EMPLOYEE COMPENSATION TRENDS IN INDIA TODAY

EMPLOYEE COMPENSATION TRENDS IN INDIA TODAY

• Substantial differentials in gross compensation of the managerial level to the next lower level are practiced.
• Differentials in gross compensation and sometimes compensation structure are being practiced between the project and support functions.
• Personalized salaries out of a basket of options for individuals at senior levels.
• Significant increase in basic salary and hence in deferred benefits.
• Restriction of non-tax perks in the form of reimbursement under various heads to only certain top levels of management.
• Higher annual increments, the average increments varying from 50 to 100% for different levels of management.
• Shift in incentives to group / team incentives rather than individual based. Different kinds of incentive like Performance Incentive, Commission, Performance Payment, and Performance Bonus etc. are not always individual specific. They are usually team or level based. Individual based cash incentives are on the downslide except at very senior levels.
• Soft furnishing allowance is being provided towards purchase of curtains, carpets, cutlery and crockery etc., and this is usually paid as an annual, non-taxable allowance.
• Conveyance is an area, which provides a lot of scope for variations. Practices with regard to provision of car, driver and reimbursement of expenses on car, parking, cleaning, petrol, and maintenance are covered under this category.
• Companies encourages the employees to buy cars through hire purchase schemes and the installments are paid by the company. This also helps combat the problem of accumulation of used cars by the company cars with the high employee turnover.
• Two and Four wheeler loans are common practice. Interest rates may vary from 0% to 5% with the repayment period varying from 3 to 5 years.
• Medical benefits are liberally available with tie-ups with insurance companies and hospitals in many cases.
• Some companies assist employees in their higher education by sponsoring evening classes or providing sabbatical leave at company cost.
• Reimbursement of books, periodicals, newspapers, journals etc against a pre-determined limit is common. Membership subscription to professional bodies is also reimbursed.
• Club membership in form of reimbursement of one-time joining fee for one club plus the monthly/ annual subscription to one more clubs is an attractive perk for senior management. Companies also go for bulk corporate club memberships.
• Soft loans for purchase of furniture, appliances and computers are also extended.
• Housing loans or interest subsidy is also provided
• Reimbursement for travel for a holiday including accommodation in guesthouses, transit flats etc, is practiced. In most cases, this is used as a discretionary reward for exemplary performance rather than as a perk.
• Pre-employment benefits for attracting good people include the company picking up of all relocation expenses for the family, transport of personal goods, assistance in locating housing, schooling etc.
• Some trendy components like long-term paternity or maternity leave, part and flexi-time employment options are also available.
• The trend has shifted to make components direct and taxable. There is a distinct shift towards schemes for asset creation.
• The senior executives share introduction of profit sharing schemes whereby when the company earns profits beyond a certain fixed level, the profit accrued, the average norm being 20 to 25% of the excess profit.
• Stock options are also a rage in the market.