It's raining bonus: India Inc wakes up to retention

Money is the one language everyone understands. And in order to retain talent, many companies in the consumer durables and the telecom space have doled out hefty payouts in the form of bonuses and variable pay this year.

FP Staff May 29, 2012 12:08:19 IST
It's raining bonus: India Inc wakes up to retention

Notwithstanding sluggish economic conditions, India Inc is expected to dole out double-digit salary hikes this year and overall rise in pay packets could go up to 20 percent a survey by staffing firm TeamLease Services had pointed out earlier this month. However, many HR experts feel that the June-ended quarter could see an attrition rate as high as 31 percent as employees would look for better prospects.

But money is the one language everyone understands. And in order to retain talent, many companies in the consumer durables and the telecom space have doled out hefty payouts in the form of bonuses and variable pay this year. According to an Economic Times report, employees of Samsung India have received bonuses ranging between 150 and 400 percent of the their monthly basic salary this year, while the bonuses for marketing and sales professionals at Panasonic will be around 20 percent of CTC. Telecom operator MTS India, which employs over 3,500 people, too, is paying bonuses ranged from 75 percent to 125 perent to employees in India (based on performance), said the ET report. Other top bonus payers include software services provider Hexaware, EXL Services, apparel maker Woodland and the Essar Group. However, payouts in the insurance sector have taken a beating this year because of regulatory changes.

Its raining bonus India Inc wakes up to retention

On an average, the variable pay component accounts for 15-30 percent of an employee's total pay packet

On an average, the variable pay component accounts for 15-30 percent of an employee's total pay packet or cost-to-company (CTC). But over the last year, the bonus component alone has gone up by 20-50 percent for critical, revenue-driving functions like sales and top management.

Headhunters say this trend of sizeable payouts is an indication of a more performance-oriented compensation culture coming into India Inc. Such sizable payouts are in stark contrast to the modest increments, of 12-15 percent, which most companies offered till 2010.

Another tool used by corporate India to preserve existing talent is retention bonus, which is paid in the form of ESOPs, deferred cash payments and performance-linked incentives. Employees are chosen for retention bonuses based on their contributions to management and revenue generation. The amount varies from position to position and is paid either lumpsum or in installments.

And now a host of companies like Procter & Gamble India, Marico, Asian Paints, and Tata Consultancy Services offer their employees the choice to structure their pay packages. "While the cost to company (CTC) will be fixed by the employer and benchmarked against the market, employees will be given a free hand to decide on the components they would prefer as part of their salary," reported HR magazine People Matters.

Even though only a few companies have started this initiative, it is bound to grow if India Inc wants to attract and retain talent. Companies are realising that the present day workforce prefers a working environment which offers them choice, even in the way their salary is structured.

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