Perform and prosper: Indian companies to employees

MUMBAI: Perform and prosper: That's the message India Inc is sending out to employees this appraisal season with many corporates readying to pay their top performers up to 200% higher increments and bonuses than average performers.

Many leading companies across sectors, including Tata Motors, Future Group, Flipkart, Paytm, Panasonic, Mahindra & Mahindra, Vodafone, Godrej and RPG Group, say sharper differentiation between their best and average lot is the only way to prevent shifting of loyalties at a time when there is a scramble for the right talent.

So, most firms particularly e-commerce players and startups are rolling out bigger incentives, roles and bonuses for their top-rated employees.

"In this high growth phase you have to reward your lead people much more significantly since they are the ones driving the growth. It motivates people to go all out," said Amit Sinha, president business planning and people at Paytm.

The digital wallet and e-commerce company plans to offer its top performers up to three times higher hikes than average performers besides bonus of up to 200% of their CTC (cost to company). Bonus for average performers would be pegged at about 20% of CTC, Sinha said.

Paytm has set aside a $3-4 million budget for its top performers who are also rewarded with employee stock options and better promotions and opportunities. Top e-commerce player Flipkart, too, will toe the pay-for-performance line.

"By design, our philosophy works in a manner to reward and accentuate high performance as it motivates employees to give in their best at work," said KV Satheesh, director, rewards, at Flipkart. "The variable bonus that an employee receives can be as high as 2X for a top performer compared to an average performer," he said.

Brick-and-mortar firms, too, plan to reward their top performers handsomely. "The top performers are just 15-20% but contribute to 80% of the business," said Gajendra Chandel, chief human resources officer at Tata Motors. "We need to tell them they are valued."

Until a few years ago, all Tata Motors would fit all its employees in an increment range of 8-12%, but now the automaker has changed its rewards plotting drastically. Non-performers do not get an increment at all, while the average get about 10% raise and the best get 15-20%, officials said. Bonus for the latter, too, is 50-100% more than average performers.

Consumer major Godrej Consumer Products, too, plans to roll out hefty increments and bonuses for its best lot to maintain retention. "The differentiation between top and average performers could be as high as 70%, both in increments and bonuses," said Rahul Gama, the firm's HR head.

Anandorup Ghose, partner at HR consultant Aon Hewitt India, said that on an average increments of top performers will be almost double that of average performers. "This year the base salary increase is 10.3% average and with an average multiplier of 1.8X. So you can assume the pay increase for the top performers to be in the region of 19% this year," he said. "The highest multipliers are 2.1X -2.2X in new-age startup companies and in financial Institutions," he added.

At Siemens India, where the appraisal cycle is already over, 60% of employees who got a rating of 3, which reflects average performance, got an increment of around 10%. The 5% talent at the top end with a rating of 5, in comparison, got increments of up to 20%, said Ramesh Shankar, the firm's executive vice-president for human resources.

Adarsh Mishra, chief HR officer at Panasonic India, said the consumer electronics would hand out 7-8% hikes to its average performers while for top performers it would be 15-18%. Top retailer Future Group follows a markedly different strategy in that all its employees get a flat hike.

"The real differentiation, however, in terms of performance, is in terms of the total rewards package," said Kaustubh Sonalkar, chief people officer at Future Group. An average performer stands to earn 50-60% of variable while a top performer would get 120-150% along with ESOPs and long-term incentives.

Corporate executives pointed out that there is intense competition for top talent across industries. "While the overall labour market has expanded, the competition for top talent is only getting more and more intense," said Suvamoy Roy Choudhury, HR director at mobile operator Vodafone India. The company would offer 25-50% higher variable pay to its top performers compared with average employees.

The RPG Group, too, has a strong total rewards framework for top talent. "Our annual increments and bonuses reward employees purely based on performance. For instance, our performance bonus scheme has an accelerated benefit as you move up the performance rating table. In addition, we also have recognition schemes," said S Venkatesh, management board member & president - group HR at RPG Enterprises.

Prince Augustin, EVP, group human capital and leadership development, at Mahindra & Mahindra, said that while it was too early to comment on increments, the auto major's high performers would get much better rewards than those in the middle.

Source: TechGig.com