Compensation Management Practices and Policies Assignment / Report

Assignment On
Compensation Management
Practices and Policies of Mutual Trust Bank
SubmittedTo
DR. FARAHANA FERDOUSI
Lecturer
Southeast Business School
Southeast University
SubmittedBy
FAKRUL HASSAN ABU BOKER
A.M. AHSANUR
RAHMAN
TONMOY
ISTIAK AHMAD
BIMOL CHANDRA
SARKER
ID #
2018010005080
ID #
2018010005042
ID #
2018010005039
ID #
2018010005079
ID #
2018010005047

Submission Date : 19 April 2019
Letter of Transmittal
19 April, 2019
Dr. Farahana Ferdousi
Lecturer
Southeast Business School
Southeast University
A.R. Tower
24, Kamal Ataturk Avenue
Banani, Dhaka-1213
Subject: Submission of Assignment
Dear Sir,
With due respect and humble submission, we would like to state that it is an
immense joy for me to submit our assignment on “Compensation Management
Practices and Policies of Mutual Trust Bank”. We are glad to work under your active
and cooperative support and we think it has been a great achievement for us that we
could study under you throughout the last three months for which it has been
possible to complete the assignment successfully.
We will be really grateful to you if you are kind enough to receive our assignment
report and give your valuable feedback so that we can utilize your judgment for
further prospects.
Sincerely Yours,
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FAKRUL HASSAN

ABU BOKER
A.M. AHSANUR RAHMAN TONMOY
ISTIAK AHMAD
BIMOL CHANDRA SARKER
Executive Summary
This assignment is prepared on the basis of our few days practical experience at
Mutual trust bank. Mutual trust bank is one of the leading local banks in our country.
The bank has many divisions and departments but the focus is given more on the
HRD. Moreover, from the all bank MTB is renowned to good HR practices. We are
lucky that we got the opportunity to work in this division. This report is based on
compensation system of Mutual Trust Bank how their strong and effective
compensation policy increase efficiency and motivate the employees. The purpose of
making this report is to identify the compensation management practices and
policies of mutual trust bank. The assignment also consist recommendations and
conclusion according to our point of view, which we think would more develop the
compensation policies of the bank if implemented.

1.0 Introduction
1.1 - Background of the Study:
For the students of MBA program of Southeast University, this study is a partial
requirement of MBA curriculum so that the students get tuned and have a true feel
of the real job world. This study is titled “Compensation Management Practices and
Policies of Mutual Trust Bank Limited”. This report includes information of the
compensation system of MTB, the overview of the organization and also facilities
they offer to satisfy their employees.
1.2 - Scope of the study:
The study will focus on the compensation management of MTB; how they perform
and maintain compensation management. Also It will be discussed the current
compensation practices and policies of MTB. We are lucky that we had a great
opportunity to have an in depth knowledge of compensation management practiced
by the Mutual Trust Bank Ltd.
1.3 - Objective of the Study:

Without objective nothing can be counted as a successful one. Our assignment also
directed to serve some particular objectives. The main objective of the study is to get
an overall idea about the compensation management of Mutual Trust Bank Ltd.
1.4 - Specific objectives of the Study:

To identify the Compensation Management Practices and policies of Mutual Trust
Bank Limited.

2.0 Methodology
As we were involved with the organization for the last three months and work there,
We were able to collect the data from the primary sources. Therefore, Data are
collected from both primary and secondary sources. Every now and then we tried to
talk to different officials to find out relevant facts even in unofficial manners like in
tea breaks and lunch breaks. And talking about secondary source we have used to
the fullest extent possible. The sources of data details are given below:
Primary Sources:

Communication with a branch manager.

Discussion with officials and concerned experts of different designation.
Secondary Sources:

Websites of the Bank.

Significant data from the Internet

Textbook &

Survey Report.
2.1 - Limitation:
First of all, there are some information’s that are thought to be confidential to be
disclosed to others, some people were found to be hesitant to share those and
showed negative impression. We only worked at the HR department and it was quite
difficult to understand about the compensation policies and the extent to which
employees were satisfied in other division.
Secondly, Time constraint was another difficulty for the completion of the report
because due to the limitation of the time it was not possible to study a large sample
size for which we had to deal with a small sample size in case of research. We had
only few days to complete our assignment.

3.0 An Overview of Mutual Trust Bank
Mutual trust bank limited is one of the leading local private banks in Bangladesh. It
offers a full range of personnel, corporate, international trade, foreign exchange, and
lease finance and capital market services. Mutual trust bank is the first choice in the
banking sector since it provides a service of excellence a customized solution for
business purposes, a global and technical bank of high investment which has actually
created a new dimension in the area of banking. Due to its experienced professional
and dedicated force of management along with a vast knowledge of banking, it has
gone to the apex of success. Because of its high expertise, the bank is only able to
solve and resolve all the problems regarding the banking of their customer.
3.1 - Background and History of MTBL:
The company has started its journey on September 29, 1999 with a authorized
capital of taka 1,000,000,000. Under the banking company act 1991 it got it license
on October 5, 1991 and the banking operation of MTB was started on October 24
1999. The company started its operation with the following commercial banking
activities.
 All sort of commercial banking activities
 Investment in merchant and company activities
 Different sort of financial services including financial intermediaries’
services.
3.2 - Objectives of MTB:
The main objective of MTB is to see itself in a position where the people and all
stakeholders consider the bank as a bank of difference. It aims to master the savings

Junior Asstt. Vice president
FirstAsstt. Vice president
AssistantVicepresident
Senior Asstt. Vice president
Vice president
Senior Vicepresident
Executive Vice president
Sr. Executive Vice president
and channelling the procedure to make the company perfect in a proper banking
system. To carry and undertake all sort of investment policies including financing,
managing, underwriting etc.
3.3 - Mission:
The Mission of “Mutual Trust Bank Ltd” is to be one of the most admired banks in
the nation and be recognized as an innovative and client-focused company, enabled
by cutting-edge technology, a dynamic workforce and a broad array of financial
products and services.
3.4 - Vision:
The ultimate vision of Mutual Trust Bank is to be the first leading company in
Bangladesh in the banking industry. MTBL wants to see itself as the one and only
leading performers and world class service providers in the banking industry.
3.5 - Organization Hierarchy:

4.0 Compensation Management Practices of Mutual Trust Bank
Compensation is the most important part in any organization as it is one of the key
factors of motivation for all employees now-a-days. Therefore, different organization
undertakes attractive compensation policy to uphold the potential employees to
increase the productivity. Generally, we can see two types of compensation system.
One is financial and another one is non-financial. Mutual trust bank has been also
offering lucrative compensation to their employees for years for which their demand
is up scaling day by day. One of the finest things that we observe that MTB has
always tried their utmost to keep their best person else by ensuring the best pay
scale comparing with the competitors. Therefore, it is seen that the turnout ratio of
employees of MTB is so low. MTB goal of compensation is to focus on the certain
activity or works done by the employees upon which the compensation is maintain
or scaled such as it has maintained a combination of cash, benefits, retirement,
perquisites as a total compensation package.
There are several compensation policies taken by MTB. These are given below:
4.1 - Salary:
To compare with all the local banks MTB pays relatively so high to their lower level
employees. It is done due to grab the potential employees from the market. Actually
there are few companies in the market to pay such a high basics to their employees
for which MTB is still is the first choice of new comers. This is the area in which MTB

has done marvellous job because now-a-days employees are more concern of their
basics. MTB has successfully adapted this change. It has been seen that employees of
MTB are highly satisfied due to the convenient salary structure as other company in
the market are not paying like this. Moreover, MTB used to review its salary once in a
year. For a instance every December, the salary of the employee review based on the
performance which is key motivating factor to perform well. Another thing that is to
mention that MTB conducts performance evaluation twice in a year according to that
they are to review the salary.
The overall pay structure of the employees varies in different layers which are shown
below:-
Designation Salary ( BDT taka)
Assistant Officer (AO) 34,000
Junior Officer (JO) 40,000
Officer 48,000
Senior Officer 54,000
Junior Assistant Vice president (JAVP) 60,000
First Assistant Vice President (FAVP) 66,000
Assistant Vice President (AVP) 74,000
4.2 - Salary Payment:
The most important thing about the payment of the salary of MTB is that it clears all
the salary payments within 25th
of each month which is quite absent in other
companies. The employees are paid their every month salary on their accounts which
they have to open while joining in the company. It is good in such way that all the
tax and deductable income are cut by company itself and the employees get those
amounts withdrawn the money from their account as a whole.

4.3 - Bonus:
Like the other banks, MTB provides two festival bonuses to their employee’s one is in
Eid-ul- Fitar another one is Eid-ul-Azha. The bonus is equivalent to the basics of the
employees. Moreover, there is another provision regarding the bonus which is based
on the performance of the employee. But it actually depends in the performance of
the branch which means if a branch does well as a whole then all the employees of
that branch get bonuses of their performance.

4. 4 - Performance Bonus:
If the bank makes profit, the employees will be entitled to 3% of pre-tax profit as
performance bonus. Fifty percent of such bonus distributed on the basis of basic pay
of an employee, and balance fifty percent on the basis of performance of individual
employees. Performance appraisal for the purpose made on the criterion set by the
management time to time.
4.5 - Provident Fund & Gratuity:
The employees are also entitled with provident fund in MTB. Actually 10% of the
basic are deducted from each employee for the provident fund along with this 10%
another 10% provided by the company total 20% is installed as the payment of
provident fund. This fund is given to their employees at the end of their service. If
any employees leave the organization before completing three years of employment
he will get the provident fund induce from the 10% of the basic that will be
calculated upon his service period which means those employees will not be able to
claim the other 10% provided by the company. In addition, MTB also provide gratuity
to their which has a handsome amount apart from the basics. The employees who
complete 10 years are used to get a gratuity equivalent to the basic of 3 months.
4.6 - Annual Increment:
There is a provision of annual increment of MTB which is 10% increment based on
the performance. It works as a motivating factor for the employees to perform well.
Therefore, each employee tries their best to make it happen so that their base salary
having well shaped structure.
4.7 - Travel Allowance:
The bank also provides travel allowance to their employees. If any employee travels
any place in Bangladesh regarding company’s prospect, they will get the money or
remuneration that is cost by them but the cost that is spent is verified by the HR
personnel and after that they got the requisition of the money.

4.8 - House Rent Allowance:
The company also provides house rent to their permanent employees who are in the
managerial level. Each employee in the managerial level gets 55% of their basic as
house rent. This encourages the potential candidates in the market to work for MTB.
4.9 - Employee Loan:
Unlike other banks, MTB provides a great scheme of loans to their employees. First
of all, the permanent employees get loans from their provident fund at a cost of
10%. They can use their money for several purposes. Secondly, from the executive
level the employees are qualified for home loans, car loans and others at a cost of
8% where it is around 15% for the customers so it an extra benefit consumed by the
employees.
4.10 - Medical Facilities:
The medical facility provided by MTB is quite different from other banks. MTB has
their own medical team to look after their employees in case of any medical
assistance. They have their nursing home as well. Therefore, employees of MTB do
not have the opportunity to enjoy life insurance which means MTB does not provides
life insurance policies to the employees.
4.11 - Welfare Funds:
Every year 200 taka for each employee is deducted to count in the employee welfare
fund. The money induced from the welfare fund is used for the welfare for the
employees when they are in trouble or in emergency. This money is totally
distributed to the employees so that they feel safe at their emergency period.
4.12 - Earn Leave:

The employees who complete one year of service without any unusual leave, get 30
days for earn leave in a year. It means their paid equivalent 30 days of compensation.
4.13 - Disability Leave:
If any employee faces unusual accident or physical challenge, then they are provided
leave granted by the company which is called disability leave but for this leave the
salary of them will not be deduced which means these are paid leave.
4.14 - Maternity Leave:
Maternity leave may be granted by the competent authority to an employee for a
maximum three months period at a time. This flexibility is provided considering the
labour law made by the government. This is also a paid leave.
4.15 - Study leave:
There is a fantastic opportunity for the employee of MTB. The employees who
perform extensively well and show gratitude of benefits that they can contribute for
the sake of company are entitled for recommendation to study. Generally, the
employees are recommended to get 3 (three) years paid leave for their studies but all
the employees do not get this advantage because it is for those who are really high
performer are to authorized to get the full payment to continue their studies.

5.0 Compensation Management Policy Of Mutual Trust Bank
There are several compensation policies in an organization. Compensation is
important such a way that without a fair policy in this sector, it is not possible to
make the employee participate in their work effectively. Mutual trust bank undertake
different lucrative policies regarding the compensation of their employees so that
they can manipulate employees to have a productive outcome. The policies over the
compensation taken by MTB are discussed below:-
The most important policy of MTB is providing the death benefits to their
employees to support their families to run with. It is such a benefit that is
handover to their families after the death of employees. To get this after this
death employee nominate a person of him to take the money which is done
for the proper documentation and safety of the money. Due to this the
families of those employees feel comfortable and secure after the death of
their wage earner. The death benefit varies according to the designation and
employment status. The following chart will give the clear overview of several
death benefits in different layers.
Designation Amount of taka
Managing Director 10 Lac
EVP-SVP 8 Lac
AVP-VP 7 Lac
SO-FAVP 6 Lac
AO-JAVP 5 Lac
There is another policy which is providing loan to the employees at a lower
interest rate. MTB of the employee are ought to pay only 8% interest rate over

the loan. So, the employees can use this money of the loan for their personal
welfare.

Another eye-catching policy of MTB is their welfare fund. It is actually
undertaken for the welfare of the employee’s so that they can run
themselves in a solvent way when they become unable and physically
challenged to work. But the fact is they have to deposit 200 takas to their
welfare fund at end of each year. But the sanction of the money of the
welfare fund is distributed according to the job status of the job employees.
Designation Amount of taka
MD 6 Lac
DMD 5.5 Lac
SEVP 4.5 Lac
AVP-EVP 4 Lac
Officer 3.5 Lac
Other 2.5 Lac
MTB has undertaken different plans of the employees who are of ages over
60 years regarding the compensation. The basic compensation policies are
not valid to the employees who are over 60 years old. It means all the
employees get the compensation benefits within 60 years.
In addition, MTB also provides financial aids to those employees who are
enthusiastic to participate any competitive examination. MTB bears all the
fees and necessary finance of those particular competitions. For instance if
any employee eager to participate in CDCS (Certified documentary credit
specialist) where an employee will need eighty thousand taka which is
totally bear by the bank.
Moreover, MTB also some policies over the completion over the several
courses like JAIBB (Junior Associate of the Indian Institute of Bankers). If the
employee can complete the first part of JAIBB, he will be provided eight

thousand takas where if they become able to complete the second part
they will be funded fifteen thousand taka.
6.0 Data Analysis, Findings & Recommendation
6.1 - Data Analysis:
1. Are you satisfied with your current salaries?
Particular Responds Percentage
Satisfied 3 20%
Strongly satisfied 10 66%
Neutral 2 13%
Dissatisfied 0 0%
Strongly dissatisfied 0 0%
Total 15 100%
Explanation:
From the above figure, we can observe that 66% employees are strongly satisfied
with the current salary and 20% are satisfied where 13% employees are neutral.
Observation:
Most of the employees are strongly satisfied with current salaries.
2. Are you happy with your portion of base pay?
Yes 14 93%
No 0 0%
Neutral 1 7%

Total 15 100%
Explanation:
From the above figure, we can observe that 93% employees are happy with their
portion of base pay where 7% are neutral.
Observation:
Most of the employees are happy with their portion of base pay.
3. Are you satisfied with the compensation benefits and plans provided to you?
Satisfied 9 60%
Strongly satisfied 3 20%
Neutral 3 20%
Dissatisfied 0 0%
Strongly dissatisfied 0 0%
Total 15 100%
Explanation:
From the above figure, we can observe that 60% employees are satisfied with the
compensation benefits and plans and 20% are strongly satisfied where 20%
employees are neutral.
Observation:
Most of the employees are satisfied with compensation benefits and plans.

4. Do you feel competitors pay mix is more attractive?
Yes 5 33%
No 10 67%
Neutral 0 0%
Total 15 100%
Explanation:
From the above figure, we can observe that 67% employees don’t think that
competitor pay mix is more attractive where 33% think competitor pay mix is more
attractive than MTB.
Observation:
Most of the employees thinking that other competitors of MTB pay mix are not
attractive.
5. Does the company adjust the whole compensation time to time?
Yes 12 80%
No 2 13%

Neutral 1 7%
Total 15 100%
Explanation:
From the above figure, we can observe that 80% employees said compensation
adjusted time to time, 13% said no where 7% are neutral.
Observation:
Most of the employees said their compensation is adjusted time to time.
6. How do you rate your bank work environment?
Particular Respondents Percentage
Excellent 3 20%
Very good 3 20%
Good 8 53%
Average 1 7%
Poor 0 0%
Total 15 100%
Explanation:
From the above figure, we can observe that 53% employees said MTB work
environment is good, 20% employees said environment is very good, 20% said work
environment is excellent and other 7% said working environment is average.
Observation:
Most of the employees said bank work environment is good.

7. Does your organization provide the medical facilities?
Particular Respondents percentage
Agree 1 7%
Strongly agree 14 93%
Neutral 0 0%
Disagree 0 0%
Strongly disagree 0 0%
Total 15 100%
Explanation:
From the above figure, we can observe that 93% employees are strongly agreed with
that they are provided medical facility where other 7 % are agreed.
Observation:
Most of the employees are strongly agree that they are provided medical facility.
8. How do you rate your company’s incentives system?
Particular Respondents percentage
Excellent 1 7%
Very good 4 26%
Good 9 60%
Average 1 7%
Poor 0 0%
Total 15 100%

Explanation:
From the above figure, we can observe that 60% employees said MTB incentive
system is good, 26% are very good, 7% are excellent and other 7% said incentives
are average.
Observation:
Most of the employees said bank incentive system is good.
9. Does your organization provide the life insurance facility?
Yes 0 0%
No 13 87%
Neutral 2 13%
Total 15 100%
Explanation:
From the above figure, we can observe 87% employees said MTB did not provide any
life insurance facility to employees where 13% are neutral.
Observation:
Most of the employees said they did not get life insurance facility.
10. What types of insurance facility offered by your organization?
Individual insurance 2 13%

Group insurance 11 74%
Any other 2 13%
Total 15 100%
Explanation:
From the above figure, we can observe 74% employees said MTB have group
insurance facility. 13% said they have individual insurance facility and other 13 % said
they have other insurance facility.
Observation:
Most of the employees said they got group insurance facility

6.2 - Findings & Recommendation :
Compensation and benefits which are provided to the employees are good but should
be better because employees of certain levels are satisfied but not all. So, MTB should
increase other benefits according to their promotion and efforts. Moreover, MTB
should try to increase compensation and benefits according to market standard
analysis. One thing we like to mention that MTB does not provide any life insurance
policy which we have come to know while working there. The absence of life insurance
may discourage the employees to settle there. Therefore, we think they can introduce
life insurance policy to their employees since other organization of similar field have
their life insurance policy. In term of promotion MTB only focuses to the increment of
the salary. But we think it would be better and satisfactory for the employee if they get
other incentives and benefits along with the salary when they are promoted. It is
discouraging the senior most employees to continue their work at MTB due to the
policy of not giving compensation benefits 60 ages above employees. Therefore, we
think they can review this policy considering for the job satisfaction of senior level
employees.
7.0 Conclusion
We are fortunate that we were given the opportunity to work in HR division of MTB. We
think it is a great policy of Southeast University to make the internship programmed
compulsory for the graduation. As we have worked three months in one of the local
leading bank in Bangladesh, We were able to know different HR practices performed in
the banks. We also get to know that the HR practices of MTB signifies standard in
relevant field. The best thing is that for working practically we have been able to have a
profound knowledge over the compensation. We came to know different
compensation strategies taken by MTB which we can relate with my academic
knowledge. MTB ensures a fair compensation policy for which the satisfaction level of
employee is so high. Due to this high job satisfaction of the employee regarding the
compensation, the overall employee turnover is quite negligible in MTB. Finally it is to

mention that we were able to relate all my academic HR knowledge with the real
environment which is we think will be highly helpful for my future career.

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