Revisiting Compensation Philosophy


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Speaker: Preeti Gupta

Published in: Business, Economy & Finance
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Revisiting Compensation Philosophy

  2. 2. Discuss – Changing employee and business context which call for revisit of compensation philosophy – Reward Insights – ABG Framework considerations
  3. 3. • With 500m strong workforce, India is home to 16% of global workforce • Demographic dividend – 50% of India’s population is75% of technical graduatesage more than 85% itsgeneral below 25 years of and and 62% of of population is in thegraduates are age group (15 Indias high-growth global working unemployable by to 59 years)industries • Demand forecast for labour for next 5 years will show rapid increase in knowledge based industries, financial services, infrastructure, construction, mining and health There would still be supply demand mismatch and care consequent pressure on compensation • 51% of workforce is self employed, 33% casual labour, 16% regular waged / salaried employees • Un-organised sector in India employs 92% of the total workforce
  4. 4. Customized Rewards Multi- FixedGenerational Compensation Workforce Changing How employee Needs Understand Needs & needs differ Aspirations across various diversitiesDiversifiedSectors and Location
  5. 5. LIFE STAGE ABG Rewards Insight Survey 2011 6
  6. 6. ABG Insight @Rewards Needs of employees by geography/life stage/gender Build insights on the elements of total rewards and employee perception to it.
  7. 7. 40% 35% 35% •The importance of Compensation 30% , Benefits and work-life balance isPillars of Total Rewards increasing with age. 25% 20% •At the start there is more focus 5 Years Ago 15% towards development and career 10% Now opportunities. 5% 5 Years From now 0% Attributes of Customized Rewards 30% 25% 20%•The focus moves from lifestyle and 15% 5 Years agoasset building to retirement planning 10% Nowand children’s education as people 5% 5 Years Latergrow older. 0% 10 Years later•Asset building is most importantattribute for our employees
  8. 8. Gender variation  Children’s education is more important to men as compared to women.  Women on the other hand are more career oriented.  Women give more priority to international vacations, gold investment plans and sabbaticals as compare to men. Men Women 1. Purchase of a house 1. Professional Growth. Top Priorities 2. Professional Growth 2. Children’s Education 3. Children’s Education 3. Purchase of house Top 1. Children’s Education 1. Property Aspirations 2. Property 2. Children’s Education and Needs 3. Pension Plans 3. International Vacations 4. Executive Programs 4. Pension Plans 5. Life insurance 5. Executive Programs
  9. 9. • High Growth leading to high level of responsibility at low age • Comparatively lower India maturity levels – gap in availability of “right fit talent” • High Wage inflation. Low India Growth 2011 cost of living – high savings and investment Talent Impact Comparison India Growth 1991 • Aging workforce – responsibility at more than adequate US experience levels /Europe • Higher maturity levels • High cost of living – low wage inflationUnderstanding Aspirations of talent segments and setting the right expectation iskey to the develop the right Total Reward Model in the Indian Global Context
  10. 10. ABG context Global Corporate Smart & Collaborative workplace Customer Centric Business Volatility
  11. 11. What drives rewards philosophy?• Employee Groups: • Business Multi Ethnic, Multi Generational, Multi Segments / Country, Multiple Life Sectors stages Rewards Philosophy • Business Growth • Business Life Aspirations Cycle
  12. 12. Right Competitive Benchmarking to guide decision making • Getting the Right balance of Performance Measures – External Stock Market Measures Business comparators/Talent comparators Industry, Size, Geographic reach Ownership, – Internal Financial Measures – Strategic and Operational Measures – Monitoring oriented measures Diversity/Complexity of business/ • Appropriate Mix of Long/Mid and Short Term Incentives – Aligned to risk tolerance of the organization – Risk tails, Control functions compensation – Legal & Compliance, Leverage – Share ownership guidelines • Right benefits and perquisites – Aligned to market and geography practices – Aligned to segmented employee preferences and
  13. 13. Market Productivity Defining performance Benchmarking Benchmarking • Internal Financial • Job Matching and • Pay to revenue and Measures comparators key operating costs • Strategic and Operational • Industry, Size, Geographic • Per employee measures Measures reach, Ownership, Diversit • Per unit of compensation • Monitoring oriented y/Complexity of business/ cost measures measures • Business • External Stock Market comparators/Talent Measures comparatorsOptimize the double digit pay increases tomove to the right pay mix vs market
  14. 14. 1990 Low Cash High Benefits 2015? 2000 Where are we Medium Cash moving to? Medium BenefitsFlexible Benefits Total Rewards Cash /Benefits Cycle 2010 2005 High Cash Medium Cash Valued Benefits Low Benefits
  15. 15. Thank you!