2nd Assignment of Compensation Management - Amjad Baig

COMPENSATION
MANAGEMENT(823)
ASSIGNMENT NO. 2
By:
Muhammad Amjad Baig
508195520
Submitted to:
Respectable Tutor
Mr. Kanwar M. Anwar
H. No.158-B, St No. 94,
G-6/1-4, Islamabad.
AIOU, ISLAMABAD
Assignment No. 2 Project Management (569)
ACKNOWLEDGEMENT
All praise to Almighty Allah, the most merciful and compassionate, who give
me skills and abilities to complete this report successfully
I am grateful to my parents who are always been a source of encouragement for

me throughout my life and from start to the end of this report.
I am greatful to our respectable tutor Mr. Kanwar M. Anwar, for his kind
guidance and support. And also the support & guidance of Mr. Asad Hussain, PA
to SM HR, PTCL, Headquarters, Islamabad for providing me relevant information
to prepare & complete my case study.
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ABSTRACT
Administrative procedure of establishing and supervising wage levels and

operations in an organization. In most organizations, wage and salary
administration is performed in the personnel department, although larger
organizations often have a payroll or wage and salary administration department.
This report is based on the theoretical and practical research on the future of
wage & salary administration function.
This report carries the introduction to Human Resource Managerial Functions,

Compensation Management, Classification Of Wages, Introduction To Wages And
Salary Administration, Factors Influencing Wage And Salary Structure &
Administration Function, Administration Of Wages And Salaries, Principles Of
Wages And Salary Administration & Practical Study Of The Organization. For the
empirical research, I select PTCL and visited PTCL Headquarters, Islamabad.
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CONTENTS
• TITLE PAGE 1
• ACKNOWLEDGEMENT 2
• ABSTRACT 3
• TABLE OF CONTENTS 4
• HUMAN RESOURCE MANAGERIAL FUNCTIONS 5-6
• COMPENSATION MANAGEMENT 7
• CLASSIFICATION OF WAGES 8
• INTRODUCTION TO WAGES AND SALARY ADMINISTRATION 9
• FACTORS INFLUENCING WAGE AND SALARY STRUCTURE 10-
13
AND ADMINISTRATION FUNCTION
• ADMINISTRATION OF WAGES AND SALARIES 13
• PRINCIPLES OF WAGES AND SALARY ADMINISTRATION 14-
15
• PRACTICAL STUDY OF THE ORGANIZATION
INTRODUCTION 16
• COMPANY PROFILE 17
VISION 18
MISSION 18
CORE VALUES 18
• BOARD OF DIRECTORS 19
MANAGEMENT 20
ORGANIZATIONAL STRUCTURE 21-23
• NUMBER OF EMPLOYEES IN FINANCE SECTION 24
FINANCE & ACCOUNTING SYSTEM OF PTCL 25
• ACCOUNTING SYSTEM OF PTCL 26-
27
• FINANCE SYSTEM OF PTCL 28-
31
• WAGE & SALARY ADMINISTRATION FUNCTION OF PTCL
• ROLES AND RESPONSIBILITIES 31
• REVIEW AND APPROVAL REQUIREMENTS 32
o ONE-LEVEL-UP SUPPORT
o WING/DEPARTMENT REVIEW AND SUPPORT
o REVIEW AND APPROVAL MODIFIED STAFF WAGE AND SALARY
o GUIDELINES
• PRINCIPLES 32-34
o MINIMUM PAY
o ACCOUNTABILITY
o PAY PRACTICES
o PAY COMPARISONS
o FUNDING
o ANNUAL PAY INCREASES
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o PAY FOR TRANSFERS AND REHIRES

• SWOT ANALYSIS 35
• CONCLUSION & RECOMMENDATIONS 36
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WAGE & SALARY ADMINISTRATION FUNCTION
HUMAN RESOURCE MANAGERIAL FUNCTIONS
Manager’s primary duty is to mange the people. Like other managers, a

human resource manager performs the functions of planning, organizing,
directing and controlling.
1) - Planning:
A plan is a determination of future action. Establishment of policies and

programs, goals are the process of planning. Human resource manager predict
the trends in labour market, wages, union demands, etc. and their impact on the
co operatives. Planning is the means manage to change. It avoids tomorrow’s
crisis. Human resource manager decide the personnel goals, formulating the
personnel policies and programs and preparing the human resources budget, etc.
2) - Organizing:
Organization is the subsequent activity of the planning. It allocated takes

among the members of the group, establishing authority – responsibility
relationships among them ant integrating their activities towards common goals.
3) - Directing:
Directing is process of motivating, activating, leading and supervising to

peoples. Directing includes manager’s influence activity of subordinate’s action.
Directing is the centre of the process because it is concerned with initiating
action. It helps to sure the willing and effective cooperation of employees for
attaining the organization objectives.
4) - Controlling:
It is implies checking, verifying and regulating to ensure that everything

occurs in conformity with the plan adopted and instructions issued. Such
monitoring helps to minimize the gape between desired result and actual
performance. Controlling the management of human resource involves auditing
training programs, analyzing labour turnover records, directing moral surveys,
conducting separation interviews and such other means.
Operative Functions:
Human resource manager’s tasks are concerned with specific activities of
the recruitment and selection training, compensation and maintenance an
efficient workforce.
1) - Recruitment and Selection:
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It is concerned with the aim of the selecting right person for the right job. It
consists of the following activities.
a – Job analysis
b – Human resource planning
c – Recruitment
d – Selection
e – Placement
f – Induction and orientation
2) - Training Functions:
Human resource manager has to improve the knowledge, skills aptitudes and
values of employees so that they can perform the present and future jobs more
effectively. It consists of the following activities,
a – Performance Appraisal
b – Training
c – Executive Development
d – Carrier Planning and Development.
3) – Compensation Function:
It deals with the equitable and fair remuneration to employees for their
contribution to the attainment of organizational objectives. It consists of the
following activities,
a – Job Evaluation
b – Wage and Salary Administration
c – Bonus
4) – Coordinating Functions:
It is the process of reconciling the goals of the cooperatives with those of its
members. Coordination involves motivating employees through various financial
and non-financial incentives, providing job satisfaction, handling employee’s
grievances through formal grievance procedures, collective bargaining, and
worker’s participation in management, conflict resolution, developing sound
relation employee counseling improving quality of work life, etc.
5) – Maintenance Functions:
It deals with protecting and promoting the physical and mental health of the
employees. For this purpose several types of fringe benefits such as housing,
medical aid, educational facilities, conveyance facilities, etc. are provided to
employees. Social security measures like provident funds, gratuity, and maternity
benefits, injury, disablement allowance, group insurance, etc., are also arranged.
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COMPENSATION MANAGEMENT
Compensation is what employees receive in exchange for their contribution to the

organisation.
Total Compensation =
Direct + Indirect Compensation
Base Pay & Incentives Benefits
Wages
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• “Wage means all remuneration, capable of being expressed in terms of money

which would if the terms of the contract employment express or implied, were
fulfilled, be payable to a person employed in respect of his employment or of
work done in such employment”
– The payment paid for manual and mechanical work is wages
– Represents hourly rates of pay
Salary
• Meaning Oxford Dictionary - meaning “ Fixed periodical payment to a person
doing other than manual or mechanical work”
• It refers to monthly rate of may, irrespective of the number of hours put by an
employee
• Compensation to an employee for service rendered on a weekly, monthly or
annual basis.
Incentives
• Are paid in addition to wages and salaries. Incentives depend upon
productivity, sales, profit or cost reduction efforts
• Individual incentive scheme
• Group Incentive Scheme
Fringe benefit
• This include such employee benefits as provident fund, gratuity, medical care,
hospitalization, accident relief and group insurance, canteen, uniform
recreation
Perquisites
• These are allowed to executives and include company car, club membership,
paid holidays, furnished homes, stock option schemes and the like
• Perquisites are offered to retain competent executives
Dearness Allowance
• Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as a
percent of the basic salary. This amount is then added to the basic salary
along with house rent allowance to get the total salary. Rates vary as per
rural/urban areas
Non-Monetary Benefits
• This include challenging job responsibilities, recognition of merit, growth
prospects, competent supervision, comfortable working conditions, job sharing
and flexi-time
CLASSIFICATION OF WAGES
• The International Labour Organization (ILO) in one of its publication, classified
wages as under :
A) Minimum wages
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B) Fair Wages
C) Living Wages
Minimum wages
• It has been defined by the committee as “The wage which must provide not
only for the bare sustenance of life, but for the preservation of the
efficiency of the worker.
•
• The minimum wages must provided for some measure of education medical
requirements and amenities
•
• It should provide fro the substances of worker’s family members, for the
medical care and for some amenities
Fair Wage
• According to committee of Fair Wages : “ It is the wage which is above the
minimum wage but below the living wage”
• The lower limit of fair wage is obviously the minimum wage. The upper limit
is set by the “capacity of the industry pay”. Between these two limits, the
actual wages should depend on considerations of such factors as
– The productivity of labuor

– The prevailing rates of wages in the same or neighboring localities
– The level of national income and its distribution
– The place of industry in the economy
Living wages
• It defined a Living Wage as “One which should enable the earner to provide
for himself and his family not only the bare essential of food, clothing and
shelter but a measure of frugal comfort, including education of his children,
protection against ill health, requirement of social needs and a measure of
insurance against the more important misfortunes including old age”.
INTRODUCTION TO WAGES AND SALARY ADMINISTRATION
• To approve system of job description and evaluation.

• Recommend to top management the policy for administration of wage
programme.
• To recommend changes in wage policies and in the salary or wage level.
• To review wage and salary department wise.
• To check all activities of the salary administration against the company
policies.
Job evaluation results in fixing salaries and allowances etc. for the post(s) in an
organization. This is not a one-time job. Posts keep on changing according to
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growth and functional transformation of an organization. Simultaneously inflation,

devaluation and rising costs are the outside factors, which also force for revision
in wages and salaries. Some times, new jobs are added. Old jobs are abolished or
modified. All these necessitate the continuing function of wage and salary
administration. However, it is mostly handled on centralized levels like Provincial
or Federal Ministries of Finance, Public Administration etc.
One of the more complex functions under this element is to authorize ad-hoc or
special allowance to persons doing some special work or working under certain
circumstances. The main difficulty here is that such allowances should not upset
the salary structure or create discontentment among others who handle similar
work or works under similar circumstances without the benefit of additional
allowances (such as " secretariat allowance" "unattractive area allowance" etc).
The Task of personnel management, in this respect, is to compensate the
deserving persons without upsetting the prevailing balance in salaries and
allowances well in time.
FACTORS INFLUENCING WAGE AND SALARY STRUCTURE AND

ADMINISTRATION FUNCTION
The first and the most important problem in wage and salary administration is the
establishment of base compensation for the job. This problem is enormously
complicated by such factors as Supply and Demand, Labor organization, the
firm’s ability to pay, Variations in productivity and Cost of living, Government
legislation, Including CIVICS RIGHTS ACT.
In order to attract and retain needed personnel for the organization, employees
must perceive that compensation offered is equitable in relation to their inputs
and relative contributions. The most likely to be used method to solve this
problem at present would be job evaluation, a systematic and orderly process for
establishing the worth of job.
The importance of a pay system to an event of major importance to employees

and its effects upon them cannot be ignored. It is a valid system if it results in a
structure acceptable to both employee and employer. In general, structures that
are internally and externally consistent have the greatest chances of affecting
overall satisfaction. Under reward, Over-reward and inconsistency of reward not
only tend to lead to lower satisfaction but encourage behaviour that often proves
dysfunctional to organizational objectives. A sound, systematic, consistent system
of compensation determination will do much to promote equity and satisfaction,
provided that such a system is understood and accepted by most employees.
Factors influencing wage and salary structure and administration

The wage policies of different organization vary some what. Marginal units pay
the minimum necessary to attract the required number of kind of labour. Often,
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these units pay minimum wage rates required by labour legislation, and recruit
marginal labour. At the other extreme, some units pay well about going rates in
the labour market. They do so to attract and retain the highest caliber of labour
force. Some managers believe in the economy of higher wages. They feel that, by
paying high wages, they would attract better workers who will produce more than
average worker in the industry. This greater production per employee means
greater output per man hour. Hence, labour costs may turn those existing in firms
using marginal labour. Some units pay high wages because of a combination of a
favourable product market demand, higher ability to pay and the bargaining
power of trade union. But a large number of them seek to be competitive in their
wage programme, i.e., they aim at paying somewhere near the going rate in the
labour they employ. Most units give greater weight to two wage criteria, viz, job
requirements and the prevailing rates of wages in the labour market. Other
factors, such as changes in the cost of living the supply and demand of labour,
and ability to pay are accorded a secondary importance.
A sound wage policy is to adopt a job evaluation programme in order to establish
fair differentials in wages based upon differences in job contents. Beside the basic
factors provided by a job description and job evaluation, those that are usually
taken into consideration for wage and salary administration are:
• The organizations ability to pay;

• Supply and demand of labour;
• The prevailing market rate;
• The cost of living;
• Living wage;
• Productivity;
• Trade unions bargaining power;
• Job requirements;
• Managerial attitudes; and
• Psychological and sociological factors.
• Levels of skills available in the market.
(1) The organizations ability to pay:

Wage increases should be given by those organizations which can afford them.
Companies that have good sales and, therefore, high profits tend to pay higher
those which running at a loss or earning low profits because of higher cost of
production or low sales. In the short run, the economic influence on the ability to
pay is practically nil. All employers, irrespective of their profits or losses, must
pay no less than their competitors and need to pay no more if they wish to attract
and keep workers. In the long run, the ability to pay is important. During the time
of prosperity, pay high wages to carry on profitable operations and because of
their increased ability to pay. But during the period of depression, wages are cut
because the funds are not available. Marginal firms and non profit organization
(like hospitals and educational institutions) pay relatively wages because of low or
non profits.
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(2) Supply and demand of labour:

The labour market conditions or supply and demand forces operate at the
national, regional and local levels, and determine organizational wage structure
and level.
If the demand for certain skills is high and supply is low, the result is a rise in the
price to be paid to these skills. When prolonged and acuter, these labour market
pressures probably force most organizations to reclassify hard to fill jobs at a
higher level” that suggested by the job evaluation. The other alternative is to pay
higher wages if the labour supply is scarce; and lower wages when it is excessive.
Similarly, if there is a great demand for labour expertise, wages rise; but if the
demand for manpower skill is minimal, the wages will be relatively low. The
supply and demand compensation criterion is very closely related to the
prevailing pay, comparable wage and on going wage concepts since; in essence,
all of these remuneration standards are determined by immediate market forces
and factors.
(3) Prevailing market rate:

This is known as the ‘comparable wage’ or ‘going wage rate’, and is the widely
used criterion. An organization compensation policy generally tends to conform to
the wage rate payable by the industry and the community. This is done for
several reasons. First, competition demand that competitors adhere to the same
relative wage level. Second, various government laws and judicial decisions make
the adoption of uniform wage rates an attractive proposition. Third, trade union
encourages this practice so that their members can have equal pay, equal work
and geographical differences may be eliminated. Fourth, functionally related
firms in the same industry requires essentially the same quality of employees,
with same skill and experience. This results in a considerable uniformity in wage
and salary rates. Finally, if the same or about the same general rates of wages
are not paid to the employees as are paid by the organizations competitors, it will
not be able to attract and maintain the sufficient quantity and quality of
manpower. Some companies pay on a high side of the market in order to obtain
goodwill or to insure an adequate supply of labour, while other organizations pay
lower wages because economically they have to or because by lowering hiring
requirements they can keep jobs adequately manned.
(4) The cost of living:

The cost of living pay criterion is usually regarded as an automatic minimum
equity pay criterion. This criterion calls for pay adjustments based on increases or
decreases in an acceptable cost of living index. In recognition of the influence of
the cost of living.” escalator clauses” are written into labour contracts. When the
cost of living increases, workers and trade unions demand adjusted wages to
offset the erosion of real wages. However, when living costs are stable or decline,
the management does not resort to this argument as a reason for wage
reductions.
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(5) The living wage:

Criterion means that wages paid should be adequate to enable an employee to
maintain himself and his family at a reasonable level of existence. However,
employers do not generally favor using the concepts of a living wage as a guide
to wage determination because they prefer to base the wages of an employee on
his contribution rather than on his need. Also, they feel that the level of living
prescribed in a workers budge is open to argument since it is based on subjective
opinion.
Psychological and Social Factors:

These determine in a significant measure how hard a person will work for the
compensation received or what pressures he will exert to get his compensation
increased. Psychologically, persons perceive the level of wages as a measure of
success in life; people may feel secure; have an inferiority complex, seem
inadequate or feel the reverse of all these. They may not take pride in their work,
or in the wages they get. Therefore, these things should not be overlooked by the
management in establishing wage rate. Sociologically and ethically, people feel
that “equal work should carry equal wages”that“wages should be commensurate
with their efforts,”that“they are not exploited, and that no distinction is made on
the basis of caste, colour, sex or religion.” To satisfy the conditions of equity,
fairness and justice, a management should take these factors into consideration.
Skill Levels Available in the Market:

With the rapid growth of industries business trade, there is shortage of skilled
resources. The technological development, automation has been affecting the
skill levels at faster rates. Thus the wage levels of skilled employees are
constantly changing and an organization has to keep its level up to suit the
market needs.
ADMINISTRATION OF WAGES AND SALARIES
Wage and salary administration should be controlled by some proper agency. This
responsibility may be entrusted to the personnel department or to some job
executive. Since the problem of wages and salary is very delicate and
complicated, it is usually entrusted to a Committee composed of high-ranking
executives representing major line organizations. The major functions of such
Committee are:
a) Approval and/or recommendation to management on job evaluation methods

and findings;
b) Review and recommendation of basic wage and salary structure;
c) Help in the formulation of wage policies from time to time;
d) Co-ordination and review of relative departmental rates to ensure conformity;
and
e) Review of budget estimates for wage and salary adjustments and increases.
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This Committee should be supported by the advice of the technical staff. Such
staff committees may be for job evolution. Job description, merit rating, wage and
salary surveys in an industry, and for a review of present wage rates procedure
and policies.
Alternatively, the over all plan is first prepared by the Personnel Manager in
consultation and discussions with senior members of other departments. It is then
submitted for final approval of the top executive. Once he has given his approval,
for the wage and salary structure and the rules for administration, its
implementation becomes a joint effort of all heads of the departments. The actual
appraisal of the performance of subordinates is carried out by the various
managers, who in turn submit their recommendations to higher authority and the
latter, in turn, to the personnel department. The personnel department ordinarily
reviews recommendations to ensure compliance with established rules of
administration. In unusual cases of serious disagreement, the president makes
the final decision.
PRINCIPLES OF WAGES AND SALARY ADMINISTRATION
The generally accepted principles governing the fixation of wages and salary are:
a) There should be definite plan to ensure that differences in pay for jobs are
based upon variations in job requirements, such as skill effort, responsibility or
job or working conditions and mental and physical requirements.
b) The general level of wages and salaries should be reasonably in line with that
prevailing in the labour market. The labour market criterion is most commonly
used.
c) The plan should carefully distinguish between jobs and employees. A job
carries a certain wage rate, and a person is assigned to fill it that rate. Exceptions
sometimes occur in very high level jobs in which the job holder may make the job
large or small, depending upon his ability and contributions.
d) Equal pay for equal work, i.e., if two jobs have equal difficulty requirements,
the pay should be the same, regardless of who fills them.
e) An equitable practice should be adopted for the recognition of individual

differences in ability and contribution. For some units, this may take the from of
rate ranges, with in grade increases; in others, it may be a wage incentive plan; in
still others, it may take the from of closely integrated sequences of job promotion.
f) There should be a clearly established procedure for hearing and adjusting wage
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complaints. This may be integrated with the regular grievance procedure, if it

exists.
g) The employees and the trade union, if there is one, should be informed about
the procedure used to establish wage rates. Every employee should be informed
of his own position, and of the wage and salary structure. Secrecy in wage
matters should not be used as a cover up for haphazard and unreasonable wage
programme.
h) The wage should be sufficient to ensure for the worker and his family
reasonable standard of living. Workers should receive a guaranteed minimum
wage to protect them against conditions beyond their control.
i) The wage and salary structure should be flexible so that changing conditions
can be easily met.
j) Prompt and correct payments of the dues of the employees must be ensured
and arrears of payment should not accumulate.
k) For revision of wages, a Wage Committee should always be preferred to the

individual judgement, however unbiased, or a manager.
l) The wage and salary payment must fulfill a wide variety of human needs,
including the need for self-actualisation. It has been recognized that “money is
the only form of incentive which is wholly negotiable, appealing to the widest
possible range of seekers. Monetary payment often acts as motivation and
satisfies interdependently of other job factors.
Desire to maintain or enhance the company’s prestige has been a major factor in
the wage policy of a number of firms. Desires to improve or maintain morale, to
attract high caliber employees, to reduced turnover, and to provide a high living
standard for employees as possible also appear to be factors in management’s
wage policy decisions.
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PRACTICAL STUDY OF THE ORGANIZATION

(With respect to the issue)
INTRODUCTION
Pakistan Telecommunication Corporation (PTC) has established in

December 1990, taking over operations and functions from Pakistan Telephone
and Telegraph Department under Pakistan Telecommunication Corporation Act
1991.
This coincided with the Government's competitive policy, encouraging

private sector participation and resulting in award of licenses for cellular, card-
operated payphones, paging and, lately, data communication services.
In 1994, the PTCL becomes the company limited (Pakistan

Telecommunication Company Limited) by issued six million vouchers
exchangeable into 600 million shares of the PTCL in two separate placements.
Each had a par value of Rs. 10 per share. These vouchers were converted into
PTCL shares in mid-1996.
In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed

the basis for PTCL monopoly over basic telecommunication sector in the country.
It also paved the way for the establishment of an independent regulatory regime.
The provisions of the Ordinance were lent permanence in October 1996 through
Pakistan Telecommunication (Reorganization) Act.
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The year 2006-07 in the telecom sector was marked by the phenomenal
growth in the mobile sector in Pakistan, which doubled its subscriber base to 60
million. The teledensity increased from 26% to 40%, helping to spread the
benefits of communication technology across the country. PTCL ’s mobile phone
subsidiary Ufone’s subscriber base grew by more than 87%, from 7.49 million to
14 million. The year also witnessed the entry of major telecom companies, most
notably China Telecom and Singtel, into market.
The privatization of the company was completed in the FY06, following the
purchaser of 26% ‘B’ class ordinary shares by Etisalat International Pakistan L.L.C.
EIP took over management control on 12th on April 2006.
In short PTCL has been working vigorously to meet the dual challenge of
telecom development and socio-economic uplift of the country. This is
characterized by a clearer appreciation of ongoing telecom scenario wherein
convergence of technologies continuously changes the shape of the sector.
A measure of this understanding is progressive measures such as

establishment of the company's mobile and Internet subsidiaries in 1998. As
telecommunication monopolies head towards an imminent end, services and
infrastructure providers are set to face even bigger challenges. Pakistan also
entered post-monopoly era with deregulation of the telecom sector in January
2003. PTCL is in full awareness of the same, and future policies feature a strong
conviction of healthy competition.
COMPANY PROFILE
With employee strength of 30,000 and 5.7 million customers, PTCL is the
largest telecommunications provider in Pakistan. PTCL also continues to be the
largest CDMA operator in the country with 0.8 million V-fone customers.
The company maintains a leading position in Pakistan as an infrastructure

provider to other telecom operators and corporate customers of the country. It
has the potential to be an instrumental agent in Pakistan’s economic growth.
PTCL has laid an Optical Fibre Access Network in the major metropolitan
centres of Pakistan and local loop services have started to be modernized and
upgraded from copper to an optical network.
On the Long Distance and International infrastructure side, the capacity of

two SEA-ME-WE submarine cable is being expanded to meet the increasing
demand of International traffic.
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Vision
To be the leading Information and Communication Technology Service Provider in

the region by achieving customer satisfaction and maximizing shareholders'
value'.
The future is unfolding around us. In times to come, we will be the link that allows
global communication. We are striving towards mobilizing the world for the
future. By becoming partners in innovation, we are ready to shape a future that
offers telecom services that bring us closer.
Mission
To achieve our vision by having:
• An organizational environment that fosters professionalism, motivation and

quality
• An environment that is cost effective and quality conscious
• Services that are based on the most optimum technology
• "Quality" and "Time" conscious customer service
• Sustained growth in earnings and profitability
Core Values
• Professional Integrity
• Customer satisfaction
• Team Work
• Company Loyalty
• Corporate Information
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Board of Directors
Mr. Najibullah Malik

Chairman PTCL Board
Secretary IT & Telecom Division, Ministry of Information Technology
Government of Pakistan,
Islamabad
Mr. Abdulrahim Abdulla Abdulrahim Al Nooryani

Chairman & Chief Executive Officer
Etisalat International Pakistan L.L.C
Executive Vice President Contracts & Administration
Etisalat, UAE
Mr. Salman Siddique

Secretary (Finance), Ministry of Finance
Islamabad
Mr. Abdulaziz Ahmed Saleh Ahmed Al Sawaleh

Chief Human Resources Officer
Etisalat, UAE
Mr. Mushtaq Ahmad Bhatti

Member Telecom
Islamabad
Mr. Fadhil Mohamed Erhama Al Ansari

Executive Vice President Engineering
Etisalat, UAE
Mr. Khursheed Ahmed Junejo

Ambassador, Embassy of Pakistan
Abu Dhabi, UAE
Mr. Abdulaziz Hamad Omran Taryam

General Manager, Northern Emirates
Etisalat, UAE
Dr. Ahmed Al Jarwan

General Manager
Real Estate
Etisalat, UAE
Ms. Farah Qamar
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Company Secretary PTCL

PTCL Headquarters,
Islamabad
Management
• Walid Irshaid
President & Chief Executive Officer
• Ismail Salih Taha

S.E.V.P (HR & Admn)
• Muhammad Nehmatullah Toor

S.E.V.P (Finance)
• M. Mashkoor Hussain
S.E.V.P (Operations)
• Fazal Hussain
S.E.V.P (Corporate Affairs)
• Sikandar Naqi
S.E.V.P (Special Projects)
• Dr. Sadik Al-Jadir

S.E.V.P (Commercial)
• Shaukat Hayat Javed

Acting S.E.V.P (Technical)
• Farah Qamar
Company Secretary
• Dr. Sajid Qureshi

E.V.P (Legal Affairs)
Organizational Structure
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(Source: ptcl website)
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Departments and their Working
The PTCL Organizational structure needs to be formalized on emergent basis.
FINANCE WING STRUCTURE
At this level there is one head SEVP (Finance) who controls the
functions of FINANCE, ACCOUNTS, and REVENEU with the assistant of EVP in their
respective within the Region, Director Accounts has Senior Revenue Officers in his
area of Finance Jurisdiction on Division Level. The Senior Revenue Officer, usually
the head of Finance Division and Revenue Officers then supervised on District
level.
SEVP (Finance)
EVP (Finance), (Accounts) & (Revenue)
The Director (Finance),(Accounts) & (Revenue)
On the Regional Level comprising two or three Divisions.
The Senior Revenue Officers on Division Level
The Revenue Officers on District Level
In view of the challenging scenario PTCL has to take bold steps regarding its
organizational structure in order to demonstrate that PTCL has set-up arms-length
relationships among the staff. There should be separation of Finance Wing from
the Engineering Wing. Finance Wing should give liberty to take the decision in
their favor. Management has to take the strategic decisions, the clear and
institutionalized arrangements.
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FINANCE WING STRUCTURE
SEVP (FINANCE)
EVP
EVP (Finance) EVP(Revenue)
(Accounts)
GM
GM (Finance) GM (Revenue)
(Accounts)
Director
(Finance)
General Manager of the
Director Region. He will report to the
(Revenue) SEVP (OPS) as well as any
officer designated by C.E
Director
(Accounts)
24
NUMBER OF EMPLOYEES IN FINANCE SECTION
There are about 15987(2006-2007) employees are working in the PTCL, which
are being divided into categorically here under
Division of Employees according to their Status
Regular Daily wager Through T.F Contract *Ad-hoc

12452 1725 956 854 NIL
* There is no any employee in PTCL on Ad-hoc basis. This system of recruitment

has since been changed into contract basis.
FINANCE & ACCOUNTING SYSTEM OF PTCL
The PTCL FINANCE & ACCOUNTING system is actually divided into three wings.
1- FINANCE
2- ACCOUNTS
3- REVENUE
1) FINANCE
The SEVP (FINANCE) is concerned with the makeup of the all type of
financial decisions especially in the context of acquisition, financing and
management of all assets with some goal in mind. The EVP (Finance) with the
General Manager (Finance) extend their expertise in the decision making process.
2) ACCOUNTS
Here the SEVP (Finance) is once again concerned by heading the

EVP(ACCOUNTS) and General Manager (Accounts) to deal with all Accounts
Decision. In PTCL the Finance and Accounting are so correlated but the difference
between finance and Accounting is the method of Funds Recognition and the
decision making. In the Accounting the Director Accounts in the PTCL Regions
assist the higher management.
3) REVENUE
Here the SEVP (Finance) is once again concerned by heading the EVP
(Revenue) and General Manager (Revenue) to deal with all Revenue matters. One
Director Revenue within the Region assist to implement and control the inflow of
Revenue and Reconcile it with the PTCL Headquarters Islamabad.
The PTCL is actually the Revenue Generation organization. PTCL Collect the
Revenue from the following modes.
25
1) Revenue from System Billing of Land Line Numbers.

a) Through Line Rent of Land Line Numbers.
b) Through National wide dialing from LLN’s (Land Line Numbers)
c) International dialing from LLN’s
d) Providing Value Added services to customers. Like UAN (Universal
Access Numbers), PABX (Private Auto Branch
Exchanges),VPN( Virtual Private Network) Bandwidth of ISP’S
(Internet service providers)
e) PTCL has its three subsidiaries PAKNET (leading ISP in the country),
UFONE (unique cellular phone company in Pakistan), TF (Telecom
Foundation) the leading foundation for the welfare of employees of
Telecom Sector.
26
ACCOUNTING SYSTEM OF PTCL
In PTCL the rules contained in the special volume of the PTCL under which the
SEVP (FINANCE) is responsible for creating the procedure of Accounting matters.
CAPITAL RECEIPTS SIDE.
1. REVENUE FROM BILLING SYSTEM

a. Revenue from Usual customer.
b. Revenue from DXX System
c. Revenue from DSL System
d. Revenue from PABX/PBX System
e. Revenue from Card Phone Operators
f. Revenue from IPOs Internet service providers
g. Revenue from Mobile Phone Operators
h. Co-location charges from various companies
2. REVENUE FROM OTHER

a. Revenue from Overseas calls (Incoming)
b. Revenue from Premium PRS (0900) calls
c. Income from Dismantle Exchanges
d. Revenue from MDF used by other companies
CAPITAL EXPENDITURES
INSTALLATION OF NEW EXCHANGES

Expenses of installation of new Exchanges are the major capital expense of
PTCL because PTCL purchases the new telephone exchanges from France, Italy,
Germany and China. So heavy cost is to be paid for purchasing process in order
to proper margin. Each exchange having different capacity and due which each
Engineer should has to be trained accordingly so expenses rises on purchasing of
new Telephone Exchanges. This is the main expense of PTCL.
EXTENSION OF EXISTING EXCHANGES

The extension of the existing exchanges is the dire need as the density of
the population is increasing day by day and in order to fulfill the basic
communication and fill the communication gap PTCL has to extend its normal
Telephone Exchanges in accordance with the demand and per paid connection.
So PTCL sustain heavy expenses on the extension of exchanges.
MINOR EXPENDITURES
INTERNAL AUDIT AND TECHNICAL INSPECTION

The PTCL has sustained huge amount in context of internal audit both Accounts
and Technical from various agencies. For example M/s Ferguson conduct both
internal audit and external audit and payment made to auditors in the expenses
of the company.
27
ADMINISTRATION AND CONTROL EXPENSES

Some time in the best interest of company, some expenses could be occurred for
example if there is need of induction of a financial analyst in one region or if there
is need of an Engineer then transfer and posting order can be issued and
traveling and training expenses could be realized to employees.
SALARIES OF STAFF
The monthly salary of the staff is rest with the approval of PTCL H.Q Islamabad.
PTCL is spending lot of amount on the salaries.
PRINTING AND STATIONARY CHARGES

On printing of stationery PTCL spends reasonable amount.
CONTRIBUTION IN PROVIDEND FUND

There is also contribution in the provident fund from the PTCL.
28
FINANCE SYSTEM OF PTCL
PTCL has magnificent finance structure; it is basically Product Oriented

organization so here, the Revenue is the Life Blood as such for any other profit
seeking organization. So we should have isolated the Revenue from Finance side
or either we should consider the Finance in the context of Revenue.
Finance activities can be evaluated in terms of PTCL’s basic financial

statements analyzing through
Finance planning
On PTCL HQ Islamabad, SEVP (Finance) is, who with the concurrence with
the CEO for making all the Finance Planning that’s way the PTCL has to inject the
money in order to boost up the business and in order to complete the stiff
competition faced in the telecomm sector. Before taking any decision regarding
financial planning the draft could be presented before the Board of Governors. In
this section there is need of financing either in the WLL (wireless local loop)
sector or wire-line or mobile operator services.
Managing the PTCL’s Asset structure
PTC is very organized organization and it has also its fixed as well with the
current asset. So there are many experts in order to keep the eye watch on the
PTCL infrastructure, for example Director (Fixed Assets) is responsible for the
maintenance and repair of the building and machinery on the Regional level.
Managing the PTCL’s financial structure
PTCL financial structure is in the safe hands the basic qualification for the
post of Assistant Accounts Officer is MBA (Finance) and for the SEVP (Finance) the
incumbent should possess the degree of MBA with ACMA & CA. Due to such fresh
blood the young and energetic financial management taking some bold decision
the results of which are awaited up till.
FUNDING OF PTCL
MOBILIZATION OF FUNDS
PTCL mobilized its funds with following ways.

1) Purchase the new imported infrastructure like new Exchanges etc
PTCL mobilized its finds mostly in the purchase of new telephone
exchanges from abroad (France, Italy & China). There is also purchase of
accessories of telephone exchange generators and other equipments.
29
2) Capital expenditure for the organization.

There are various expenses for the PTCL in the context of capital
expenditure that has already been mentioned in previous pages.
3) Purchase and acquisition of stores.
PTCL store items are very important components i.e Stationery, stand-by
Exchanges, generators, barites and other equipments. PTCL spend lot of
funds on these items.
4) Loan and advances to others, and re-investment.
There are offering of Loan and advances to the employees on various
rates according to the length of services on roll. This is the main source
of mobilization of funds.
5) Payment of dividend to the stockholders.
Payment made to the shareholders in the context of dividend to be paid
to the shareholders. PTCL has currently announced the divided of
Rs.32/per share.
6) Salaries of the staff all over the country.
Obviously services rendered by the staff and in this way PTCL has to pay
handsome amount to their staff, those are the main source of generating
the revenue.
7) Annual Bonus to employees.
PTCL pays annual Bonus of Rs. 12000/- to its employees on the Eid
occasion.
8) Security deposits, Transfer of Company’s Land & Building.
Where PTCL does not find any building or land then security deposit may
be paid to the private landholders for the installation of PTCL
infrastructure.
9) Insurance of the Company
PTCL offers the insurance from its own side in case of death and
medically unfit of its employees.
10) Pension, graduate, and other fringe benefits.
For the pension and gratuity of the retire official PTCL mobilized its funds
accordingly.
11) Supply of Furniture and Fixtures to the office buildings.
This is the responsibility of the Management to be provided the furniture
and fixture to the office buildings accordingly.
12) Renovation, alteration, and rental charges of privately owned buildings.
PTCL has to pay the handsome amount for renovation and alteration of
existing building and the charges of privately owned builders are being
issued accordingly.
13) Premium paid to the other telecomm companies of different countries in
the context of overseas calls and media used.
GENERATION OF FUNDS
1. Amount Realized from System Billing.

2. Amount Realized from defaulters.
3. Revenue from Value-added Services.
30
4. Bandwidth facilities provided to the companies.

5. Earning from DXX, PSTN, PABX, VPN, PRI & ISD.
6. Media used by cellular and pay-card companies and earn royalty.
7. Earning from subsidiaries PTML, PAKNET & TF.
8. Amount realized through co-location charges.
9. Basic Rate Interface provided to the subscriber.
10. International dialing customers.
11. Corporate Billing customers, valued customers.
12. Earning from MTR mobile Termination Rate.
13. Earning from Incoming Overseas Calls in shape of premium from overseas
SOURCES OF FUNDS OF PTCL
Cash generated from operations

In this context we can say that PTCL usual earning lot much more depends
upon the usual earning from Telephone number and payments of the bill thereof,
this is the primary source of funds of PTCL.
Security deposits
Various pay card companies like Dancom, World call, Pearl Tel, Soft tech,
deposited huge amount as the securing deposit in the books of PTCL for the
media that is being used by these companies. PTCL is utilizing these security
deposits.
Return on deposits
After payment the dividend to the share holders and having paid the
income tax on the profit the surplus amount is being used in the deposits of
various national and multinational banks from where ROD is received accordingly.
Dividend Income
PTCL some time itself purchases the share from the open market and earn the
dividend income thereof. It is also possibly that PTCL if applicable may detain the
shares of different other companies and earn the dividend.
Sale proceeds of fixed assets

The defunct and dismantle Telephone exchanges not allowed re-sell to the other
underdeveloped countries and gain profit. PTCL is also not in the process of
planning to be used the idle land, which could be used on commercial basis by
other parties.
Long- Term Investment

There are various long-term project of PTCL. BLT is one of them. PTCL is now
expanding its business through the United Arab Emirates by consortium and
through the joint venture with other telecom operators. PTCL has also some long-
term investment in the AT&T (American Telephone & Telegraph) and ZTE
(Zehwing Telecom Engineering Company China).
31
Long-Term Loan to others

PTCL has also offered long term loan agreement to other Telecom provider
companies. PTCL is providing its expertise and Engineers to them and also
offering amount to be invested on behalf of PTCL for example PTML Pakistan
Telecom Mobile Limited and Paknet the Internet providers company.
Loans, advances, deposits, prepayments and other receivable

In this context all the referred point and return thereof will be called the
receivable.
ALLOCATION OF FUNDS
Against all purchase orders issued by the PTCL H/Q’s Islamabad payment
made after allocation of Funds which further allocated by the Regional offices.
The funds usually allocate in order to manage the following: -
14. Capital expenditure

15. Purchase of infrastructure like new exchanges.
16. Launching of new Product.
17. Human resource development
18. Transportation expenses, misc expenses
19. Domestic and overseas training of staff
20. Bonus to the employees, house/building advances, motor car/motor cycle
advances.
21. Worker compensation fund, benevolent fund contribution general provident
fund
22. Maintenance of buildings, vehicles, fixed assets.
23. Default situation of subsidiaries.
Allocation of Funds for Marketing exploration 19% of net profit

Allocation of Funds for Research & development 18% of net profit
Allocation of Funds for Human resources & Admn 33% of net profit
Allocation of Funds for Corporate affairs 30% of net profit
WAGE & SALARY ADMINISTRATION FUNCTION OF PTCL
Roles and Responsibilities
Supervisors carry much of the responsibility for staff compensation administration

within the departments and must do so in accordance with these guidelines.
Department administrators, senior business officers, human resource directors
and managers, home department coordinators and supervisors are responsible
for assuring their department’s compliance with staff posting and classification
procedures, including approval and recordkeeping requirements.
These Staff Wage and Salary Guidelines provide departments with a framework
around which those internal procedures must be developed and executed. From
32
time to time, the Staff Wage and Salary Guidelines may be modified because of
special circumstances that require additional restrictions, changes in procedure,
or levels of approvals.
Failure to comply with the requirements set forth in university and department
policies will be cause for disciplinary action, up to and including termination.
The Pay Roll Deptt is responsible for the following:

• Establishing Company compensation principles,
• Determining salary and wage guidelines.
• Establishing position descriptions in accordance with Company business
practices that comply with Govt of Pakistan laws
• Determining the classification of positions,
• Conducting job audits,
• Ensuring departments utilize job descriptions that most appropriately match
work performed,
• Conducting and participating in compensation surveys
• Devising departments on various compensation matters based on both internal
and external benchmarking, and
• Monitoring departmental compliance with staff posting and classification
procedures.
Review and Approval Requirements

1. One-Level-Up Support
The employee’s direct supervisor and the supervisor’s supervisor review request
and approve submission to next level.
2. Wing/Department Review and Support

The most senior position in the department (e.g. EVP, SEVP, etc.) reviews request
and approves all discretionary bonuses, mid-year pay increases, overload
compensation, merit increases in excess of 3% for eligible staff for next fiscal
year.
3. Review and Approval Modified Staff Wage and Salary Guidelines
The Executive Vice President reviews request and determines final approval
for all discretionary bonuses, mid-year pay increases, overload compensation,
merit increases in excess of 3% for eligible staff
Principles
1. Minimum Pay –
All departments must comply with Govt of Pakistan law including minimum pay
requirements, minimum wage and salary rates, time and record
keeping, overtime pay requirements and pay periods
33
2. Accountability –
The authority, accountability and responsibility for staff compensation

administration lies with supervisors, who are required to execute employment
actions in accordance with the policies, practices and guidelines established by
the university and additional requirements that may be established by their
departments. Supervisors are required to consult with the person to whom they
report on all employment decisions and transactions affecting the employees that
report directly to them. This requirement for “one Staff Wage and Salary
Guidelines level up” review and support applies to all employment decisions
including, but not limited to, the determination of, or changes in, salary and
wages rates, bonus compensation, perquisites, budget allocation, job postings,
employment offers, changes in the terms and conditions of employment, hiring,
promotions, demotions, reorganizations, and terminations.
3. Pay Practices –
Supervisors are accountable for and expected to establish and maintain pay in
accordance with these staff wage and salary guidelines and the additional
requirements which are prescribed by the president, executive vice president and
senior vice president for administration. When determining wage or salary rates
or other compensation, perquisites and non-standard benefits, factors such as
marketplace comparisons, the education and experience of the individual, fair
and equitable distribution among employees in the same or similar position
classifications, individual performance, and available funding must be considered.
4. Pay Comparisons –
The compensation staff in Payroll Section is available to assist departments in
reviewing compensation on a case-by-case basis. The compensation staff will
provide departments with salary/wage averages by position.
Departments should utilize the recommended hiring ranges as a guide to

establishing starting wage and salary rates for newly hired, rehired or transferred
staff.
5. Funding –
Funding for staff compensation is allocated during the budget approval process
each fiscal year. Changes to this allocation may only be made during the annual
budget approval process or through a specific mid-year budget amendment or
modification request, which has been reviewed and approved by the competent
authority.
6. Annual Pay Increases –

Annual staff pay increases must follow the “Review and Approval Requirements”
and limitations described in these guidelines. Annual staff pay increases are
34
merit-based and should vary according to individual performance and the amount
of funding available.
Every employee should be informed, in writing, of his or her annual merit increase
and new rate of pay, if applicable, before July 1. The reason for the amount of the
increase, or lack thereof, should be described and documentation must be
retained in the employee’s file.
Performance evaluations should be based on performance sustained over time

and documented in writing. Employees must be given the opportunity to
comment on the evaluation documentation. Both the evaluation and the
employee’s comments must be retained in the employee’s file.
7. Pay for Transfers and Rehires –

Employees who transfer or are rehired into posted positions should receive
compensation appropriate to the new position, their experience and qualifications
and available funding as described in number three above. Employees are not
guaranteed the rate of pay associated with their previous position or guaranteed
any increase because of a move to a new position.
35
SWOT ANALYSIS:
Strengths
Weakness
Opportunities
Threats
36
CONCLUSION & RECOMMENDATION
Where differentials perform important economic functions like labour

productivity, attracting the people to different jobs. Since most of the workers are
mobile with a view to maximizing their earnings, wage differentials reflect the
variations in productivity, efficiency of management, maximum utilization of
human force, etc. Attracting efficient workers, maximization of employee’s
commitment, and development of skills. Knowledge, utilization of human
resources, maximization of productivity can be fulfilled through wage differentials
as the latter determines the direct allocation of manpower among different units,
occupations and regions so that the overall production can be maximized. Thus,
wage differentials provide an incentive for better allocation of human force –
labour mobility among different regions and the like.
Wage differentials play a pivotal role in a planned economy in the regulation of

wages and development of national wage policy by allocating the skilled human
force on priority basis. Development of new skills, knowledge, etc. is an essential
parts of human resource development. Shortage of technical and skilled
personnel is not only a problem for industries but it creates bottlenecks in the
attainment of planned goals. Thus, wage differentials, to a certain extent, are
desirable from the viewpoint of national interest. As such, they probably become
an essential part of the national wage policy. Complete uniform national wage
policy is impracticable and undesirable.
37

2nd Assignment of Compensation Management - Amjad Baig

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COMPENSATION

I am grateful to my parents who are always been a source of encouragement for

Administrative procedure of establishing and supervising wage levels and

This report carries the introduction to Human Resource Managerial Functions,

o PAY FOR TRANSFERS AND REHIRES

WAGE & SALARY ADMINISTRATION FUNCTION

HUMAN RESOURCE MANAGERIAL FUNCTIONS

Manager’s primary duty is to mange the people. Like other managers, a

A plan is a determination of future action. Establishment of policies and

Organization is the subsequent activity of the planning. It allocated takes

Directing is process of motivating, activating, leading and supervising to

It is implies checking, verifying and regulating to ensure that everything

1) - Recruitment and Selection:

Compensation is what employees receive in exchange for their contribution to the

Direct + Indirect Compensation

Base Pay & Incentives Benefits

• “Wage means all remuneration, capable of being expressed in terms of money

– The productivity of labuor

INTRODUCTION TO WAGES AND SALARY ADMINISTRATION

• To approve system of job description and evaluation.

growth and functional transformation of an organization. Simultaneously inflation,

FACTORS INFLUENCING WAGE AND SALARY STRUCTURE AND

The importance of a pay system to an event of major importance to employees

Factors influencing wage and salary structure and administration

• The organizations ability to pay;

(1) The organizations ability to pay:

(2) Supply and demand of labour:

(3) Prevailing market rate:

(4) The cost of living:

(5) The living wage:

Psychological and Social Factors:

Skill Levels Available in the Market:

ADMINISTRATION OF WAGES AND SALARIES

a) Approval and/or recommendation to management on job evaluation methods

PRINCIPLES OF WAGES AND SALARY ADMINISTRATION

e) An equitable practice should be adopted for the recognition of individual

complaints. This may be integrated with the regular grievance procedure, if it

k) For revision of wages, a Wage Committee should always be preferred to the

PRACTICAL STUDY OF THE ORGANIZATION

Pakistan Telecommunication Corporation (PTC) has established in

This coincided with the Government's competitive policy, encouraging

In 1994, the PTCL becomes the company limited (Pakistan

In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed

A measure of this understanding is progressive measures such as

The company maintains a leading position in Pakistan as an infrastructure

On the Long Distance and International infrastructure side, the capacity of

To be the leading Information and Communication Technology Service Provider in

To achieve our vision by having:

• An organizational environment that fosters professionalism, motivation and

Mr. Najibullah Malik

Mr. Abdulrahim Abdulla Abdulrahim Al Nooryani

Mr. Salman Siddique

Mr. Abdulaziz Ahmed Saleh Ahmed Al Sawaleh

Mr. Mushtaq Ahmad Bhatti

Mr. Fadhil Mohamed Erhama Al Ansari

Mr. Khursheed Ahmed Junejo

Mr. Abdulaziz Hamad Omran Taryam

Dr. Ahmed Al Jarwan

Ms. Farah Qamar

Company Secretary PTCL

• Ismail Salih Taha

• Muhammad Nehmatullah Toor