Rewards And Compensation In Tata Motors Accounting Essay

Tata Motors Limited is India ‘s largest car company, with amalgamate grosss of INR 1, 65,654 crores ( USD 32.5 billion ) in 2011-12. It is the leader in commercial vehicles in each section, and among the top three in rider vehicles with winning merchandises in the compact, midsize auto and public-service corporation vehicle sections. It is the universe ‘s 4th largest truck and coach maker. The Tata Motors Group ‘s over 55,000 employees are guided by the vision to be ”best in the mode in which we operate, best in the merchandises we deliver, and best in our value system and moralss. ”

Established in 1945, Tata Motors ‘ presence so cuts across the length and comprehensiveness of India. Over 7.5 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company ‘s fabrication base in India is dispersed across Jamshedpur ( Jharkhand ) , Pune ( Maharashtra ) , Lucknow ( Uttar Pradesh ) , Pantnagar ( Uttarakhand ) , Sanand ( Gujarat ) and Dharwad ( Karnataka ) . Following a strategic confederation with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon ( Maharashtra ) to bring forth both Fiat and Tata autos and Fiat power trains. The company ‘s franchise, gross revenues, services and trim parts web comprises over 3,500 touch points.

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Tata Motors, the first company from India ‘s technology sector to be listed in the New York Stock Exchange ( September 2004 ) , has besides emerged as an international car company. Through subordinates and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, Spain and South Africa. Among them is Jaguar Land Rover, a concern consisting the two iconic British trade names that was acquired in 2008. JLR supports two province of the art technology and design installations and three fabrication workss ( Solihull, Castle Bromwich & A ; Halewood ) in the UK. In 2004, Tata Motors acquired the Daewoo Commercial Vehicles Company, South Korea ‘s 2nd largest truck shaper. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new merchandises in the Korean market, while besides exporting these merchandises to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21 % interest in Hispano Carrocera, a reputed Spanish coach and manager maker, and later the staying interest in 2009. Hispano ‘s presence is being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a planetary leader in body-building for coachs and managers to fabricate fully-built coachs and managers for India and choice international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to fabricate and market the company ‘s pickup vehicles in Thailand.

We have chosen this organisation because this is the taking company in car sector and most of our group members want to travel in car sector.

Wagess and Compensation in Tata Motors: –

A elaborate treatment with HR caput Mrs. Monika Ahuja of Tata Motors ( Lucknow subdivision ) , gave us the penetration in the wagess and compensation system followed in the company. The assessment theoretical account which is followed on one-year footing get downing from the month of April boulder clay March has been highly effectual for the employees of Tata Motors.

Half annually appraisal system was started few old ages ago. This activity was started maintaining in head the dynamic behaviour of the industry. With a half annual assessment system, the employee gets feedback twice a twelvemonth, which gives him/her a opportunity to re-look at his/her attack of working. Necessary stairss are besides undertaken for employees who deviate from their ends. They have introduced a comprehensive system of quarterly assessments ‘ where an employee selects his/her ain ends or Key Result Area ( KRAs ) every one-fourth and him/her ego assesses his/her ain public presentation against these parametric quantities. At Spice jet while officially the procedure is one-year, for several of the frontline employees, there are public presentation related quarterly payouts designed to honor them with inducements for their public presentation. This has resulted in quarterly appraisals which are aligned overall to one-year KRAs

Tata Motors have a midterm reappraisal for all those who have been performing artists, thereby making an outlook amongst the employees of an addition in salary twice a twelvemonth if they perform good. They used to hold one-year assessments earlier, but so they felt that the inducements are non plenty to motivation the gross revenues section, which generates major grosss or the organisation. They do give pecuniary increases and appellation hikings, harmonizing to the public presentation. If the employee deserves both, they give him/her both the advantages otherwise at least one of them. Appellation hikings are given yearly. These are relative to attempt of the person, squad and the section. Designation alterations are given maintaining in head the huge duty one has to shoulder in a high rank. Monetary increases are chiefly inducements that are given either in hard currency or sort for illustration they give them travel bundle within India or outside. Besides, they have an roll uping incentive strategy in which employees can roll up inducements and acquire them yearly with interest.A

To run into the new demands of the concern and to actuate the employees for higher public presentation, they have started associating a portion of the salary addition to single public presentation steps as variable wage. At present, between 6 to 8 per centum of the compensation is variable wage, which they are be aftering to increase over a period of clip. Executives are categorized in degrees based on their public presentations in a comparative ranking and based on outcome performance-linked wage is awarded.

Wagess: –

Promotions based on PerformanceA·

Productivity & A ; Profit-linked Incentive SchemesA·

Training including Long-run Term

Appraisals: –

New Appraisal System based on KRAs & A ; A TargetsA·

Review of Targets at regular IntervalsA·

Peoples Development an of import KRA

Career Design: –

Performance & A ; Potential based Appraisals

Fast Track Option for High-performers

Promotions after Managers Vacancy based

Interviews for publicities above Directors

Choice of Supervisors: – Performance / Attendance / Discipline record- Written Test & A ; Interview

Job Rotation – including Inter-functional

Goal-SettingA Model

AA goalA settingA plan in an organizationA requiresA carefulA planning.A AsA shownA in the figure, theA firstA three factorsA inA end puting procedure are set uping the end, accomplishing end committedness, and get the better ofing opposition to end credence. GoalsA canA beA establishedA in a assortment ofA ways. BestA wayA is toA setA byA jointA participationA betweenA the employeeA andA theA supervisor.A This methodA oftenA leadsA toA employeeA committedness, aA crucialA ingredientA in effectiveA goalA scene.

GoalA Puting

S.M.A.R.T. Goals

Specific – precise and detailed

Measurable – with standards for finding advancement and success

Accomplishable – come-at-able and action-oriented

Realistic – relevant and aligned

Time-related – grounded within a time-frame

For this intent, an on-line templet is circulated in the organisation. Superiors fill out that signifier maintaining in position the public presentation of their subsidiary over the twelvemonth. This feedback becomes the footing of the publicity of the employees. Superior is responsible for categorising the employees in four classs, viz. – “ A B C D ”

This classification is done both on the footing of public presentation and the ends they were given.

This whole system is normally known as “ 90 grade assessment system ” besides called “ 2 grades ” .


Gratuity: –

The Company has an duty towards tip, a defined benefit retirement program cover ineligible employees. The program provides for a ball sum payment to vested employees retirement, decease while in employment or on expiration of employment of an sum equivalent to 15 to 30A yearss salary collectible for each completed twelvemonth ofA service. Investing occurs upon completion of five old ages of service. The Company makes one-year parts to tip fund established as trust. The Company accounts for the liability for tip benefits collectible in future based on an independent actuarial rating.

Old-age pension: –

The Company has two old-age pension programs, a defined benefit program and a defined part program. Employees who are members of the defined benefit old-age pension program are entitled to benefits depending on the old ages of service and salary drawn. The monthly pension benefits after retirement scope from 0.75 % to 2 % of the one-year basic wage for each twelvemonth of service. The Company accounts for the liability for old-age pension benefits collectible in future under the program based on an independent actuarial rating. With consequence from April 1, 2003, this program was amended and benefits earned by covered employees have been protected as at March 31, 2003. Employees covered by this program are prospectively entitled to benefits computed on a footing that ensures that theA one-year cost of supplying the pension benefits would non transcend 15 % of wage. The Company maintains a separate irrevokable trustA for employees covered and entitled to benefits. The Company contributes up to 15 % of the eligible employees ‘ wage to the trust every twelvemonth. The Company recognizes such parts as an disbursal when incurred. The Company has no farther obligationA beyond this part.

Bhavishya Kalyan Yojana ( BKY ) :

BKY is an unfunded defined benefit program. The benefits of the program accrue to an eligible employee at the clip of decease or lasting disability, while in service, either as a consequence of an hurt or as certified by the Company ‘s Medical Board. The monthly payment to dependants of the asleep / disabled employee under the program equals 50 % of the salary drawn at the clip of decease or accident or a specified sum, whichever is higher. The Company accounts for the liability for BKY benefits collectible in future based on anA independent actuarial rating.

Post-retirement Medicare Scheme: –

Under this strategy, employees get medical benefits capable to certain bounds of sum, periods after retirement and types of benefits, depending on their class and location at the clip of retirement. Employees separated from the Company as portion of Early Separation Scheme, on medical evidences or due to lasting disability are besides covered under the strategy. The liability for post-retirement medical strategy is based on an independent actuarial rating.

Provident Fund: –

The eligible employees of the Company are entitled to have benefits under the provident fund, a defined part program, in which both employees and the Company do monthly parts at a specified per centum of the covered employees ‘ wage ( presently 12 % ofA employees ‘ wage ) . The parts as specified under the jurisprudence are paid to the provident fund and pension fund set up as irrevokable trust by the Company or to respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension strategy. The Company is by and large apt for one-year parts and any deficit in the fund assets based on the authorities specified minimal rates of return or pension and recognizes such parts and deficit, if any, asA an disbursal in the twelvemonth incurred.

Compensated absences: –

The Company provides for the encashment of leave or leave with wage capable toA certain regulations. The employees are entitled to roll up go forth capable to certain bounds, for future encashment. The liability is provided based on the figure of yearss of unutilized leave at each balance sheet day of the month on the basisA of an independent actuarial rating. Some other benefits advanced to the lasting employees are:

Allowances like Transport allowance, Education allowance, Sanitation allowance, Leave and travel allowance etc.

Annual Performance linked Payment

Free Medical installation for household

Company loans & A ; progresss

Analysis of Practice: –

After holding treatment with HR caput Mrs. Monika Ahuja, it was observed that there was wagess and compensation in the organisation. It is an effectual tool, since it is on uninterrupted footing. Wagess and compensation in Tata Motors is satisfactory for its effectual direction and rating of staff. Wagess here are assisting persons to develop, better organisational public presentation, and provender into concern planning. Performance assessments enable direction in monitoring of criterions, holding outlooks and aims, and deputation of duties and undertakings. Staff public presentation assessments besides set up single preparation demands and enable organisational preparation demands analysis and planning. 90degrees appraisal system or reappraisal is being followed in Tata Motors i.e. feedback that comes from members of an employee ‘s immediate work circle most frequently, 360-degree feedback will include direct feedback from an employee ‘s subsidiaries, equals, and supervisor ( s ) , every bit good as a self-evaluation. It can besides include, in some instances, feedback from external beginnings, such as clients and providers or other interested stakeholders. The appraisal procedure is uninterrupted here and encourages employee productiveness with positive feedbacks.

Each company is pioneer in their ain manner of bring forthing their merchandises and every bit counterbalancing the employees. TATA Motors have fixed wage and more and more variable wage is introduced in every company. Nowadays we find that the variable constituent is rather big as compared to the fixed 1. There are immense advantages due to variable wage compensation which are as follows:

Employee answerability

Motivation to execute more

Performance taking to wagess and acknowledgment

High ego motive to execute nevertheless, critics has argued that such a wage construction would ever set immense tonss ofA force per unit area on the employees and therefore an employee is looked simply as a machine with no emotions. Some of the disadvantages may be asA follows:


Increased emphasis degrees due to heavy outlooks

Performance anxiousness

Employee worn-out

Findingss: –

The really construct of public presentation assessment is marketed throughout the organisation ; people have accepted it and understood its importance to the organisation.

It should be noted that the appraisal signifier for each occupation place should be different as each occupation has different cognition and accomplishment demands. There should non be a common assessment signifier for every occupation place in the organisation.

The occupation and function expected from the employees should be decided good in progress and that excessively with the consensus with them.

Superior ‘s response tend to be bias, which make employees unsated. Therefore, a better system can be installed.

Associating, Findingss to the wagess can turn out to be unjust. Transparency should be bought in assessment system.

Ignores public presentation in footings of making ends, which can be black for the organisation.

Ideally in the present twenty-four hours scenario, assessment should be done, taking the positions of all the concerned parties who have some bearing on the employee. But, since a alteration in the system is required, it can non be a drastic 1. It ought to be gradual and a alteration in the mentality of both the employees and the caput is required.


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