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Carrots with strings

Better pay packets for senior managers come at a premium in 2009.

Saumya Bhattacharya | Print Edition: April 5, 2009

Winter is gone, but the season of pay freezes is far from over. More so for senior managers, which is what this installment of BT-Omam Consultants Salary Survey deals with. The reason is two-pronged. One, owing to slowdown, the increments will be minimal. And two, with business environment still challenging, the discretionary pay for senior management will take a beating. Organisations are also looking for innovative skill-sets to drive the philosophy of “do more with less” at the level of functional leadership. More on this skill-set later; first, here’s your primer on salary and increment.

There are no pleasant surprises on this count. “I would be surprised if there have been any increments at all,” says Hastha Krishnan, CEO, Ma Foi Global Search Services. Sure, there are no big expectations on the increment front. But, guess what, depending on the salary structure, your gross salary may be in for a cut. That’s because variable pay forms a large chunk of the salary package for senior managers.

So, at what levels are the senior manager salaries in 2008-09? The BT-Omam survey offers a snapshot of salaries of senior managers, with an average experience of 15 to 20 years, across a range of 14 industries and 101 companies.

For SM I (senior level managers with experience of 20 years on average), the top paymasters are FMCG, consumer durables, automobile and pharma sectors. The comparison of average Total Cost to Company (TCC) throws up some interesting numbers.

In numbers: Senior management salary survey 2008
In 2008-09, the maximum TCC went up to Rs 1.35 crore in FMCG with automobile sector coming a distant second with an average TCC of Rs 85 lakh. Senior managers in FMCG earn an average gross salary upwards of Rs 89 lakh. Consumer durables, auto and pharma all mete out average total salaries in the region of Rs 62 lakh. Banks pay an average gross salary of Rs 56 lakh while telecom pays in the range of Rs 50 lakh plus.

Stay the course

  • Healthcare, energy and telecom will pay better than the rest

  • Ability to take on multiple roles will become the differentiator

  • Being risk-averse is a major virtue for senior managers

 


Engineering, textiles and real estate account for considerably smaller pay packets—in the region of Rs 31 lakh to Rs 36 lakh.

At SM II level (senior managers with experience of 15 years on average), while FMCG again rules the roost with an average TCC of Rs 51 lakh, consumer durables drops several notches with average TCC at Rs 33 lakh. Auto, pharma, banking and telecom follow FMCG as highest paymasters. The lowest paying sectors, according to the survey, are engineering, textiles, real estate and core sectors (See Industrywise Percentile).

How will the salaries pan out from here? Not very differently, because pay packets will remain mostly unchanged this year and, in fact, get trimmed. “Outlook for the year looks broadly flat,” says Madhav Sharan, Regional Market Leader, Asia Pacific, Industrial, for executive search firm Korn/Ferry International. However, two trends are visible here. Take the case of people-centric services and knowledge industries like IT, ITES and retail. The biggest expenditure for these industries is people.

Subsequently, to cut costs, these industries will attack peoplerelated costs and resort to pay cuts. Bonuses and increments of senior managers in these industries are being minimised. Sectors such as manufacturing, pharma, and consumer durables, among others, by the virtue of being non-people-centric industries will get less impacted and will look at increments, albeit small.

Compensation experts say that in the coming year, healthcare, energy, infrastructure and telecom are expected to do well while senior managers in FMCG might find the going tough.

Also, on the chopping block are variable pay packets of senior managers. Orgsanisations are reviewing the variable component of employees’ salaries in an attempt to cut costs. IT majors like Tata Consultancy Services and Infosys Technologies, for whom manpower cost and salary account for the biggest expenditures, have already put in place plans to review variable salaries. This will hurt senior managers the most as variable component accounts for more than 50 per cent of their total cost to company.

Is there anything senior managers can do to add to their efficacy? Organisations are fixing nuts and bolts of their businesses and are less tolerant of managers who are buckling under slowdown pressure. According to executive search experts, companies, especially in slowdown-hit sectors, are even looking at replacing senior executives who are not equipped to handle multidimensional roles. Ergo, be open to clubbing of broad functions and taking on more than one role. While a pay cut may be the last thing you want, be gracious about losing benefits: these are the times of rigorous and essential cost-cutting.

Salary surveys of junior and middle managers was carried in Business Today dated Feb. 8, 2009 and Feb. 22, 2009, respectively. It is also available at www.businesstoday.in

Methodology
To capture compensation trends in corporate India, Business Today collaborated with the Delhi-based research consultancy, Omam Consultants, to collect data on salaries across a range of industries and companies. This survey covers senior managers with average experience of 15-20 years. Omam compiled salary data of Senior Managers I and Senior Managers II, across 101 companies in 14 sectors. Since salary data is confidential, names of the companies have not been revealed. The sectors covered under the survey are: automobile, banking, chemicals & fertilisers, core, consumer durables, engineering, FMCG, IT, ITES/BPO, pharmaceuticals, real estate, retail, telecom and textiles. The survey looks at compensation data from a number of angles, including inter-industry averages, and also the average salaries. The Omam team that collated and analysed the data was led by Director Rajeeva Kumar, Executive Director Anil Koul and General Manager Ashutosh Kumar.

 

In numbers: Senior management salary survey 2008
In 2008-09, the maximum TCC went up to Rs 1.35 crore in FMCG with automobile sector coming a distant second with an average TCC of Rs 85 lakh. Senior managers in FMCG earn an average gross salary upwards of Rs 89 lakh. Consumer durables, auto and pharma all mete out average total salaries in the region of Rs 62 lakh. Banks pay an average gross salary of Rs 56 lakh while telecom pays in the range of Rs 50 lakh plus.

Stay the course

  • Healthcare, energy and telecom will pay better than the rest

  • Ability to take on multiple roles will become the differentiator

  • Being risk-averse is a major virtue for senior managers

 


Engineering, textiles and real estate account for considerably smaller pay packets—in the region of Rs 31 lakh to Rs 36 lakh.

At SM II level (senior managers with experience of 15 years on average), while FMCG again rules the roost with an average TCC of Rs 51 lakh, consumer durables drops several notches with average TCC at Rs 33 lakh. Auto, pharma, banking and telecom follow FMCG as highest paymasters. The lowest paying sectors, according to the survey, are engineering, textiles, real estate and core sectors (See Industrywise Percentile).

How will the salaries pan out from here? Not very differently, because pay packets will remain mostly unchanged this year and, in fact, get trimmed. “Outlook for the year looks broadly flat,” says Madhav Sharan, Regional Market Leader, Asia Pacific, Industrial, for executive search firm Korn/Ferry International. However, two trends are visible here. Take the case of people-centric services and knowledge industries like IT, ITES and retail. The biggest expenditure for these industries is people.

mosimage Subsequently, to cut costs, these industries will attack peoplerelated costs and resort to pay cuts. Bonuses and increments of senior managers in these industries are being minimised. Sectors such as manufacturing, pharma, and consumer durables, among others, by the virtue of being non-people-centric industries will get less impacted and will look at increments, albeit small.

Compensation experts say that in the coming year, healthcare, energy, infrastructure and telecom are expected to do well while senior managers in FMCG might find the going tough.

Also, on the chopping block are variable pay packets of senior managers. Orgsanisations are reviewing the variable component of employees’ salaries in an attempt to cut costs. IT majors like Tata Consultancy Services and Infosys Technologies, for whom manpower cost and salary account for the biggest expenditures, have already put in place plans to review variable salaries. This will hurt senior managers the most as variable component accounts for more than 50 per cent of their total cost to company.

Is there anything senior managers can do to add to their efficacy? Organisations are fixing nuts and bolts of their businesses and are less tolerant of managers who are buckling under slowdown pressure. According to executive search experts, companies, especially in slowdown-hit sectors, are even looking at replacing senior executives who are not equipped to handle multidimensional roles. Ergo, be open to clubbing of broad functions and taking on more than one role. While a pay cut may be the last thing you want, be gracious about losing benefits: these are the times of rigorous and essential cost-cutting.

Salary surveys of junior and middle managers was carried in Business Today dated Feb. 8, 2009 and Feb. 22, 2009, respectively. It is also available at www.businesstoday.in

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