Compensation Rewards Trends: and Total
Compensation Rewards Trends: and Total
Compensation Rewards Trends: and Total
AND TOTAL
REWARDS TRENDS
decide.do TM
KEY
• A radical compensation mix - comprising between 60% and
40% fixed-to-variable and between 38% and 85% intangible
TAKEAWAYS
-to-tangible - is ushering in the Total Rewards era in India
• The age of plain salary increments is long dead, and the last 7 years
have brought rapid transformation in Compensation diversification and
Trends, Employer personalization
• Gifts and perquisites above INR 4,999 are taxed as per the income
tax law and only financial benefits as insurance and travel, among the
many flex-benefits components, attract 12% - 18% GST
KEY
• Sectors employing a bigger pool of mid-level professionals
have a rationalized compensation and rewards structure,
TAKEAWAYS
and hierarchical profiling shows up sharp increase in
variable pay higher up the hierarchy
2000s
Medium Future
Cash Benefits Flexible Benefits
1990s 2010s
Low High Cash
Cash Benefits Valued Benefits
10.60%
10.5% 2010-11 Pay for Performance
10.50%
10.4%
10.40%
2011-12 The Emergence of Total Rewards
10.10%
2014-15 The rise of non- cash benefits
10.0%
Flexible rewards program & customized
10.00%
2016-17
10.0% compensation
9.90%
9.80%
9.70%
2013 2014 2015 2016 2017
Plain old salary increments are not exciting anymore and so have plateaued over the
last 5 years … As employers take a holistic view of talent engagement compensation
trends have rapidly transformed and Total Rewards have risen in popularity
Total Rewards Strategy: Compensation -> f {Variable Pay; Fixed Pay; Tangibles; Intangibles}
Government employee
health insurance
Defined benefits (Gratuity)
Employer and Employee 1950’s
statutory contribution (EPF) 1970’s Rural Schemes:
• Below the poverty line
• Labour health insurance
1980’s
Urban employee
1990’s
basic medical insurance
scheme (individual mediclaim)
Budgetary support
to rural medical
infrastructure
2000’s
Liberalization of
insurance industry:
expansion of group
medical plan to
2020 Corporate India
2008
Cover for a
majority of the Introduction of
formally employed stand-alone health
urban population insurers to expand
urban & rural schemes
Health / MedicaI
Benefit Types benefits are a
mainstay of India’s
Benefit System; and
Benefit Type 2010 2011 2012-13 2014-15 2016-17 employers have
Group Medical Insurance 100% 100% 100% 100% 100% innovated to make
this a very valuable
Corporate Floater Prevalence 65% 67% 70% 72% 76% benefit component ..
Facilitate parent's coverage 70% 65% 54% 76% 80%
.. On the other hand,
Parent's coverage @100% 51% 40% 35% 41% 35% the benefits basket
employer sponsored has also expanded
Room rent restrictions 57% 76% 86% 85% 85% and diverse
components have
Co-pay on claims 13% 33% 32% 34% 37% gained prominence
THE STATE OF THE COMPENSATION
AND REWARDS ART profiling hierarchies
Salary Avg. Avg. Increment Compensation
Increase Variable Pay by performance Mix
10.0
10.3 10.8% 18%
Ind 10.5% 12%
10.6 10.6%
9.2 70%
10.2
10.6 22%
11.3%
Jr. Mgt 10.7 10.3% 18%
11.2%
10.4 60%
10.3
10.7 15.5% 24%
Mid Mgt 9.8% 21%
10.9 15.1%
11 55%
9.8
10.2 20.7% 25%
Sr. Mgt 10.6 9.0% 25%
20.4%
10.3 50%
8.9
28%
9.3 23.6%
CXO 9.1% 32%
9.9 22.8%
40%
9.4
0 2 4 6 8 10 12 0.0% 10.0% 20.0% 30.0% 8.0% 9.0% 10.0% 11.0% 0% 20% 40% 60% 80%
CEOs
Compensation (INR lac per month) Pay Mix (%)
Total Fixed Pay STI LTI Total Fixed Pay STI LTI
Considerations:
Compensation Practices: Fixed pay, Variable pay, Short term incentives , Long term incentives
Work-Life Programs: Workplace flexibility, Paid and unpaid time off, Health and well-being, Caring for dependents, Financial
support & Community involvement
Benefits programs: Insurance, retirement, disability and community involvement types of practices
WHAT’S TRENDING Fixed versus Variable,
Cash versus Kind, Tangible versus Intangible
70%
Incentives
Bonuses 85% Tangible
[Cash/Kind]
Theme Events
Sports Activities 65% Semi-tangible
[Symbolic] 26%
12%
Counseling
38% Intangible 6%
5%
26%
12% How Flexi is beneficial
Healthcare Plan • Cost saving
Pay Raise increases take-home
• Value of money
Performance Bonus employee decides allocation
• Tax-free benefits
Vacation Time helps not to shed additional lump-sum
Maternity, Paternity & Adoption Leave tax amount
• Retention
Professional development or educational benefits due to personalization
Gift below Rs.5,000 given to Exempt under the • No withholding tax liability
employees income-tax law • No GST implications
Perquisites forming part of employment contract Taxable as perquisite • Withholding liability arises
/cost to company & provided to all the employees under the income-tax law • No GST implications
Application of GST
Manufacturing
BFSI
Personal Provident Maternity
Annual bonus Car Allowance
Health Care Fund Leave
Information Technology
Employee Club
Company cars Paid Holidays Holiday Homes
Referral Bonus Memberships
Gym Chauffeur
Free meals Variable Pay
Membership Assistance
Telecommunication
FMCG & FMCD
Medical Company
PF/Gratuity
Reimbursements parties
Insurance Retirement
Benefits Benefits
Special Bonus/Short & Sales
Allowance Long Term Incentive
Incentives Health, Work Pattern,
Wellness Redundancy &
& Diversity Retrenchment
Insurance Phones/ Leaves (Sick,
(Health & Eye) Laptop holiday/personal)
Rewards & Compensation
Pay-at-risk Structure &
HRA/LTA/ Retirement Policies Related Benefits
Clothes
Conveyance Programs
THE STATE OF THE COMPENSATION
AND REWARDS ART profiling sectors
KPO Retail
Paid Paid Sick Core Benefits Health insurance
Vacation Leave
Engagement Value
Returns
5 Challenging Work 3
6 ‘Good Employer’ reputation 4
7 Vacation / Paid Time Off 0
Acquire
• Employee Ranking • Attribute • Employer Ranking
• Create a succession plan to replace key individuals • Accelerated Career Development Opportunities 70.7%
Maternity /
Rewards, Perks, Health / Custom / Flexi Paternity
74% Paid Time Off
drive
Wellness,
Financial Benefits
Rewards, Flexi
Work, WFH and
Benefits,
Performance
want benefit
engagement for help loyalty for Insurance Bonus, Stock
programs to join
61% 57% 68% Options motivate
55%
Attraction Engagement Retention Satisfaction Recommendation
100%
40%
48% 80%
52%
60%
40%
77% 79% 77% 79%
84%
20%
48% 52% 60%
23% 21% 23% 21% 16%
0%
Junior Middle Senior Compensation/ Being paid Base rate of pay Opportunities Stock options
pay overall competitively with for variable pay
the local market
Although businesses are able to achieve stated objectives with their current C & B
initiatives, employee satisfaction levels are seen to be poor ..
.. Total Rewards are an imminent need of today’s unsatisfied talent
Benefit Satisfaction
120%
100%
80%
60%
71% 65%
40% 68% 66% 64%
57% 51%
52%
20%
33% 27% 29% 31% 28% 25% 21% 23%
0%
Paid time off Benefits overall Health care/ Flexibility to Defined Family-friendly Wellness programs Defined benefit
medical benefits balance life and contribution plans, benefits, such pension plans
work issues such as 401(k) as domestic
and 403(b) plans partnership benefits,
subsidized child care,
scholarships
BEYOND HYPE AND HYPERBOLE
what works and what doesn’t
No Attraction / Appreciation
Benefit inadequacy (e.g. Insurance)
Lack of Budget Discipline
Inability / Unwillingness
Informal rewards/benefits programs Force-fit
Gray Areas/Partial Flexibility
Insincerity
All talk –
no walk
Apathy
Cumbersome
Convenient
Voluntary
Fair, Merit based compensation Benefits
Stability
Work/Life Balance Leadership
Clear, Honest, Focused communication Participation Personalized,
with management and team Need-based
Culture-fit
Respect
Empowerment
Meaningful & Challenging work
Training & Development
Growth Opportunities - Promotion or New Skills
Support The bed rock of Employee Satisfaction
Recognition
Employers should not be (seen to be) faking it. Honest intent and earnest effort are a
prerequisite to making C & B strategies work
Productivity Increase
40%
20%
42%
• Relaxed / Open plan offices
87%
• Personalized Healthcare / Insurance
37%
• In-office recreation/gym / Creche
62%
• Flexi-time / Vacation / Telecommuting
63%
• No / Casual dress codes
36%
• Innovative Rewards
26%
• Sports / Events / Theme parties
29%
• Maternity & Paternity Leave / Child-care
55%
• Menu options at the party
44%
• Wellness Programs / Mentoring / Counseling
19%
• Coffee / Drinks within arms-length
67%
• Career Advancement Opportunities
ANNEXURE
Compensation Structures, Components
and Elements
TYPE OF SALARY STRUCTURE
BY INDUSTRY
Retail Textile
Agriculture Automobile
BROADBANDS OTHER
Hospitality FMCD
Manufacturing & Engineering
Broadly, C & B strategies fall into one of four types based on their adaptation to market
realities, and the degree to which they have evolved
ELEMENTS AND COMPONENTS OF
TOTAL REWARDS
16%
Elements of Total Rewards
36%
16%
Compensation
16%
16% Work-Life
Integration
Performance
Component – A Management
Basic Salary
Component – B
Allowances/Reimbursements: SA/HRA/LTA etc.
Talent
Component – C
Development
Variable Pay: PLB/AB/Ex-gratia etc.
Component – D
Retirals: PF/Gratuity/Superannuation Rewards &
Recognition
Component – E
Valued Perquisites: Company Car / Mobile
Reimbursements / Lunch Sub Allow etc.
Benefits
PREVALENT PRACTICE
CAR POLICY
percent of the companies have company leased and rest have company owned car option 68%
years is the average car replacement period 4-5
INSURANCE POLICY
percent of the companies have life insurance policy 72.8%
percent of the companies have accident insurance policy 79.6%
percent of the companies have medical insurance policy 100.0%
EDUCATION ASSISTANCE
FITNESS PROGRAMS
(FOR HIGHER STUDIES)
GIVE THEM
EMPLOYEE A GIFT CARD
COMPANY
S T O C K SERVICE AWARDS
PURCHASE PERSONAL
PROGRAM ACCIDENT /
RECREATIONAL GAMES
CORPORATE INSURANCE
SWAG
CREDIT CARD
SCHEME
F L E X
MENTORING/
BANDING
BROAD
TIME/
REMOTE DEVELOPMENT
WORK PROGRAMS
COMPANY LEASED ACCOMMODATION
JOB
at a relatively better balance of
COMPRESSED value and excitement in their
WORKWEEK benefits package ..
All the above elements listed in the word-clouds are practices in some of the best start-up unicorns and acclaimed new-age
businesses
Corporate Office
6th Floor, BMTC Commercial Complex, 80 Feet Road,
Koramangala, Bangalore - 560 095, Karnataka, India
Email: [email protected]
Website: www.teamlease.com
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