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Compensation: Time for Reinvention

The ups and downs of the economic cycle have brought to the fore questions on the right approach to compensation. Globally there is a debate on performance pay and its applicability, excesses of executive compensation, wealth creation plans, etc. Will these reflect in India too? What culture should reward plans support now? A panel discussion focussing on the above and other relevant issues with respect to compensation was co-hosted by Cerebrus Consultants and the National HRD Network, Bangalore.

Over 130 enthusiastic participants and members of the NHRD Network were present at this event which started off with High Tea and stimulating conversation.

The discussion kick-started with Anita (CEO, Cerebrus Consultants) inviting the panelists to share their experiences on the challenges faced in the previous year and the ways in which they tackled them. Suresh, (CEO - Arvind Retail) gave the organized retail perspective and was of the view that while there was some actual impact of the global recession, most of the sentiments were media-induced. As the head of a young organization his emphasis was on acting fast and improving employee communication to bring down the panic in the system. He also felt that transparency was the key when the organization had to take some hard decisions like salary freeze / restructuring.

Elango (Chief HRO, MphasiS) came out with the perspective of the BPO industry, one of the worst affected in the global meltdown. His experience of outlasting the crisis was an interesting lesson on 'engaging people in the problem rather than treating them as the problem'. He used a simple 100 Rupee example to create awareness among employees and to make it relevant for them. He also spoke about the concept of 'cost with a feeling' while resorting to cost-cutting measures and the promise of 'recompense bonus' as things got better for the company.

Pramod (Head HR - Logica India) gave the IT point of view, another afflicted sector, where 'dollar salaries' were the benchmark for everyone. He saw a marked shift towards the variable pay approach to compensation as one of the ways used to manage compensation especially at the senior levels. This triggered a debate on variable pay where everyone felt that the trend was definitely towards increase in variable pay and also more frequent payouts of the same. Also company performance seems to have factored more than individual performance in some of the affected sectors in determining the amount set aside as variable pay, though individual performance was considered for actual payouts.

There was also a debate on the differential salaries between lateral hires and existing employees; it was felt that the undervaluing of existing employees was indeed a problem that companies are yet to sort out while new hires came in at large salary hikes.

Another topic that caught the interest of the audience was the gap between top management compensation and the next levels in an organization and therefore the need for a cap on executive compensation. There were mixed views on this issue with those against a ceiling on remuneration arguing that their performance was closely linked to business performance and a large percentage of it was variable and not a guaranteed payout.

There were many more questions and ideas that came up during the discussions, on the proposed Direct Tax code, ESOPs, salary increments in the coming years, clarity on performance indicators especially for support functions, to mention a few. But time was running short and the event closed with a presentation on the survey findings which again threw up a few surprises in terms of changing opinions/ preferences of HR professionals when it comes to compensation and job choices. Overall, it turned out to be an engaging evening for everyone present and once again proved Compensation and related aspects remain one of the most critical and challenging aspects for HR Professionals.