While 31% employees said there was no variable pay, 33% said there was a ‘decrease in the percentage of variable pay’ received by them, said a survey by Grant Thornton
Around two third of employees either did not get any variable pay or were given a reduced variable pay as part of their part of their cost to company (CTC) in the past one year, as India Inc. cut down their employee cost in a pandemic year.
While 31% employees said there was no variable pay, 33% said there was a “decrease in the percentage of variable pay" received by them, said a fresh survey by consulting firm Grant Thornton.
The Human Capital Survey, on the Impact of Covid-19 on “Compensation and What do the Employees Want", also showed that the loss of variable pay is pushing a sizable portion of employees to demand a restructuring of the salary with a higher fixed pay even if that means the overall CTC is little less.
Respondent said as working from home is a new normal, employers should consider a work-from-home allowance to reduce their employees’ office related expenses. “As the need to relook at strategy increases, work from anywhere, life/medical insurance, home office set up and flexible hours are being sought as high-priority benefits. Over 73% of the survey respondents also said that organisations must introduce long-term incentives, such as employee stock options and retention bonus," it said.
It also showed that companies experienced higher attrition among young performers, while lower or stable attrition among mid to senior-level performers.
Overall, 40% employees witnessed a reduction in total pay, and 45% did not see any change in overall pay over the past year. The impact on remuneration was more pronounced in mid-size companies with less than 1000 employees in sectors like real estate, infrastructure and hospitality. Larger companies in consumer-led sectors, such as consumer, retail and e-commerce, pharma, healthcare and life sciences, showed higher resilience to the adversities.
“While one-third of the respondents experienced a reduction of more than 20% in their fixed pay, 40% did not see any change in fixed pay despite an overall decrease in their earnings. This highlighted that the variable pay component of the salary took a major hit," said Amit Jaiswal, partner, Human Capital Consulting at Grant Thornton Bharat.
“There is an increased expectation to change the current pay mix and reduce pay-at-risk part of the compensation, specifically in the younger workforce of mid-size organisations," explained Jaiswal.
The survey said there are two trends are clearly emerging—first an increased appetite for long-term incentives, especially from the younger workforce. Second, the definition of benefits. It is no longer restricted to medical insurance.
“While compensation managers will have to factor in all these incentives while designing their compensation philosophy, employers will have to relook at the definition of total compensation, what to include and what not to," said Jaiswal.
Post the outbreak of the coronavirus pandemic, the job market has got battered with millions out of jobs and many more observing a pay cut or income loss. The first wave of the pandemic in 2020 pushed about 230 million Indians into poverty, according to a survey by the Azim Premji University. Data from the Centre for Monitoring Indian Economy showed that the pandemic’s second wave led to almost 23 million job losses in April and May alone.
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