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Himani Chandna Gurtoo and Mahua Venkatesh, Hindustan Times
New Delhi, April 11, 2013
Waiting for a hike in your pay cheque from corporate India? Your annual increment this year may not be a guaranteed hike as most of the salary increase is likely to come in your overall cost to company's (CTC) variable components.

To beat the economic slowdown and keep wage bills under check, Indian firms are gradually moving more towards raising variable pay in compensation packages, say human resource experts.

The variation can depend on an individual's performance or a company's overall performance - or both.


With high interest rates and slower sales biting them, most companies are looking at ways to keep costs in control.

According to a research conducted by global management consultancy firm Hay Group, 85% of the 410 Indian companies that it surveyed in 2012 said they had introduced a short-term variable pay component.

Earlier, variable components including hefty bonuses comprising 7-30% of the total CTC was primarily meant for senior managers. Now, this is being increasingly extended to middle and junior levels.

HR consulting firm Mercer surveyed 734 firm across India and suggested that employers are considering a "total rewards approach" - under which salary packages may be linked to actual performance.

"Companies are increasingly moving employee compensation away from a fixed-pay approach," said Muninder Anand, director with Mercer India's Information Solutions business.

Sreekanth K Arimanithaya, chief HR officer at Britannia Industries said economic volatility was such that firms "will not play with fixed components."

The Emami Group has introduced performance linked variable pay for all managers, a source said.

RPG Enterprises said it would continue to have differential salary increments and bonus to tide over economic uncertainties.

"The bonus payout formula majorly comprises variable performance payment," said S Varadarajan, executive president HR, Tata Teleservices.