Compensation philosophy used in IT sector companies in India

1. COMPENSATION PHILOSOPHY IN IT SECTOR COMPANIES IN INDIA
SUBMITTED BY – MD JAZIB KHAN
CLASS ROLL NO – 04
SEMESTER- III
SUBJECT - SALARY AND WAGE
ADMINISTRATION

2. A compensation philosophy is simply a formal statement
documenting the company's position about employee
compensation. It explains the "why" behind employee pay and
creates a framework for consistency and equality. Employers use
their compensation philosophy to attract, retain and motivate
employees.
The Compensation philosophy of Indian IT companies,
supports the organization's strategic plan and initiatives,
business goals, competitive outlook, operating objectives, and
compensation and total reward strategies. Understanding the
company’s requirements and framing the philosophy in a way
to get maximum talented and satisfied employees is the main
goal.

3. The Compensation philosophies seek to:
Identify the organization's pay programs and total reward strategies.
Attract people to join the organization.
Motivate employees to perform at the best of their competencies, abilities and
skill sets.
Retain key talent and reward high-performing employees.
Define the competitive market position of the organization in relation to base
pay, variable compensation and benefits opportunities.
Define how the organization plans to pay and reward competitively, based on
business conditions, competition and ability to pay.
Ensure equal pay for equal work, with allowable pay differences based on
factors not prohibited by law.

4. The philosophy behind IT Companies like Tata Consultancy
service (TCS), Infosys, Wipro Compensation program is to
provide an attractive and market based total compensation which is
linked to enabling high performance and is aligned with long term
goals of the company.
Their Compensation programs are planned with the flexibility to
be competitive in recruiting and retaining employees within
different marketplaces in which they compete for talent.
Their Compensation program is designed to attract, retain and
reward premium talent and they strive to pay highly
competitive total compensation to employees consistently
exceeding expectations.

5. To meet strategic goals of the company, they utilize variable pay that is based
on individual goals and overall company goals. They also have
a comprehensive stock equity plan for top executives to provide line of sight,
generate wealth creation opportunity and drive long term performance.
In addition, they provide a benefits package as their commitment to Employee
health and wellness.
Review of salaries is done on annual basis and salary adjustments are made in
accordance with market conditions and financial performance.
Pay rewards in form of annual appraisals are on the basis of performance,
experience and positioning versus market while striving to balance internal
and external equity in all reward decisions while at the same time
differentially rewarding their top performers.
To maintain their competitive advantage, as a reputed Organization they are
committed to evolve this philosophy to reflect changes in the business and
talent landscape.

6. Employee Stock Plan for Key Talent
Stock plan serves to create long term wealth creation opportunity
for employees linked to company’s sustainable growth as well as to
enable us to retain top key executives
Stock Awards are given to key talent across functions, premier
campuses and organizational leadership
Grant awards are made basis role, work and performance and are
delivered through Restricted Stock Units and/or Stock Appreciation
Rights.

7. A percentile-based salary tells what amount certain percentage of
the total population in an area or within certain industry earns. Say
for a job of $25k, the wage was 25th percentile annually. It means
25% of the mentioned population earns $25k annually, while the
remaining percentage of people earn more than $25k.

8. Market-based salary structures are about keeping your pulse on the
market and determining the acceptable lower and upper limits for
your company. The adoption of market-based salary structures is on
the rise as the competition for talent remains fierce; they balance
administrative ease with the need to respond to dynamic markets.
Compensation within a market pay is therefore based on merit and is
constructed to be a fair, objective, and competitive approach to pay
Market pay philosophy is based on factors within the organization’s
industry, where they want to be competitively positioned (pay
percentile) within the market and is also influenced by the specific
geographic locations within which the employee may be working.
Jobs are broken down into different components and then graded to
determine their value. Some of the elements which determine value
are , the complexity of the job, qualifications needed to function
effectively in the job, inherent risk that may come with the job,
scarcity of talent to perform the job.