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Petroleum-Gas University of Ploiesti BULLETIN

Vol. LXII No. 4/2010

1 - 11

Economic Sciences Series

Employee Compensation Practices in Industrial Enterprises of Bangladesh: A Public-Private Sector Comparison
Mir Mohammed Nurul Absar*, Zahed Husain Sikder**, Balasundaram Nimalathasan***, Mohammed Moniruzzaman Bhuiyan****

East Delta University, 1267/A Goshaildanga, Agrabad, Chittagong, Bangladesh e-mail: ** Department of Management Studies, University of Chittagong, Bangladesh e-mail: *** Department of Commerce, University of Jaffna, Thirunelveli, Jaffna, Sri Lanka e-mail: **** Department of Statistics, University of Chittagong, Bangladesh e-mail:
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Again, it is very important for the employers because it creates substantial cash out flow of an enterprise (Weeratunga, 2003). Compensation includes both financial and non-financial benefits (Aswathappa, 2008). Financial elements comprise two elements, namely: direct and indirect forms of payments to the employee. Direct compensation includes hourly and monthly rated wages or salaries, and incentives such as bonuses, commissions, and profit sharing plans. Indirect compensation includes benefits such as


Mohammed Absar, Zahed Sikder, Balasundaram Nimalathasan, Mohammed Bhuiyan

provident fund, gratuity, and health insurance, paid leaves, vacations, company car, furnished house, retirement benefits, stock option, and the like. Non-financial benefits comprise challenging job, responsibilities, appreciation, working environment, empowerment, and others. The compensation that an organization provides may be based on either membership (job) or performance (skill). In the traditional system, employees are paid according to the job or membership that has no connection with the employee‟s or organization‟s performance. On the contrary, in the case of performance or skill based pay, employees are compensated with respect to their performance, abilities, and knowledge. In practice, performance may be a minor determinant of compensation though academic theories extend the view that

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