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Term Paper

On
Compensation System of IFIC Bank

Sufiya Khatun Sumi


ID:- 11133047
Course Code: 407
Session: 2010-11

JATIYA KABI KAZI NAZRUL ISLAM UNIVERSITY,


Trisal, Mymensing.

Acknowledgement

First of all, I extend my profound gratitude to the Almighty Allah, the omnipresent and omnipotent,
who helped me accomplish this task on time. I feel satisfied and glad that I have completed this
study within specific duration. This term paper might never have been completed without the
necessary practical knowledge, assistance of many books, articles, websites, and primary data. It
enhanced my knowledge on Compensation System. Thanks to all those persons who have assisted
me, providing me co-operation, direction, valuable suggestions & advices to prepare this term
paper.

Finally I want to express my special thanks to Mymensingh Branch, under whom I have completed
my term paper. I am also grateful to all other employees and operation Unit of this branch.

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Executive Summary
This study is the result of my term paper placed at the IFIC Bank Ltd. Mymensingh Branch.
International Finance Investment and Commerce Bank Limited is one of the first generation banks.
It has already developed reputation among the users. The bank operates its all products as the
Mymensingh Branch is middle of the city. As a result the branch has to deal with commercial and
non-commercial clients. Therefore, the branch has all level of employees of the bank.
Since my term paper was directed to understand the Compensation System, I had to gain the
practical area of responsibilities and of accountabilities of the Compensation System so that I could
interact with this system. I tried my best to ask the staffs directly and indirectly to gather my
information. However, I had a good access to the banks publications. My task was designed to
understand the compensation system of the employee of the IFIC Bank Ltd. Mymensingh Branch.
For preparing this term paper I used primary and secondary data. We know in compensation system
Human Resource planning organization go for reactive HRP.
To estimate future demand and supply of employees IFIC Bank Ltd use Managerial Judgment.
To forecasting the internal supply of employees they used their own software which is HRIS. For
external supply how employees they take fresh University Graduates
In the case of compensation system they follow all the process like at first they make a plan then
develop a strategy after that they go for searching and screening at last the evaluate the whole
compensation system process. For this analysis I, focused on the compensation system practiced
by IFIC Bank Ltd. Mymensingh Branch.

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Table of Contents

Content

Page No

1.1 Historical Background of IFIC Bank Limited


1.2 Corporate Slogan
1.3 Vision of IFIC Bank Limited
1.4 Mission of IFIC Bank Limited
1.5 Nature of Business
1.6 Organogram
1.7 Competitive Status
1.8 Workforce at different level
1.9 Salary Structure
1.10 Compensation system (Basic Salary)
1.11 Impact of compensation on employee performance
1.12 SOWT analysis of compensation
1.13 Possible measures to include of compensation system
Conclusion
Reference

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Compensation System of IFIC Bank

1.1 Historical Background of IFIC Bank


International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking
company incorporated in the People's Republic of Bangladesh with limited liability. It was
set up at the instance of the Government in 1976 as a joint venture between the Government
of Bangladesh and sponsors in the private sector with the objective of working as a finance
company within the country and setting up joint venture banks/financial institutions abroad.
The Government held 49 per cent shares and the rest 51 per cent were held by the sponsors
and general public. In 1983 when the Government allowed banks in the private sector, IFIC
was converted into a full-fledged commercial bank. The Government of the Peoples
Republic of Bangladesh now holds 35% of the share capital of the Bank. Leading
industrialists of the country having vast experience in the field of trade and commerce own
34% of the share capital and the rest is held by the general public. The Bank is being
managed by a group of highly experienced professionals with diversified experience in
finance and banking. The Management of the bank constantly looks after customers
satisfaction and believes that a satisfied customer is a great Ambassador. The bank has
already ranked as one of the quality service providers & is known for its reputation. The
offers the full range of banking services for personal and corporate customers, covering all
segments of society within the framework of Banking Company Act and rules and
regulations laid down by our central bank. All activities of the Bank including its products
and services are mainly for different economic groups of Bangladesh at home & abroad.
Bangladeshi expatriates living abroad in different countries form a strong economic group
who contribute greatly towards the economic development of the country.
1.2 Corporate Slogan
Title: IFIC BANK LIMITED

Logo:

Slogan: Your Satisfaction First


1.3 Visions of IFIC BANK LIMITED
To be the best private Commercial Bank In Bangladesh and International in terms of
efficiency, capital adequacy, asset quality, sound management and profitability having strong
liquidity.
1.4 Mission of IFIC BANK LIMITED
IFIC mission is to provide service to our clients with the help of a skilled and dedicated
workforce whose creative talents, innovative, actions and competitive edge make our
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position unique in giving quality. Service to all institutions and individual that we care for.
We are committed to the welfare and economic prosperity of the people and the community.
For we drive from them our inspiration and drive for onward progress to prosperity. We want
to be the leader among banks in Bangladesh and make our indelible mark as an active partner
in regional banking operating beyond the national boundary.
In an intensely competitive and complex financial and business environment. We particularly
focus on growth and profitability of all concerned.
1.5 Nature of Business
IFIC Bank Ltd offers full range of banking services that include Deposit banking
Loans & advances facilities
Export and Import facilities
International remittance facilities
Foreign Exchange transactions
Q-Cash (providing both Debit & Credit card facilities).

1.6 Organogram of IFIC Bank


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Source: Annual Report; http://www.ificbank.com.bd/annual_report.php; 2014

Source: Annual Report; http://www.ificbank.com.bd/annual_report.php; 2014

1.7 Competitive Status

Rank
During the lengthy political turmoil in 2014, while most banks struggled, IFIC Bank Ltd
managed to register 93.26 percent profit growth. Such has been the impact of the private bank
since he assumed the position of managing director in November 2014. It was possible due to
IFICs innovative lending policies, where the bank concentrated on providing loans to small and
medium enterprises owing to its high recovery rate. The bank provided Tk 8,000 crore in SME
loansmore than 50 percent of the total funded portfolio of Tk. 15,000 crore as of March 2013.
Strong support from the bank's board members and the bank's Chairman is another reason behind
last year's profit of Tk. 307 crore. The bank earned Tk. 96 crore between January and March
2015, returning from the net loss of Tk 99.98 crore in the same period in 2015.

Growth Rate
Almost all Commercial Banks operating in Bangladesh are competitors of IFIC as all their
activities are concentrated on attracting and serving more customers. The banks try to match
each others features in order to remain competitive.
Below is a schedule of performance of various banks in yearly, 2014 published in the Dhaka
Tribune. IFIC held the top position during that period.

Source: http://www.dhakatribune.com/banks/2014/apr/06/most-listed-banks-see-annual-profits-soar

1.8 Workforce at different level


Designation
Managing Director
Deputy Managing Director
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Probationary Officer

Number of employees
1
1
1
1
2
2
2
5

Junior Officer
Asst. Officer/Asst. Cash Officer
Trainee Asst. Officer/Trainee Asst. Cash Officer
Total

3
2
2
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1.9 Salary structure of IFIC Bank


To evaluate the various components of the total compensation package, the values of cash
and non-cash perquisites and benefits have been monetized at current market rates. While
computing Annual Bonus, Performance Bonus, which is financial, and Company Products,
Transportation Cost have not been taken into account though these have been considered as
non-financial Cost to the Company.
The compensation package has been divided into two major segments:
Financial
Non-Financial
Financial
Basic Salary
House Rent Allowance
Domestic Aids Wage
Utilities / Maintenance
Transport Allowance
Medical Allowance
Children Education Allowance
Annual Bonus
Festival Bonus
Leave Fare Assistance
Performance Bonus
Profit Bonus
Incentive Bonus
Provident Fund
Gratuity
Pension Fund

Non- Financial
Company Leased Accommodation
Household Effects
Utilities / Maintenance
Telephone
Company Car
Running and Maintenance Cost
Pickup-Drop / Transportation Cost
Entertainment Allowance
Canteen Subsidy
Company Products
Club Membership
Group Life Insurance
Medical Expense
Hospitalization Scheme
Loan

PAYMENT FOR TIME NOT WORKED

Vacation
Holidays
Sick leave
Military leave
Paid rest periods
Lunch periods
Travel time
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1.10

Compensation system of IFIC Bank (Basic Salary)

Source: Annual Report; http://www.ificbank.com.bd/annual_report.php; 2014

Level

Designation
Chairmen
CEO

Top

Mid

Lower

Managing Director
Deputy Managing Director
Senior Vice President
Vice President
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Probationary Officer
Junior Officer
Asst. Officer/Asst. Cash
Officer
Trainee Asst.
Officer/Trainee Asst. Cash
Officer

Salary
Confidential
Confidential
126445
114950
104500
95000
42592
38720
35200
32000
15972
14520
13200

Pay differential with the immediate


employee
11495
10445
9500
3875
3520
3200
1452
1320

12000

1200

The bank is committed to follow a fair, competitive and flexible remuneration policy. The
board is the final authority for approval of this policy and will amend and review the policy
on recommendation of the Managing Director/ Management Committee periodically.
Salaries are confidential between the employees concerned and management. The salary
ranges for these job grades are reviewed from time to time. Temporary and outsource staffs
do not have any assigned job grade. The contracts get a consolidated payment per month and
there are no other entitlements applicable except commission based on job criteria.
Basic Pay: Basic salary ranges (BSRs) is commensurate with the job grades and is
determined by the Managing Director. The Board reviews the BSR at least once every
2/3 years.
Salary of employees of IFIC at different level
Higher Level
Mid-Level
Lower Level
Chairmen
Vice Senior Principal Officer - Probationary Officer - Trainee
Officer
President
Officer
Confidential - 95000
42592 - 32000
15972 - 12000

Asst.

1.11

Impact of Compensation on employee performance

Compensation is output and the benefit that employee receive in the form of pay,
wages and also same rewards like monetary exchange for the employees to increases the
Performance(Holt,1993).Compensation is the segment of transition between the employee
and the owner that the outcomes employee contract. As the prospective of employee pay
is the necessary of life. The payment receives from work done on the behalf of people
getting the employment. From the employee prospective one of the most important
part of cash flow. Compensation is mostly equal to half of cash flow of the companies. But
in the service sector it is more than half.
It is the major to attract the employee and motivate employee to increases the performance
(Ivanceikh and Glueck, 1989).
It is argument that mostly individuals that getting higher education they are not
satisfied their jobs and their turnover is more than so that organizations are overcome to
that problem design the compensation plain to retain the employees as well plays more
to attract, retain and motivate to give man power. Different universities objectives make
their benefits and compensation packages to attract as possible (HRM Process BPR
term report june,2009) mostly employees believe their abilities that knows that if they
perform well pay can be increasing.

1.12

SWOT analysis of compensation system of IFIC Bank

SWOT means overall evaluation of an organization by its activities such as, Strength,
Weakness, Opportunity, Threat, now I am going to discuss about IFIC BANK LIMITED.
Strength:
There is much Strength in this organization from my point of view, though much strength but
I would like to discuss such type of entireties:

IFIC BANK LIMITED is the 1st private generation Bank in banking environment in
Bangladesh & it provides customer satisfaction within 25 years. Now there are 75 Numbers
of Branches in six division .There are 2251 numbers of employees all over the country &
contribute of our economy by their hard and soul working, on the other hand 35% share of
Govt.
Weakness:
In my case study, I gathered some weakness in this organization which is very essential to
overcome for this organization, such as
New
comers in
on
Banking
Employee
turnover
tendency
high

Lack of
ATM
Weakness
Most of the
employees are
not adapted in
online
Banking

Marketing
Policy

Insufficie
nt of paid
up capital

From my point of view there are many weakness in this organization .paid up capital is not
accurate in the rule of Bangladesh Bank .IFIC Bank Limited has 164.00 million instead of
200 million. Newcomer online system, for this reason they are not totally adapted in online
Banking ATM Booth is not all over the country, they have not enough marketing team to
advertising of their product line.

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Opportunity:

IFIC BANK LIMITED has a big network to capture the whole items of customer by its
aggressive product.
Threat:
Bangladesh is a third world country & practicing a democracy policy by this policy Bank are
affected some hassles ,which is a big threat for a Bank .on the other hand Global recession &
Rising of new generation Bank ,New generation bank are provide highest facilities for their
customer which is a lack of the IFIC bank limited .

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1.13

Possible measures to include compensation system

The Human Resources Management system of IFIC is quite good. But the management
authority needs to look at some of the major issues like compensation policies, allowances
and transfer policies. IFIC needs more man power in the HR department for handling its
large number of employees.
IFIC should adjust its compensation policies with the industry standards. It should either
match or exceed its competitors rates in order to attract and retain competent employees.
They should also shift from job-based to person-based compensation structure. After all,
happy employees will lead to happy customers.
Temporary employees at IFIC suffer from job insecurity and instability. They are deprived
from the benefits provided to permanent employees. This results in dissatisfaction and
demoralization. IFIC should consider providing some benefits to the temporary staff like
health care, allowance or other benefits.
Teamwork, cooperation and coordination between the employees are of utmost importance to
ensure smooth flow of work. Thus, IFIC should take measures to that will foster teamwork
amongst the employees. There should be a sense of equity among the employees so that they
are willing to work with and help each other out when needed. An employee, who feels that
he is underpaid compared to his colleague, will not be willing cooperate with the other
employee.
IFIC has devised a very comprehensive performance appraisal program in which each
employee is given objectives against which his/her performance will be evaluated. For the
setting up of these objectives with its work force, the company utilized Management by
Objectives. The way these objectives are set is through mutual agreement, where the
employees are told exactly what is required of them, how they will be evaluated against each
of their objectives and what will be the reward in case if the objectives are met or exceeded.
The mutual setting up of these objectives in a participative manner motivates the employee to
achieve these objectives as they have a hand in setting them up as well. IFIC should have a
time limit, evaluation criteria and clearly defined rewards that will contribute towards
motivating the employees to contribute the best towards fulfilling their goals.

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CONCLUSION
In this Term Paper, we have focused on the Compensation Management system of International
Finance Investment and Commerce (IFIC) Bank Limited.
We began our report by looking at the history and composition of the Banking Industry of our
country. Our banking sector has grown significantly since the liberation war in 1971. The
banking sector plays a vital role in developing a countrys economy. We then took a closer look
at IFIC, its background, corporate vision, mission, values, organizational structure, and product
and service offerings. We also looked at their current market position which revealed that it is
performing well financially.
We then focused our attention on the Compensation Management system of IFIC. We review
some of the CM related theories and tried to relate them with IFICs practices. During our study,
we realized how complex it is to manage compensation effectively. It is difficult to keep all
stakeholders happy at the same time. Overall, IFICs CM practices are good, but there is much
scope for improvements. IFIC needs to adjust its pay policies as there is some dissatisfaction
amongst the employees regarding the pay structure. It would be beneficial for IFIC if they
implemented some of the recommendations that we have provided from our analysis and
understanding.

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Reference
International Finance Investment and Commerce Bank Limited; 2014; IFIC Profile;
http://www.ificbank.com.bd/about.php; 2014-08-02
International Finance Investment and Commerce Bank Limited; 2014; News & Events;
http://www.ificbank.com.bd/news.php; 2014-08-04
International Finance Investment and Commerce Bank Limited; 2014; Management Structure;
http://www.ificbank.com.bd/management_structure.php; 2014-08-08
International Finance Investment and Commerce Bank Limited; 2014; Human Resource
Development (HRD); http://www.ificbank.com.bd/HRD.php; 2014-08-09
International Finance Investment and Commerce Bank Limited; 2014; Annual Report;
http://www.ificbank.com.bd/annual_report.php; 2014-09-05
http://www.slideshare.net/abidi512/compensation-management-12919427
http://www.dhakatribune.com/banks/2014/apr/06/most-listed-banks-see-annual-profits-soar
Selima Begum, Senior Principle Officer, IFIC Bank, Mymensingh Branch.

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