Wednesday, November 3, 2010

What will be your pay check in 2011?

Bangalore: Hewitt Associates' recent Asia-Pacific salary increase survey brings good news for Indian companies and their employees. The global study, which also looks at some 260 companies in the country, predicts that double-digit salaries will continue, compensation will become more customized and more variable pay will fuel employees to work harder and look forward to disproportionate rewards, creating a high-performance workplace, reports the Economic Times. 1.Double-digit pay hikes
Salary increases will play a very dominant role this year to decide how competitive a company stays in the market. More than the previous year, 2011 will rely more heavily on salary increases and bonuses than 2006-08. Post-recession, India has been on the path to recovery much faster over the last three quarters.
2.More variable pay
The study shows 93 percent of companies in India offer some sort of variable pay. That could go to 100 percent. In the first quarter of 2009, when the largest IT companies did not provide the variable pay they had in many years, employees saw this as a salary cut. Truth is, between 2003 and 2008, employees were paid 100 percent and above of their variable and more every year, which is why in their minds they started thinking of this as a guaranteed part of their compensation. Variable pay will increase, but there needs to be a clear and robust communication by line managers to their teams that they are actually getting guaranteed pay which is pegged to the market, and the variable part of it is pegged to the performance of the organization, the particular department, the employee's position and his/her function as an individual.
3.Customized compensation
Companies are not only looking at better salary increases, but also better policies. Those that have sustained the recession and come up even more strongly this year have adopted a more appropriate total rewards strategy for themselves and their employees, and focused on career and development rather than just compensation. Now there will be greater differentiation in the treatment of incentives and the kind of vehicles with which they are delivered. This will create better performance orientation across levels of management. The relevance of fixed compensation, annual and long-term incentives, perquisites and benefits will have to be a little more tied down to employee preference, rather than a broad-brushstroke approach for everyone.
4.More finessed talent
Companies need to develop a more holistic talent strategy. The crisis of 2009 made many of them take desperate cost-cutting measures. The more-evolved companies are innovating to catch new talent catchment areas, rather than go after the same IT and IIMs. They are also going back and asking their employees how they would like their compensation to be structured. We are fooling ourselves, for instance, if we think stock options create a sense of ownership with younger employees who would rather have cash incentives. Instead, companies should withdraw that and keep it more for senior management. If you do a total rewards optimisation, you will free up some money to do this.  

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