Business Today

India Inc. reworks pay norms

The downturn is making firms change their salary structures, says a Mercer study.

Saumya Bhattacharya | Print Edition: December 28, 2008

After right-sizing, India Inc. is now right-pricing its workforce. Faced with a cash crunch, companies are tweaking their salary structures and adopting a differential package based on performance, according to a Mercer study on compensation. What’s more, with compensations getting rationalised, the incentives are also getting more intangible like—“holistic opportunity” and “favourable work environment”.

In the last few years of exponential growth, fairly ad hoc ways of managing compensation had taken root. Anomalies had crept in because salary bands and internal equity (fairness of the pay structure) were not adhered to. This was the time of growth and ergo, there was pressure to retain and attract talent, come what may.

This resulted in a disparity in compensation for similar jobs, with no linkage to performance. “Any kind of anomaly that crept in during the growth phase will now be looked at,” says Gangapriya Chakraverti, India Business Leader (Information Product Solution’s business), Mercer.

According to the study titled, Compensation Practices in India 2008, the current situation has provided organisations an opportunity to revisit the way they attract, reward and retain talent. More than 70 Indian and MNCs in India participated in the survey.

The survey found that though most companies in India use the cost to company (CTC) model, CTC was defined differently by different companies. The underlying factor of the study is that these companies now realise talent is their only sustainable form of competitive advantage. “Organisations want to attract, retain, and develop highimpact employees to sustain businesses over the long term,” says Chakraverti.

Clearly, with competitive benchmarking for salary on the rise, the days of limitless, soaring salaries are over.

 On a merit roll?

  • Beyond monetary benefits, companies are putting in place 'total rewards strategy.' It comprises a better learning experience, exposure to new projects and the work environment

  • Cost to company is a popular practice, but the definition of CTC varies

  • 82 per cent of the companies surveyed revise their pay slabs once a year, while 11 per cent review pay structures depending on the market conditions

  • At the CXO level, incentives depend on global & regional performance of the organisation and the individual

Source: Compensation Practices in India, 2000 (Mercer)

  • Print

A    A   A