Allianz Malaysia is a part of the Allianz Group which was founded in 5 February

1890 in Germany. Allianz was founded by Carl von Thieme and Wilhelm von Finck. The

first step to become an international company started with the opening of a branch office

in London in the late 19th century. Allianz Group is a multinational financial services

company that headquartered at Munich, Germany. As until 2010, it was the world 12 th

largest financial services group. Until 2013, Allianz Group has approximately 142,000

employees worldwide, the organization had serve more than 78 million customers in

about 70 countries including Malaysia. In 2001, Allianz officially stepped foot in

Malaysia for becoming the shareholder of Allianz General Insurance Malaysia Berhad

(AGIM). Following the completion of the transfer of general insurance business, AGIM

changed its name to Allianz Malaysia Berhad (“AMB”) and became an investment

holding company. In the same year, AMB also acquired Commerce Assurance Berhad

(“CAB”), a general insurance company. It’s the intention of AMB to eventually merge

the general insurance businesses of AGIC and CAB by end of 2008. AMB become an

investment holding company for both the life and the general insurance companies in

Malaysia namely general insurance (AGIC) and life insurance (ALIM) subsidiary. AGIC

is now a leading general insurer in Malaysia. Allianz insurance is also one of the

Malaysia most trusted product and choice in insurance field. Allianz Malaysia vision is to

be the most reliable partner, always delivering in moments of truth. The organization

mission is has insurance solutions from A-Z. Allianz Group holds the values of customer

focus as priority, integrity, practice high performance culture, always open in

communication and take the social responsibility. In Malaysia, Allianz Group aims to

become the most trusted provider of financial service to suit Malaysian’s needs. By using

value based approach, make employees as important as they are, ultimately the company

able to attain customer satisfaction. With the current three directors, San Kan Foo CPA,

Y. Bhg. Dato' Dr. Thillainathan Ramasamy and Tan Sri Datuk (Dr.) Rafiah Binti Salim

hopefully will bring Allianz Malaysia to a greater management.

One of the legislation aspects in compensation administration system is

employment legislation and standard. This legislation is important so that the employer

will know the minimum standards of employment for workplace require by law.

According to Malaysia Labour Law: Regulation of Employment which consist Salary Act

and Statutory Holiday which are the also the part in the employment legislation and

standard requirement. The legislation is important to ensure that the employer will not

provide less than what is offered in the legislation. For example, under the legislation, it

has stated the employment of those who is under 18, the overtime and also the hours of

work. Under the Employee Act 1955 or Industrial Relation Act 1967, the minimum

amount of money that the employer should compensate is:

Between 1 to 2 years, minimum 10 days salary for each year of service.

Between 2 to 5 years, minimum 15 days salary for each year of service.

Above 5 years, minimum 20 days of salary for each year of service.

Therefore, the formula will be something like this if you work for 2 years:

($1 year salary/365 days) × (2 years) × (10 days)

As addition, employers are also free to develop policies that provide better standard that

what is allowed for in the law. In the other word, it means that employers can provide

more than what is stated in the legislation but provided less than in legislation will cost

compound or fine for the employers if being caught. Second aspect in legislation for the

compensation administration system is human right legislation. Human right legislation is

aim to protect people discrimination. Under the legislation, it is say that it seeks to

guarantee people equal treatment regardless of the certain identified characteristic that

will lead to stereotyping and bias in the relation to the employment of work. For example,

people often have the stereotype that the secretary position in a company will always be a

beautiful lady; therefore, indirectly it might lead to workplace harassment (sexual

harassment). Whereas, in a company, male employees will often have more opportunities

to be promoted as compare to female employees which is also the sign of the gender bias

in workplace. Therefore, the human right legislation is important in the compensation

administration system so that any unfairness can be solved as well as given equal

opportunities for all the workers. An organization strives to create better world through

their missions, therefore, creating an inclusive workplaces that are respectful and

welcoming of diversity is very important. In human right legislation, it is including

promotion, hiring, benefits and also the workplace harassment. Therefore, according to

Malaysia Labour Law, employees are protected if they are encountered any unfair

treatment as well as any harassment in workplace. For example, under the hiring section,

there is maternity right for female employees where a female entitled to maternity leave

for a period of not less than the eligible period of 60 consecutive days and maternity

allowance in respect of the eligible period. If a female employed on a monthly pay rate,

maternity allowance is based on her monthly wages, otherwise, the allowance will pay

based on ordinary rate which is RM6 per day. The third aspect of legislation is health and

safety legislation. This legislation is important in order to prevent workplace accidents,

injuries and diseases besides help in outlines the consequences for breaches of those

standards. Generally, the legislation requires the employer to do everything that

reasonably to protect the health and the safety of their employees in the workplace. This

also includes provide appropriate training for handling potentially dangerous equipment,

informing employees of potential dangers in the workplace and setting up safe work

practices. Under this legislation, employees has the right to refuse the perform work that

will endangered their safety. Health and safety are important issues in all workplaces.

Therefore, the organizations are required to comply with health and safety regulations

and acts. Under Malaysia Labor Law, it also stated about the Occupational Safety and

Health Act to protect Malaysian employee. This act provides the legislative framework to

secure the safety, health and welfare among all Malaysian employees.

In the organization that I had selected, I had analyzed and noticed the legislation

aspects in compensation administrative system in the determination of salary and wage

pay rates for the Allianz Malaysia Berhad. Under employment legislation and standard,

Allianz Malaysia Berhad had provided the salary and wage pay rates according to

Malaysia Labor Law. Table below shows the salary and bonuses that being received by

executive in Allianz Malaysia.

Categories of

Remuneration

Executive Directors

(RM’000)

Non-Executive Directors

(RM’000)

Salaries and Bonuses 189 -

Fees and Allowance - 399

Benefits 186 51

Total 375 450

Below also shown another table that is showing the base salary and requisite in the

payment as well as what they had received according to the year of the services for each

individual in Allianz Group. Below data is shown based on euro currency value.

Fixed Variables Total Pensions Total

Includes

Pensions

Board

Members

Base

Salary

Perquisites Annual

Bonus

(short

term)

3

Years

Bonus

(mid-

term)

Fair

Award

Grante

d (long-

term)

Michael

Diekmann

1280 23 1498 1498 1498 5798 824 6622

Dr. Paul

Achleitner

356 25 447 447 447 1723 295 2018

Oliver

Bate

750 58 946 946 946 3646 277 3923

Manuel

Bauer

700 16 899 899 899 3412 272 3684

Gary

Bhojwani

700 68 793 793 793 3146 210 3356

Clement

Booth

750 137 926 926 926 3664 394 4058

Dr. Helga

Jung

700 11 857 857 857 3281 267 3549

Dr.

Christof

Mascher

700 23 841 841 841 3247 286 3533

Jay Ralph 700 36 943 943 943 3566 234 3800

Dr. Dieter 700 18 958 958 958 3592 205 3797

Wemmer

Dr.

Werner

Zedellius

750 172 896 896 896 3611 485 4096

Dr.

Maximilia

n Zimerer

408 8 543 543 543 2044 257 2301

Total 8495 595 10,547 10,547 10,547 40,73

1

4006 44.737

SOURCE: Allianz Group Individual Remuneration 2012, from

https://www.allianz.com/v_1363772366000/media/investor_relations/en/

results_reports/annual_report/ar2012/ar2012_remuneration.pdf

According to the data shown, Allianz is has systematic in determining the compensation

for their employees. They take consideration of the legislation and give more than the

standard requirement that stated under the legislation. Besides, if we can see, the bonus

given for each individual is also different, this means that the bonus is given based on

individual performance for the target group. In other word, the better the performance,

the higher the bonus get. It is also one of the ways on how Allianz Organization shows

the appreciation towards their employees’ hard work. By this way, employees will be

more willingly to take part in the contribution of the organization’s success. Besides,

Allianz Life also honors its top performing agents who deliver their best for customers.

For the purpose, AMB had held 2013 Allianz Agency Awards Night to recognize the

excellent performance that shows by the employees. In Allianz Malaysia Berhad Group

they also professional training to enhance their career. Second aspect of legislation is

human right legislation. If we look on this aspect, the organization should provided good

benefit in order to create a better workplace for the sake of the employees in the

organization. As far as we concern, pension is also included in this human right

legislation. Therefore, if we look at the pension given by the organization, we can say

that the average percentage in the pension given for retired employees is around 20%

from their total payment they get along they are working for the company. Allianz

Malaysia does not discriminate against employees on the basis of age, color, disability,

gender, genetic information, national origin, political affiliation, race, religion, sexual

orientation or even veteran status. This mean that, in the organization, everyone has equal

rights to gain employee benefits such as pregnancy leaves for female workers or the

opportunities to get promotion in the organization. For example, in the executive board,

there are female employees that gain the position. AMB Group has appointed YBhg Tan

Sri Datuk (Dr.) Rafiah Binti Salim as Independent Director effective from 23 November

2012. She is also first woman to be appointed as Independent Director of AMB Group.

This clearly shows that AMB Group also cares and appreciates their female workers and

given equal opportunities to those who is suitable and rightful for the position without

bias. The other aspect is health and safety legislation. AMB provided good personal

accident policy for their employees to ensure the health and safety when they are in the

workplace. These benefits include accidental death and permanent disablement, medical

expenses, repatriation expenses, hospital and surgical benefit and also weekly benefit for

RM105.00 per week (up to maximum of 15 weeks). Like, for example, if the employees

of AMB facing the permanent disablement, they will cover for the rate limit of RM30,

000. Accidents are unpredictable; it can take place anytime and anywhere. Even working

as an insurance agent might face danger and accident while selling the insurance. A

routine event can take a turn for the worse in just a matter of seconds. Life is too precious

to not think ahead. Therefore, AMB Group cares about their worker and tries to give as

much benefits as they can to protect their employees. That is what they hold for their

vision, work together and become reliable partner to Malaysian.

Therefore, in order to improve the compensation administrative system so that the

employees and employers are happy with the implementations of the salary structure,

there are few suggestions that can be take in consideration so that every employees in

AMB Group will become motivated to work harder. First, employees often had to go to

the professional training or any career enhancing talk, in this kind of situation, most

probably that the employees will find reason to escape for the training. Therefore, in

order to make the employees are satisfied and willing to go to improve themselves,

employer of the organization should set the rules that the employees who went to the

professional training for at least 3 times and above will get more bonus than others. In

other words, it means that if the worker base salary is RM1800, then includes the annual

bonus, RM1800 for becoming top sellers and addition of 20% from the base salary will

be included if they went to the professional training to improve their career, which mean

they will have the total salary of RM3960 for the minimum pay. Secondly, for the pay

strategy, employer which is AMB Group is advised to use the pay structure regardless the

grades and bands of the employees. Unlike the old pay grade system where an increase in

responsibilities often meant a promotion to the next pay grade, pay bands represent a

much broader range of different types of jobs and levels of responsibility. If the old

system, we will often see there will be some bias in determining the salary because it

based on the job performance or might be because of the likeness of the employers

toward certain employees, therefore, using a more systematic pay system is said to be fair

and will as well as motivating the worker so that they will try to increase their

performance next time. Given the example, executive director who is in band 9 had

minimum pay of RM186, 000 per year, while non executive who is in band 6 had

minimum pay of RM51, 000 per year. Moving on the job band does not necessary require

you to gain promotion, but it is important to increase the job performance as well as

showing the abilities to cope different types of job range and levels of responsibility.

Thirdly, to make employees happy with the salary and wage system, it is being

encouraged that the employees’ family also being taken care of. Therefore, AMB should

give take consider and care about the employees’ family. For example, automatic

scholarship should be given to the children of the employees who are excellent in their

study. This will as well as helping the employees to make the burden lesser. Plus, if we

take from the positive side, the children that already being given scholarship may one day

being a part of AMB Group family in contribution to the success of the company. By this

way, both employees and employer will have benefits.

As a conclusion, in order to create good compensation administration system,

certain legislation should be adhered. Employment legislation and standard, human rights

legislation and health and safety legislation are important element in determining the

salary and wage system of an employment. The legislation exists in order to protect

certain benefits of the employee. This is important to ensure that the employees know

their right and get their rightful payment accordingly. Consequently, compensation

administrators frequently adopt general guidelines that all departmental compensation

policies must follow, but allow departments to develop their own policies, such as those

for incentives, as long as they adhere to the general guidelines. Ultimately, a

compensation program must be flexible enough to reflect the different needs of the

individual and the organization; joint investments in ongoing training; the ebb and flow

of an employee's contributions without creating expectations of permanence, and each

employee’s changes needs each time.