Organizations are becoming innovative on compensation—they are offering premium to key skills, says Rajul Mathur, Head of talent and reward (India), Willis Towers Watson
NEW DELHI :
There is an uptick in hiring at consumer goods and a continued robustness in fintech and e-commerce firms as economy recovers gradually, said Rajul Mathur, head of talent and reward (India) at Willis Towers Watson, a leading consulting firm. In an interview, Mathur also spoke about how the environmental, social and governance (ESG) metric is increasingly becoming a criteria for executive compensation, and how ESG regulations will build a new work and compensation culture. Edited excerpts:
With the economy slowly recovering, is hiring picking up?
The technology sector is doing well and the compensation norms are pretty good. If I can compare last year versus this year, there is definitely an uptick in terms of business performance, and it’s getting reflected in the compensation as well. If we look at how the economy is behaving and how the market sentiment is, then it’s all on the positive side. Organizations are becoming innovative on compensation—they are looking at variables as well as long-term benefits, and offering premium to key skills.
You work with companies on reward and talent. Which sectors are recovering well and increasing hiring?
FMCG-retail is recovering, segments of capital goods sector are doing well, especially those who have managed their inventory well during the pandemic. They are seeing good growth numbers. Finance is doing better than last year and the new age finance sector— the entire ‘fintech’ segment is doing very well. E-commerce and pharma sectors continue to do well. Automobile also saw some spurt before the second wave of covid-19, but since then they have been a bit subdued. With the recent price hike in auto sector, it may not see a huge festive cheer.
So, FMCG is recovering well, and hiring is picking up too...
FMCH-retail is recovering well. If you look at college recruitment by these firms, you see they are on course. If the third wave is not there, or does not hit us hard, you will see these firms will hire very well. The compensation and reward norms will revert to the level of 2019, which is in the range of around 9% increment.
ESG is an emerging regulatory requirement. Is it a factor in employee compensation, especially at the CXO level?
ESG is becoming important because of three factors—the investors are showing keen interest. One of their key parameters in evaluating long term sustainability of a firm is by looking at ESG. Investors are driving this change across economies. Some investors are saying: climate risk is an investment risk, and you must measure this and if you don’t do this our investment in your firm will go down. Companies that are invested in sustainability are doing better in several other parameters. Second is consumer awareness. Research shows that 80% of the consumers are ready to pay more for a product that is made through a process that is climate neutral than climate negative. So, there is a pressure from consumers. The third is employees’ perspective—the current population at workspace is largely young, and one of their main motivations to work with a firm is (whether) their employer is purposeful or not. Employees will stay more with an organization that is purposeful and conscious as against others that are not. So there is a pressure from the workforce point of view.
How is ESG playing out in Indian boardrooms?
As many as 220 firms have disclosed environment-related actions this year in their balance sheet. If you see ESG from a talent and investment perspective, then we are in the same market as the rest of the world. On carbon neutrality, we are not on par with some global peers but progressing gradually.
So what about the ESG factor in compensation?
Some Indian firms have started looking at sustainability from a talent and leadership point of view. You will see some new parameters getting part of the compensation structure of senior and top executive level officers, especially in terms of sustainability of talent. Very few firms have put carbon neutrality factor of ESG in compensation. The good part in India is carbon neutrality has started as a conversation at the board level. Globally, the trend has started not just sustainability of talent and leadership but also carbon neutrality.
So, a young workforce is pushing firms to be purposeful?
Earlier employees were largely driven from the point of view of need. The new generation is more aware, and have far more choices, their understanding of the environment is far better than what it was. They are also driving this change, and saying: ‘I want to do the right things, and if a company is not doing right, then I will not like to be associated with it’. And remember these young individuals are investors or part of investment teams, they are also consumers. While environment is clear for all, ‘social’ for these people means well-being of employees, diversity, equity and inclusion and more fairness in treatment, etc. Look at some of the big firms in the world, employees are now becoming concerned about well-being, and saying they are well protected against the pandemic at home and are preferring not to go back to office. Twenty years back, it would have been seen as a (trade) union issue but now companies are discussing it favourably to evolve a solution.
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