Employees and employers prefer variable pay and flexi benefits with salary, said a new report by human resources firm TeamLease Services. In fact, the variable pay for senior management has risen to 25-30 percent from 18-20 percent.
According to the TeamLease Compensation & Total Rewards Trends Report, the changing dynamics of the job industry seems to be impacting the rewards and compensation structure. It said that both employees and employers seem to be moving towards total rewards wherein the share of variable pay and flexi benefits are significant.
Similarly, the report said that there has been a significant rise in the middle management (from 10- 12 percent earlier to 18-20 percent today) as well as the junior management (from 5-8 percent earlier to 10-12 percent currently).
A radical compensation mix – comprising 40 percent to 60 percent fixed-to-variable and 38 percent to 85 percent intangible-to-tangible – is ushering in the Total Rewards era in India.
“With nil impact of GST on gifts and perquisites, and little impact on most other components flexi-benefits potentially increase net income for employees by 28 percent,” said the report.
Further, it said that benefit plans while joining an organisation attract 74 percent of potential employees, while health/wellness plans, and financial benefits help retain 57 percent of people.
While the cost to the business in providing flexible benefits is 25 percent of the total HR budget, which in turn is around 10-15 percent of the employees’ total salary package.
Sonal Arora, Vice President, TeamLease Services said, “While flexi benefits have become a popular medium to please and retain employees, organisations need to be honest with their intent, put earnest effort and prioritise on aligning rewards with business objectives, communicate effectively and personalization.”
The report said that executive compensation is heavily loaded with components and they comprise almost half the total compensation, right at the top. For a mid-management employee the actual average variable pay stands at 15.1 percent while the same for a CXO is 22.8 percent.
The report further analyses what flexible benefits across different sectors. It showed that the traditional sectors like manufacturing, healthcare & pharma, BPO/ITeS offer a wide range of options in the compensation & benefits mix, to cater to a broad-based workforce.
While the new economy businesses like BFSI, e-commerce, IT, telecommunication and FMCG/D have rationalised the benefits mix by stripping it of elements that employees perceive as irrelevant. Also, sectors like retail, media & entertainment, travel & tourism that are seen to be fun places to work at have a lean compensation & benefits structures.
Another interesting finding that the report showcases is how the reward value retention is perceived differently by employees and the employers at different stages of the employee cycle. While attracting the employee to a new job, the employer thinks of career advancement opportunity as the most important criteria. For an employee, the base pay/salary is what attracts him/her to the new job.moneycontrol