Datatech Employer -EmployeeMNYL

8/9/2019 Datatech Employer -EmployeeMNYL

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Datatech

andMax New York Insurance

Partners in productivity


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How many people doesDatatech need?

4000 employees were recruited in 2004

6000 employees were recruited in 2005

How many in 2006?

20,000


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Cost of recruitment(through recruitment consultants)

One of the most common recruitmentmethods is through recruitment consultants.

The consultants charge at least 7.5 percent ofthe employees CTC as their commission.

There is also the cost incurred for arrangingand conducting interviews.

Rajesh joined as service executive throughABC consultant

If Rajesh earns 3 lacs, then Datatech hasincurred cost of at least Rs 20,000 on him.


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Training costs

After recruiting the employee has to betrained.

There is a cost of Training programsconducted for new employees about Rs15000 per employee.

Datatech has a training period that extendsto one month.

It costs Datatech Rs 15,000 to train Rajesh


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On the Job Training costs

Immediately after the employee has beentrained, will he be a efficient worker?

There will be a need for on the job training.On an average Datatech incurs a cost of Rs10,000 per employee on on the job training.

It costs Datatech Rs 10,000 to train Rajesh.


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Learning by errors costs

Every employee commits errors on thejob.

New employees commit more errors.There is a cost incurred to the companybecause of the same.

Learning mistake costs for Rajesh wasRs 10,000.


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Total Cost to company

The cost incurred by the company on a newemployee = Recruiting costs + Training costs

+ On the job Training costs + Employeemistake costs

Total costs incurred on Rajesh who was

recruited by Datatech = 20,000 + 15,000 +10,000 + 10,000

Total cost of recruiting Rajesh = Rs 55,000


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The efficient employee

Now Rajesh is ready to contributeefficiently.

He has the potential to perform.Rajesh reads an advertisement in thenewspaper for the post of serviceexecutive.

He sees that he meets all herequirements.


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Job hopping

He goes for the interview.

He is offered a 10 percent raise.

He feels that the work there will be thesame.

Why should he work for Rs 100 when

he is being offered Rs 110 for the samework?

This is called as ATTRITION.


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Cost of attrition

Datatech has spent lot of time andmoney in making Rajesh a efficient

contributor.

A conservative estimate on costsincurred = Rs 50,000

A normal estimate on costs incurred =Rs 65,000


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Total cost of of newemployees for Datatech

Datatech plans to recruit 20,000employees.

If we take the conservative cost peremployee as Rs 50,000, then the total

investment will be Rs 50,000 X 20,000

Total investment = Rs 100 crores


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Can we do something tosafeguard this investment ?

Can we prevent employees fromseeking better opportunities?

Can we offer a raise every time thecompetitor raises the bid?

Can we expect total loyalty?


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Attrition due to marginalincrease in remuneration

Rajesh who is earning 2.5 lacs with Datatechright now is offered Rs 7.5 lacs.

Can we hold him back?NO.

We are talking about employees leaving formarginal increase.

If the offer was just 2.8 lacs could somethingbe done to keep Rajesh with Datatech?


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Why will Rajesh stay withDatatech?

If Rajesh sees an additional benefit in stayingback with Datatech then he will think twice

before leaving on a marginal increase.If Rajesh feels that Datatech cares for hiswelfare, then he will have second thoughtson leaving Datatech.

Is there some solution that will offer thesebenefits?


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How much will Datatech spendon keeping Rajesh with them?

Datatech will want a solution that willbe cost effective.

Datatech will want a solution that willreward loyalty.

Datatech will want a solution which will

convey that Datatech Cares


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What can Max New Yorkoffer?

Max New York Life Insurance canprovide a solution that will be

1. Cost effective2. Reward loyalty

3. Convey care and concern towardsemployee

What is that solution?


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Employer Employee InsuranceScheme

Max New York Life Insurance offersthe Employer EmployeeInsurance Scheme.

What are the benefits of this

solution?


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Employer Employee InsuranceScheme is cost effective

The cost of the investment will bemarginal as compared to the total cost

of a new employeeWhen you invest in the EmployerEmployee Insurance Scheme then the

premium paid by Datatech may betreated as business expenditure (thussaving in taxes).


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Employer Employee Insurance

Scheme rewards loyaltyEmployer Employee Insurance Scheme can bestructured such that if the employee leaves thecompany before a stipulated period he benefits of

the scheme will not be available to the employee.

If Rajesh quits before, say 3 years (stipulatedperiod), then the benefits of his Employer

Employee Insurance Scheme policy will not bepayable to him. In Rajeshs case, if he stays with the company for more

than 3 years then the benefits will be payable to him.


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Employer Employee InsuranceScheme reduces loss due to attrition

If the employee leaves Datatech before thestipulated period, then the benefits of the

policy are paid to the company.*

If Rajesh leaves Datatech after 2 years and 5months(stipulated period is 3 years) , then

the cost incurred on Employer EmployeeInsurance Scheme will be recovered by thebenefits payable to Datatech

* Conditions apply


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The company paid three premiums of Rs20000 for Rajesh = Rs 60000. Every year it saved on taxes to the extent of 30%

of the premium

If Rajesh leaves before the stipulated period, thenthe policy reverts to Datatech and the surrendervalue is payable.

The surrender value is , say Rs 42000 .Total cost for the company = 60000 18000(Savings on taxes)-Rs 42000 (Surrendervalue) = ZERO


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What happens if the employee stays onbeyond the stipulated period? The policy is assigned to the employee.

Datatech continues to save on taxes.

Rajesh left the company after 7 years. Datatech has saved on taxes for 7 years i.e. 6000

X 7 = Rs 42000

Datatech has recovered the investment costincurred on Rajesh.

The policy remains with Rajesh as a memento

from Datatech


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Employer Employee Insurance Schemeconveys that Datatech cares

Employer Employee Insurance Schemeprovides Life Insurance cover for theemployee, thus securing his familys future.

Employer Employee Insurance Schemeprovides also builds up an asset for theemployee.

Rajesh sees that a colleague who died in anaccident got Rs 5 lakhs under the EmployerEmployee Insurance Scheme . He feel greatrespect for Datatech because it cares.


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Employer Employee InsuranceScheme is a WIN-WIN solution

Benefits to Datatech Benefits toemployees

Cost effective.

Rewards loyalty.

Conveys care.

Reduces loss due toattrition

Life insurance cover

The premiums paidby the employer will

create an asset for theemployee

Tax benefits u/s 80c

and 10(10D)


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Tax implications for theemployee

Tax benefits u / s 80C will be availableto the employee on the amount paid as

premium.Tax benefits u / s 10 (10D) is availableto the employee.

Documents

Datatech Employer -EmployeeMNYL