Compensation Chains                          Leveraging Locations with Wide Compensation                          Bands fo...
OVERVIEW OF COMPENSATION CHAINS          The depth in compensation chains across Emerging countries provides significant  ...
ADVANTAGES OF COMPENSATION CHAIN MANAGEMENT             By having a higher depth in compensation chain, Organizations can ...
EXAMPLESExamples of Information Technology (IT) Compensation chains in Emerging and DevelopedLocations Slide 1 of 2       ...
EXAMPLESExamples of Information Technology (IT) Compensation chains in Emerging and DevelopedLocations Slide 2 of 2       ...
KEY CHALLENGES AND SUGGESTED APPROACHA careful portfolio evaluation and deeper understanding of the location is critical f...
Zinnov’s Global Location and Talent Pool portal empowers HR and Engineering leaders withlocation and talent specific data ...
Zinnov LLC4701 Patrick Henry Dr.Building 7Santa ClaraCA – 95054Phone: +1-408-716-843221, Waterway Ave,                    ...
Upcoming SlideShare
Loading in …5
×

Compensation Chains

873 views

Published on

Zinnov has built a concept called “Compensation Chains” to best depict the variability in pay levels for the same position in emerging countries. While this variability offers cost advantage in some situations, this can also result in missteps in work allocation. This can result in a situation where wrong tier talent is picked based on cost advantage considerations, without accounting for the impact on work quality and operational efficiency.

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
873
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
28
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Compensation Chains

  1. 1. Compensation Chains Leveraging Locations with Wide Compensation Bands for Cost Savings January, 2012 | A Concept Document Zinnov This report is solely for the use of Zinnov and Zinnov Clients.Zinnov LLC CONFIDENTIAL No part of it may be circulated, quoted, or reproduced for distribution from Zinnov LLC.
  2. 2. OVERVIEW OF COMPENSATION CHAINS The depth in compensation chains across Emerging countries provides significant opportunity to plan for the type of work being executed in these locations • Emerging locations like china and India have a wide Range of Pay across the various experience levels and domains. For e.g., the compensation for IT professionals with 0-3 years experience level in Bangalore - India is in the range of USD 4,760 – USD 10,200 • This situation provides a unique opportunity to Global organizations – a realignment of the pyramid structures in these locations can greatly improve the contribution as well as impact of emerging locations in the location matrix • Understanding the chain dynamics is therefore extremely crucial in planning the type of work being executed at the emerging locals Information Technology (IT) Compensation Chains in Emerging Locations – 0 to 3 Years Experience Level Variance Variance Variance Variance 25000 114% 119% 88% 75% Max $19,600 20000 MaxCompensation (USD) $16,660 15000 Median $14,000 Max $10,200 Max 10000 Median $8,940 Min $9,520 $11,200 Median $6,800 Min Median 5000 $7,616 $5,960 Min Min $4,760 $4,768 0 India - Bangalore China - Beijing Philippines - Quezon Romania - Bucharest Zinnov 2
  3. 3. ADVANTAGES OF COMPENSATION CHAIN MANAGEMENT By having a higher depth in compensation chain, Organizations can afford a pyramid of multiple levels Current Scenario Leveraging Compensation Chains Wide Compensation Chains in Org Pyramid leading to Multiple Sub Pyramids at the Bottom Reduce Costs Higher Costs of Operations 100% Minimal or No Change in Leadership Higher Levels More than 10 Years 90% 0 – 3 Years Tier III 5 – 10 Years 0 – 3 Years Tier II 80% Cost reduction through higher number of FTEs at 0 – 3 Years Tier I the bottom of the chain 70% 3 – 5 Years Pyramid Realigned for Leveraging Comp. ChainsPercentage of FTEs 60% 50% Type of Work Aligned to FTEs Position in Compensation Chain to Improve Quality and Efficiency 40% 0 – 3 Years All Comp Levels Team composition Minimal or No Change in depending on the • No planning w.r.t. Higher Levels complexity of work 30% compensation chains leading to higher costs 20% • Despite wide range of 0 – 3 Years Tier III compensation, FTEs in an experience band working 0 – 3 Years 0 – 3 Years Tier II 10% across similar types of work Tier I Only 0 – 3 Years Tier I 0% Typical Pyramid Across The Location Lower Complexity Work Higher Complexity Work Zinnov 3
  4. 4. EXAMPLESExamples of Information Technology (IT) Compensation chains in Emerging and DevelopedLocations Slide 1 of 2 Ukraine - Kiev Min: 39,550 Ukraine Median: 56,500 Kiev 90000 Max: 84,750 USA Bay Area 80000 Compensation (USD) 70000 India Min: 22,610 Bangalore 60000 Median: 32,300 Min: 16,665 Max: 48,450 50000 Median: 23,808 40000 Min: 11,000 Max: 35,712 Median: 15,500 30000 Max: 23,250 20000 10000 0 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years USA - Bay Area India - Bangalore Min: 34,905 Min: 86,700 Median: 145,777 Median: 53,700 300000 100000 Max: 91,290 Max: 260,200 90000 250000Compensation (USD) Compensation (USD) Min: 73,800 80000 Median: 107,384 70000 200000 Min: 62,000 Max: 172,700 Median: 85,090 60000 Min: 18,900 Min: 55,000 Max: 128,800 Median: 27,000 150000 Median: 67,500 50000 Max: 40,500 Max: 95,000 40000 Min: 10,500 Median: 15,000 100000 30000 Min: 4,760 Max: 22,500 Median: 6,800 20000 Max:10,200 50000 10000 0 0 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years Zinnov 4
  5. 5. EXAMPLESExamples of Information Technology (IT) Compensation chains in Emerging and DevelopedLocations Slide 2 of 2 China - Dalian Min: 35,649 UK Median: 59,415 London China 100000 Max: 95,064 Dalian 90000 Compensation (USD) 80000 70000 Min: 21,837 Malaysia 60000 Median: 31,196 Penang 50000 Max: 46,795 Min: 13,076 Median: 18,680 40000 Min: 6,702 Max: 28,954 30000 Median: 8,377 20000 Max: 14,660 10000 0 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years UK - London Malaysia - Penang Min: 80,677 Min: 41,580 250000 Median: 128,059 140000 Median: 59,400 Max: 217,700 Max: 120,400 120000 Min: 22,365Compensation (USD) Compensation (USD) 200000 Median: 31,950 Min: 65,547 100000 Max: 93,150 Median: 93,639 Min: 14,301 150000 Max: 131,095 Median: 20,430 Min: 46,503 80000 Max: 67,300 Median: 63,703 Min: 37,290 Max: 89,184 60000 Min: 8,190 100000 Median: 46,613 Median: 11,700 Max: 65,258 Max: 32,600 40000 50000 20000 0 0 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years 0 to 3 Years 3 to 7 Years 7 to 10 Years Exp > 10 Years Zinnov 5
  6. 6. KEY CHALLENGES AND SUGGESTED APPROACHA careful portfolio evaluation and deeper understanding of the location is critical forleveraging the location optimally Key Challenges Suggested Approach  Having a higher depth in compensation chains in a country  While long compensation chain countries offer does not necessarily provide an advantage unique and scalable advantages, there is also a tax on planning. A careful portfolio understanding and  Locations in such countries will require careful planning and deeper understanding of the location is therefore a focused execution must for leveraging the location optimally  Any missteps in work allocation can result in a situation  Average Salary Trends should not be considered where wrong tier talent is picked based on cost advantage alone for deciding on the type of work suitable for a considerations, without accounting for the impact on work location quality and operational efficiency  The key is in understanding the variability and  In addition, the misalignment of resources to the type of taking advantage of the same work can lead to lower employee engagement and higher turnover situations Identifying Locations with Ensuring Alignment of Team Portfolio Evaluation to Ensure Alignment of Work with Talent Deep Compensation Chains composition and Type of Work Quality and Availability at a Location Meeting Quality of Work and Managing and Maintaining Focusing on Compensation Ongoing Assessment of Operational Targets Employee Engagement Levels Ranges rather than Averages Pyramids and Maintaining KPIs Zinnov 6
  7. 7. Zinnov’s Global Location and Talent Pool portal empowers HR and Engineering leaders withlocation and talent specific data to make strategic, operations and transformation decisions Full report on the Canada Talent Landscape can be accessed through Zinnov Global Location and the Zinnov Global Location and Talent Pool Portal Talent Pool Tool Sign Up today for your free trial account http://zinnov.com/US/demo_signup.php 1. Locations: 80+ Countries, 400 Cities 2. Talent: Installed (5 domains, 31 functions and 155 skills) & Fresh University talent 3. Cost : Across cities, domains, functions and experience levels 4. Productivity: Productivity tax 5. Peer Group: Benchmarking Information on over 7,000 companiesSnapshot of Zinnov’s Through this tool, companies canGlobal Location and Talent access data across any combinationPool Portal of the above mentioned categories. For more information, visit http://zinnov.com/US/index.html Zinnov 7
  8. 8. Zinnov LLC4701 Patrick Henry Dr.Building 7Santa ClaraCA – 95054Phone: +1-408-716-843221, Waterway Ave, Thank YouSuite 300The WoodlandsTX – 77380Phone: +1-281-362-277369 "Prathiba Complex", 4th ACross, Koramangala Ind. Layout5th Block, KoramangalaBangalore – 560095Phone: +91-80-41127925/611, First Floor,Paras Downtown Center, info@zinnov.comGolf Course Road, Sector 53, www.zinnov.comGurgaon – 122002Phone: +91-124- 4378211/13 @zinnov Zinnov LLC ( Confidential) 8

×