that employees accept more responsibility and accountability.
Other organizational initiatives such as flatter organization structure and more fluid organization design
have driven sweeping changes. Often it has been difficult for compensation systems to keep pace and
support these changes. Additionally, employee compensation is a critical component to financial success.
Careful attention must be placed on the development of reward systems that reflect the financial
capability of the company as well as reinforce the new directions associated with contemporary
organizational strategy.
Compensation administration includes a collection of activities required to sustain the effectiveness of a
compensation strategy. Thus issues ranging from labor market surveying to performance management to
skill certification and peer review come under this umbrella. Involving stakeholders in compensation
administration can reinforce the values and beliefs underlying the compensation philosophy and strategy.
As part of the aligning process, the following factors are taken into consideration by TNT Express:
1.Employees inputs and Preferences
It includes perceptions of external pay equity, perceptions of internal pay equity, pay delivery beliefs in
forms(cash, gain sharing, benefits) or method (individual, small group, large group), risk tolerance and
trust in management.
2.Business and Operating Inputs
It includes operations strategy, sales development strategy, percentage of compensation costs to total
product/service costs, percentage of compensation costs to controllable
product/service cost, existing markets/products, potential markets/products, anticipated volume,
reinforce/enhance work design, maintain cultural change processes and other operating issues
3.Prevailing Market Practices and Trends
It is concerned with the availability and quality of work force, industry practices, retention of work force,
retention of key contributors, salary levels and movement, salary delivery charges
4. Compensation Philosophy and Objectives
It is concerned with basically two things. These are:-
How much emphasis should be placed on rewards to drive organization.
What issues are to be driven by compensation as opposed to management
practices.
It also includes the targeted position in the market, targeted position in product market, relationship within
total company, relationship to selection and retention, portion of pay guaranteed and at risk, and
percentage of workforce bonus eligible
5. Base Pay Delivery
It includes the method of delivery (Job-based vs. individual-based), number of level, structure of levels,
pricing strategies, adjustment method, weighting of individual performance
6.Organization Performance or Variable Pay
Role in total compensation strategy structure measures target, tolerance for pay at risk, risk - reward
ratios, use of other monetary reward, use of non-monetary rewards, individual performance recognition
7. Fringe Benefits
It is usually determined at corporate level; limited scope at other levels, they tie to business and human
resource objectives, coverage, cost, communications (Purpose - Coverage - Value)
8. Compensation Administration
Stakeholder role in compensation administration, performance management & evaluation, overtime policy
(exempt & non-exempt), shift differentials, attendance policy, role of seniority
Compensation decisions should be fully integrated into the organization’s business and operations
strategy, through its compensation philosophy. The design of compensation systems should be
subsequent to, and not precede, this key analysis and decision point. For the high performance firm, an
appropriate level of employee involvement can further
reinforce the organization’s general beliefs and values.
We all know that there are two ways of determining internal alignment in an organization which are:-
1. Hierarchy based
2. Level based
Hierarchy Based:
Serial No. Position Pay level
1 Country Manager Tk.2,41,500
2 Manager Tk.45,000
3 Sales Territory Manager Tk.15,000
4 Sales Coordinator Tk.11,000
5 Indoor Sales Executives Tk.11,000
6 Assistant Manager Credit Control Tk.20,000
7 Assistant Manager Administration Tk.20,000
8 Billing Executive Tk.15,000
9 Cashier Tk.15,000
10 Finance Executive Tk.15,000
11 Operation Supervisor Tk.12,000
12 POD Tk.6,000
13 Driver Tk.6,000
In the above list, we can see that the difference in pay level between the country manager and the other
managers are too large. Again, the difference between the managers and sales territory manager is also
large. The gap between the country manager and the manager might be reduced by increasing the salary
of the managers or by decreasing the salary of the country manager. But in this case as the country
manager is a foreigner, we want to increase the salary of the managers.
Level Based:
Under the level based internal alignment we consider equality of compensation package between the
same level employees. Here in TNT express there is problem in Level based internal alignment in
managerial post. Though the managers are in same level but they are paying differently. Here if we see
their compensation package we will find that 45000 + (depend on the CM), this indicate that how the
alignment is imbalanced in these post. Here we find that sales and finance manager are getting higher
that other managers like HR, Customer care and IT. When we asked for reason they told us that it’s
because of job description, experience and special skill. But we found one thing that when they hire
employee from competitor organization they pay high. And when they hire new employees they pay less.
So there is an imbalance situation in level based internal alignment.
5.0 Compensation Package and other benefits:
Country Manager:
Tk. 241,500/ $3500 Basic Salary
Other benefits: House rent Tk 30,000; Medical Facilities (with family), Phone Bill Tk10,000; Car
facility for 24 hours (personal Use)
Bonus – 2 (100% of Basic)
Manager (4):
Tk 45,000 Basic salary + (additional amount that CM will know)
Other benefits: Medical facilities; Phone Bill Tk3,500; Car facility for Pick up and Drop;
Bonus – 2 (100% of Basic)
Sales Territory Manager (6):
TK 15,000 Basic Salary
Other benefits: Phone Bill TK 2000; Car pick and drop and sales visit;
Bonus – 2
Sales Coordinator:
TK 11,000 Basic Salary
Other benefits: Phone Bill TK 1500; Car for pick up and Drop;
Bonus – 2
Indoor Sales Executive (4):
TK 11,000 Basic Salary
Other benefits: Phone Bill TK 1500; Car for pick up and Drop;
Bonus – 2
Assistant Manager Credit Control:
TK 20,000 Basic Salary
Other benefits: Phone Bill TK 2000; Car for Pick up and Drop;
Bonus – 2
Assistant Manager Administration:
TK 20,000 Basic Salary
Other benefits: Phone Bill TK 2000; Car for Pick up and Drop;
Bonus – 2
Billing Executive:
TK 15,000 Basic Salary
Other benefits: Phone Bill TK 1500; Car for Pick up and Drop
Bonus - 2
Cashier:
TK 15,000 Basic Salary
Other benefits: Phone Bill TK 1500; Car for Pick up and Drop;
Bonus - 2
Finance Executive:
TK 15,000 Basic Salary
Other benefits: Phone Bill TK 1500; Car for Pick up and Drop;
Bonus – 2
Operation Supervisor:
TK 12,000 Basic Salary
Other benefits: Phone Bill TK 1500;
Bonus – 2
POD (Pick up and Delevery):
TK 6,000 Basic Salary
Other benefits: Phone Bill TK 500; Lunch; overtime
Bonus – 2
Driver:
TK 6,000 Basic Salary, overtime
Other benefits: Lunch
Bonus – 2
6.0 Organizational Budget of Administration:
Since TNT is a service providing organizaion, it is very important to have very effective and efficient
workforce. In doing so, The company is giving a handsome amount to its employess in order to
motivate them to work more effectively so that the customers can have maximum satisfaction. TNT is
doing such kind of business in which it has to make sure that the customers are satisfied with its
service. Therefore, The employees of the company have to work very hard and the effort of the
employees is the biggest concern for them. Hence, it is certain that TNT has to provide good
compensation package to its employees to run its operation successfully. The company has an
estimated Budget of 40% of the Net Operating Expense for Compensation Package. Generally,
service organizations provide huge amount of salary benefits for the employees to run the show
properly because Human Resource is the biggest asset for the service organizations.
7.0 Observation
HR department is comperaively new in TNT Express Bangladesh. Previousely there was no HR
department and the country manager himself lookafter all HR activities. But later in 2007 they create HR
department because the company was growing and they needed separate HR department. The
department is lead by the HR manager and he has 10 HR executives. We found that the department is
small compare to other departments and have very less work to do. They practices HRM in a small scale.
We know many HR functions but TNT Express Bangladesh practices very few of them.
Recruiting
Selection
Training
Motivating
Conflict resolving
Compensation planning
8.0 Conclusion:
TNT Express is a service providing organization that has expanded worlwide. TNT Bangladesh is one of
the branch of the mother company,which is concentrating on customer satisfaction. Thus, the company
requires to provide maximum effort to its compensation package and other benefits.
9.0 Reference
http://www.tnt.com
Direct Interview- A.K.M. Jahangir Alam
Sales Manager
TNT Express Bangladesh