Tag Archives: Employee

A Worker’s Plea

15 Dec

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Understanding CTC and your Actual Salary

14 Dec

15fin3Whether you are joining your first job or changing jobs, it is important to understand the difference between cost to company (CTC) and take home salary. It will help you in negotiate better with the HR and in structuring your salary.

One of the most commonly used terms by companies, yet least understood by its employees is ‘cost to company’ or CTC. The CTC, as quoted by employers and the take home pay are two different amounts.

Also salary hikes in the form of an increased CTC does not necessarily increase the monthly salary. So what exactly is CTC and as an employee what all are you entitled for?

This article aims to clarify the confusion that often arise in employees’ minds when it comes to salary structures.

 

Lets Understand about the CTC (Cost To Company)

Demystifying cost to company

Ravi Bhushan, a fresh software graduate, joined a top notch IT company. For his first job, he was extremely happy with the total CTC of Rs 6,00,000.

On the basis of this CTC, Ravi made lavish plans to spend his first month’s salary. Expensive gifts for family, a swanky new bike and the latest mobile phone. But when he got his first salary, he realised some of his plans had to wait.

His take home salary was nowhere close to his estimation. He approached his HR, who then explained the breakup of his CTC, which he had just glanced over at the time of joining.

Here’s what his HR manager explained to him:

The cost to company refers to the total expenditure a company would have to incur to employ you.

It includes monetary and non-monetary benefits, such as monthly pay, training costs, accommodation, telephone, medical reimbursements or other expenses, borne by the company to keep you employed. The total CTC need not be the actual salary in hand at the end of the month.

It is simply a sum of various components put together.

Components of CTC

Companies offer various attractive components in the CTC to retain and boost the morale of the employees. Whereas some salary components are fully taxable some are fully tax-exempt. The composition of your CTC and a few of its components could be grouped as below.

1. Fixed salary

This is the major part of your CTC and forms part of your monthly take home. It commonly consists of the following:

Basic salary: The actual pay you receive for rendering your services to the company. This is a taxable amount.

Dearness allowance: A taxable amount, this is paid to compensate for the rising cost of living.

House rent allowance (or HRA): Paid to meet expenses of renting a house. The least of the following is exempt from tax.

Actual HRA received:

  • 50 per cent of salary (basic + DA) if residing in a metropolitan city, or else 40 per cent
  • The amount by which rent exceeds 1/10th of salary (basic + DA)

Conveyance allowance: Paid for daily commute expenses. Up to an amount of Rs 800 per month is exempt from tax.

2. Reimbursements

This is the part of your CTC, paid as reimbursements through billed claims.

Meal coupons: Many companies provide their employees with subsidised meal coupons in their cafeterias. Such costs incurred by companies in the form of subsidies are included in the CTC. Meal coupons are tax exempt provided it is not in the form of cash.

Mobile/Telephone bills: Telephone or mobile expenditure up to a certain limit is reimbursed by many companies through a billed claim, and is a taxable amount.

Medical reimbursements: Paid either monthly or yearly, for medicines and medical treatment. The entire amount is taxable. However, up to Rs 15,000 could be tax exempt, if bills are produced.

3. Retirement benefits

This is available to you only on retirement or resignation.

These include:

Provident fund: Employers contribute an amount equal 12 per cent to the provident fund account. This employer’s contribution though received only on retirement or resignation, is an expense incurred by the company every month and thus is included in your CTC.

Gratuity: Companies manage gratuity through a fund maintained by an insurance company. The payment towards the gratuity annually is sometimes shown in CTC.

4. Other benefits and perks

Leave travel allowance: It is the cost of travel anywhere in India for employees on leave. Tax exemption if allowed twice in a block of four calendar years.

Medical allowance: Some companies offer medical care through health facilities for employees and their families. The cost of providing this benefit to the employee could also form part of CTC.

Contribution to insurance and pension: Premiums paid by companies on behalf of employees for health, life insurance and Employees Pension Scheme, could form a part of the CTC.

Miscellaneous benefits: Other perks which companies include under CTC could be electricity, servant, furnishings, credit cards and housing.

Bonus: This is the benefit paid on satisfactory work performance for employee motivation. Though this amount is not assured to the employee, most companies include the maximum amount that can be paid as bonus, to the CTC. The two types of bonuses that are normally paid out are:

1. Fixed annual bonus: Paid on the basis of employee performance, either monthly or in most cases annually, it is a fully taxable amount.

2. Productivity linked variable bonus: Complete bonus amount is paid only on 100 per cent achievement of target, nevertheless it still is included as part of your CTC.

 

Moral of the Story :- Lessons learnt

Each company too has its own way of calculating the cost to company. Let us revisit Ravi’s case.

Ravi realised, that an attractive CTC does not necessarily indicate a heavy monthly take home. Benefits like training and development, whether undertaken by him or not was still considered part of his CTC. Here is what one should keep in mind:

One must take time to find out what the actual benefits are by asking for the break-up of the CTC so as to know the entitlement.

If you are just joining the company, try to negotiate with the HR as to opting out of some facilities in exchange for increasing the take home.

Understand the expenditure limits and tax angle of perks and benefits, and use them smartly.

Here is a Sample Salary Breakup of a MID – LEVEL Manager

080822082723_mid-level-manager

 

Thanks and Regards,

Pinal Mehta

Source:- Rediff Files

HR Article :- 9 Qualities that will Rock your career

7 Dec

Qualities of the employeeSuccess in life is always relative. Some people are happy with small achievements while there are others who won’t be satisfied until mountains are moved.

Regardless of our ambitions, our career spans through a series of jobs and experiences that truly polish our personality and will. While we all have defining moments that will determine our core beliefs around hard work, persistence, determination, etc., these are all simply components of a greater foundation that defines ‘you’. A rocking rise through corporate ranks involves a radical understanding and possible change in your attitude and behaviors.

There are millions of brilliant people who pursue aggressive career paths and have their sights set on great achievement. While their ability is nothing short of genius, many lack the soft skills that could put them over the top. These are the traits, qualities and understandings are what make good people great. Practical and time tested, mastering and practicing the following qualities will make if difficult for success to elude you.

  1. Out of Box Thinking
    Many dislike this term but the concept is for real. All it requires is thinking of problems though a different set of eyes, or different dimension. This is why many brainstorming sessions fail; most people sit and think of work problems in the context of what it means to the company, not the user, not the environment, etc. Sit back and try to solve the problem from the eyes of a 6 year old, turn things upside down, and absolutely challenge the norm. Go outside and sit in a subway station (or somewhere you generally don’t sit to work) and think about why other solutions not worked? What has worked?

    Remember the best ideas come from people who are hands-on with their work. When everyone thinks and recommends a lackluster way, lackluster results will follow. Change your surroundings, change your views, change your thought process and come up with a killer idea!

  2. Taking Ownership
    When no one is willing to own it, be the first to grab the opportunity. A process involving various stakeholders normally loses vision and momentum. A process with a good leader, input from others, and true direction, has a much better chance of success. Be the person that jumps in and takes on a new project (just don’t over-commit). An ability to own and work towards success is a skill which gives long lasting returns.
  3. Eagerness to Learn
    After a certain period, a job becomes monotonous and people become bored and eventually even lazy. They lose all the zeal to learn new things and although they won’t admit this, their actions would make you believe they have thrown in the towel and are satisfied with a status quo life and career. If you really want to move ahead, don’t get into this rut. Don’t tune out.

    Always remain eager to learn; you never know what knowledge or capability will push you up in your career. Remember, you need an open mindset and positive attitude to approach work. If you are constantly learning, it will be tough to be or appear to be interested in mediocrity.

  4. An Eye for Detail
    If you are hands on with your work there is no reason why you won’t know the intricacies involved. Therefore, have the confidence needed to make difficult choices. When you master something and know the minute details, your logic and ideas will be highly regarded. While people love to argue, they get easily impressed by intelligent reasoning too.
  5. Willingness to Help
    Much of life is give and take. Work is no exception. If you are the person that is constantly stepping out of your comfort zone in order to help others, people (most) will return the favor when you ask. That’s the key though, you have to be willing to help someone and not too proud to ask them for help when you need it.
  6. Networking
    Your network should never be restricted to people in your domain but it should span other departments too. Again, break away from comfort and get engaged with someone from a different department. When you sell yourself in the market, you need people who can vouch for you and the broader the network, the better. A strong network always gives you an upper hand, not only to receive but also influence the information flow.
  7. Solution Seeking Mindset
    People love to mention and talk about problems. However, when you ask for their solutions to those problems, they aren’t willing to go on record with sweeping changes. The majority of employees lack an attitude to solve issues and love to keep them burning for long time, almost to encourage sympathy. It is these times that a positive mindset can send the right vibes across and can really give you a lot of attention. Don’t avoid complainers, listen to them just long enough to hear the problem, then try to come up with a solution.
  8. Humility
    Arrogance has its own advantages but it never attracts more people than the magic done by humility. When you know your work and are humble about it than there is no reason that you would not get the desired appreciation. Humility needs to be pitched with much care lest it lets people take undue advantage of you. Strike the right balance and you would see its real magic.
  9. Being Practical
    Human beings are emotional and many fall for popular decisions. A practical decision made at right time with right attitude has the ability to shower you with long lasting fame. Remember, the people who are at the top are nothing but practical.

It is a jungle out there where you not only need to survive but flourish too. Develop the killer attitude for success and no one would ever dare to stop you.

Always

  1. Work Hard, Work Smart
  2. Make sure the world knows about it
  3. Make sure to sell it in right manner to right people

Go, Get Success

 

Regards,

Pinal Mehta

HR Stories :- Test of Communications Skills

3 Dec

It was a hot meeting at the office conference hall. All the people from the department had been called. The VP was looking much tensed.
 

The mood was so bad. My friend asked me – “Hey, what is this meeting all about? I told – May be they will decide on when to have the next meeting.

People around smiled at each other. Then the VP started talking. It was about the recent attrition rate that was so high. Around 10 people had put in their papers. All experienced guys. It was quarter end and so work was huge. If we do not complete the work on time, we need to be paying heavy penalty said the VP.

The VP turned to the manager and told “Hey – take how much ever resources you want. Recruit or take them from other departments. But complete the work in another 25 days. Take people and complete it man.

 
To this the sweet manager replied “Sir! Give me one wife and nine months and I shall show you results. Don’t give me nine wives and one month. I cannot do anything.” Everyone looked at him blank.

 
The VP was not prepared for this answer. We looked at the manager and thought “What an Awesome Reply man!”

HR Article :- 7 Effective Ways to recognize your People

1 Dec

Employee recognition is a much talked about, but often overlooked part of the workplace. Recognizing and rewarding your employees can be a slippery slope to navigate and sometimes it seems that managers either get it, or they don’t. If recognition is not sincere and genuine, your employees will know it.

 

 

7 Tips for Recognizing Your Peeps – this list isn’t about expensive ways to reward your employees because we know you can figure that out, but more subtle no-cost ideas that educate, motivate and inspire your team because a happy, invested team will always outperform a bunch of bitter Betty’s!

7 Tips for Recognizing Your Peeps

  1. Give ‘Em the 411: Informed peeps are empowered. Many managers make the mistake of keeping all the information to themselves. Instead, share information with your team. Fill them in on how your organization is doing, what the future holds and how they play a part in it. By giving your peeps information, you empower them to make informed, confident decisions and choices, which not only benefit them, but your organization.
  2. Miss (or Mr.) Independent: How many people like being micromanaged? Not too many! Employees value independence, so give it to them. When you work with your peeps to tell them what needs to be done and then give them the ability to decide how to do it, you increase their independence and ability to take more ownership of their role.
  3. Be Gumby: Everyone appreciates flexibility in their work whether it’s working flex hours, working from home or something else. This can be very motivating and shows you trust your peeps. In workplaces where this may not be possible, find ways to be flexible and your employees will respond.
  4. Give Me More: We all know training and development happen in real-time, on the job. Provide your peeps lots of opportunities to grow and learn by investing in their development and provide them stretch goals. It shows your peeps that you trust, respect and want the best for them. You’ll be rewarded when they perform at higher levels with each opportunity.
  5. Decisions, Decisions: How does it feel when all the decisions are made for you? Not so much eh? Well, your peeps are closer than anyone to the work they do so they are really the best decision makers. Sometimes as managers we make the mistake of deciding for our employees. Take a step back and ask them what they think and what they recommend. They’ll be more involved in the process and therefore more invested in the outcome.
  6. How Am I Doing? Everyone wants to know how they are doing at any time so hold frequent check-ins throughout the year so you can have honest conversations about your peeps performance. Take the time to share what they are doing well and what could use some work. Also, remember to share great feedback with the leadership team of your company so they’re aware of the contributions your peeps are making. The more feedback you give your employees, the more they will be equipped to respond to the needs of your organization.
  7. Celebrate! Often we are so busy strategizing, working and executing that we cruise through the year without taking the time to celebrate all the success along the way. Remember, if you celebrate often you’ll get more back in return and you’ll foster a culture of recognition.

How are you recognizing your peeps? I’d love to hear.

Regards,

Pinal Mehta

HR Article :- Promote From Within to Create Employees Loyalty

15 Nov

A company can generate increased employee loyalty by always looking first to promoting from within, rather than hiring from the outside. The advantages are clear: when employees realize that they are valued, and that they have long-term potential for advancement within their company, their loyalty and commitment will be strengthened.

In many small businesses, a few key employees keep the ball rolling. These individuals are usually highly dedicated, intelligent and experts at their jobs. But human nature is such that few people remain comfortable doing the same thing repeatedly. Dedicated employees often feel the need to expand their scope of responsibility. They want to learn new skills. And they want to feel that they are growing. One of the best ways to meet these needs is to give employees the opportunity to move upward in the company, achieving greater respect, increased salary and expanded responsibility.

Consider these tips before placing a want ad:

When a new position opens up, always evaluate in-house talent first before looking outside. Seldom will a current employee fully possess the experience and qualifications that could be found in a new hire. But by closely examining the abilities and desire of current employees, you may find someone who can be trained easily for the new position. This will save you time and money — and you’ll end up with an employee who already knows the ins and outs of the company. When you can promote in this way, you’ll create an exceptionally dedicated employee — and send a ripple of dedication through all other employees as well.

Establish pre-designated career paths. When employees know from their first days of interviewing with the company that they can achieve their career goals without changing jobs, you’ll have loyal workers.

When searching for people to promote, take suggestions from other employees. You may not be able to spot the hidden talent under your nose, but employees in the trenches know who has what it takes to move upward in the company.

Create relationships with trade groups, seminar companies, local schools and colleges, and other educational organizations to provide ongoing training for your employees. Offer to pay, or at least partially pay, for this training. Successful small businesses usually have employees who are able to multi-task.

If you contract work to outside vendors, see if these tasks can be assigned to current employees. This will help them expand their responsibilities, and could provide an avenue for in-house career advancement.

During routine employee performance evaluations, ask employees if they are interested in taking on additional responsibility. Doing this makes it easy for employees to discuss their goals.

Stick with your career-path commitments. If you waver, hiring from outside when a qualified employee was already on staff, you’ll undo all your efforts along this line. Exceptions are, of course, when a highly specialized or top executive position needs to be filled. Even so, explanations should be given to current employees so they understand and accept the decision to hire from outside.

Regards,

Pinal Mehta

HR Survey – Why Employees leaves organization ?

17 Oct

Every company faces the problem of people leaving the company for better pay or profile.

Early this year, Mark, a senior software designer, got an offer from a prestigious international firm to work in its India operations developing specialized software. He was thrilled by the offer.

He had heard a lot about the CEO. The salary was great. The company had all the right systems in place employee-friendly human resources (HR) policies, a spanking new office, and the very best technology, even a canteen that served superb food.

Twice Mark was sent abroad for training. “My learning curve is the sharpest it’s ever been,” he said soon after he joined.

Last week, less than eight months after he joined, Mark walked out of the job.

Why did this talented employee leave?

Arun quit for the same reason that drives many good people away.

The answer lies in one of the largest studies undertaken by the Gallup Organization. The study surveyed over a million employees and 80,000 managers and was published in a book called “First Break All the Rules”. It came up with this surprising finding:

If you’re losing good people, look to their immediate boss…Immediate boss is the reason people stay and thrive in an organization. And he’s the reason why people leave. When people leave they take knowledge, experience and contacts with them, straight to the competition.

“People leave managers not companies,” write the authors Marcus Buckingham and Curt Coffman.

Mostly manager drives people away?

HR experts say that of all the abuses, employees find humiliation the most intolerable. The first time, an employee may not leave, but a thought has been planted. The second time that thought gets strengthened, the third time, he looks for another job.

When people cannot retort openly in anger, they do so by passive aggression. By digging their heels in and slowing down. By doing only what they are told to do and no more. By omitting to give the boss crucial information, Dev says: “If you work for a jerk, you basically want to get him into trouble. You don’t have your heart and soul in the job.”

Different managers can stress out employees in different ways – by being too controlling, too suspicious, too pushy, too critical, but they forget that workers are not fixed assets, they are free agents. When this goes on too long, an employee will quit – often over a trivial issue.

Pinal Mehta