Strategic Human Resource Management
Strategic effectiveness of compensation and benefits in the Real Estate Sector Submitted to: Prof. Kingshuk Bhadury
Real estate has grown from an un-organized and messy sector into a more organized one. It comes through as a promising white light through the dark clouds of an economic slowdown. Rapid urbanization and rising income levels of the general demographics has piggy-backed this sector and positioned it into a tremendously growing one. The sector engulfs many segments as shown below:
This project concentrates on the compensation and benefit function that the Human Resources department manages in real estate. The concept of HR is a modern notion and hence is not fully developed or if developed, not fully functional. But with the high rising boom witnessed by this emerging stratum, the need and importance for the HR and its functions is also growing. In its entirety, the report consists of the many components addressing the most vital nuggets like the trends, challenges, benchmarking, to name a few. Introduction to the compensation and benefit function has incorporated a thorough study of the arena as it includes a myriad of topics like budgeting, benefits, Pay for Performance (PFP), Cost to Company (CTC), etc. It gives an overall view of what is the meaning of compensation and benefit, as it is a much needed step before diving into the understanding of how this function is implemented in the real estate sector. The next automatic thing to fall in line is a brief about the sector itself, which is portrayed as a fast growing one. One of the many reasons is the FDI related policies that are the external factor to this growth story and this has been quantified using examples of few top notch companies together with some trend analysis of current and past years. Strategic models/theories in this domain of HR constitute of various models that being used in the industry for designing compensation model. Some of the most widely practiced models in designing the compensation structure are pay for performance which includes merit pay system, skill based system, bonus system, commission system and piece rate system. Though in the real estate sector mostly commission based model is used while designing the compensation structure. There are various team based compensation models as well but these are not used extensively in the real estate sector. ESOPs form an important part of the compensation model for a lot of companies. The strategy of an organization speaks leaps and bounds about its general outlook towards the business and how they conduct it. Compensation and benefit has many advantages in setting the tone of a business and the methodology used for it helps in implementing that strategy. The types of strategies to follow could be a lead or lag policy or pay the average going rate of the industry. Such decisions affect the overall performance because the end point decision makers are the employees of the organization and to retain the best ones certainly gives leverage. The quality of any work is defined by the set of best practices that flourish in that industry and sadly the real estate in India is yet to establish itself at great lengths in this regard. The scenario is USA is a good benchmark, as they have a set of best practices existing in their system and also over a quick word with the Executive Director of Indian Real Estate and Finance (IREF), it was reflected that much work needs to be done in this area. When a company divides its total budget for the many parts, compensation and benefit is provided for in a rightful fashion, over the questionnaires and many interviews with persons from industry the information related to the budgeting aspect was captured, thus clearing the many myths and finding out new things. Benchmarking and quality helps in setting a certain standard in terms of its functions or the industry...
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