Good news for employees: Companies may pay 100% variable salary this year

Indian currencyEmployees in most sectors might get a huge relief this year, with companies paying the variable components of their salaries in full this appraisal season, reported The Economic Times.
The employees who will benefit from this will be workers in the auto and auto ancillary, manufacturing, consulting and chemicals units, besides pockets of the technology, banking and financial industries, ET reported.
However, employees in sectors like real estate and telecom might not benefit much, as the firms are likely to give lower variable pay to workers.
Most companies might pay 100 per cent or more as variable pay because these firms overcame two major economic changes last year — effects of demonetisation and implementation of Goods and Services Tax (GST) in July last year, experts said.
Search companies such as Korn Ferry and Heidrick & Struggles, consultants like Aon Hewitt and Willis Towers Watson India and also a few HR managers confiremed to ET about this positive trend.
Unlike last year’s variable pay sticking between 60 per cent and 80 per cent, this year’s variable pay may be at 100 per cent as well as it might even exceed and might exceed that for FY19.
“There should not be adverse payouts this year as the performance of the auto sector has been good,” said Prince Augustin, executive vice-president, Mahindra & Mahindra told ET.
According to ET, Hindustan Zinc also shows promising variable pay increase this year. “The payout of bonus this year will be higher as compared to last year as organisations in the manufacturing sector have performed better,” said Dilip Pattanayak, head of HR.
According to Press Trust of India, almost 75 per cent companies use variable pay, 91 per cent use increments and 71 per cent use career opportunities to distinguish their employees between average and high performers. Moreover, 47 per cent firms pay variable salary of more than 1.5 times to high performers than average performers.
Experts believe, in terms of cities, Bangalore and Delhi top the highest percentage as compared to Mumbai, Pune, Chennai, Hyderabad and Kolkata.
“Overall, Indian companies covering both MNCs and startups will experience a pay hike of 10-15 per cent for the right talent in 2018 after a challenging year for the job market, stunned by post- demonetization layoffs in traditional sectors followed by the advent of artificial intelligence in new-age ones,” said Amit Munjal, Founder and CEO, Doctor Insta, a video medicine platform told PTI.
Source: Business Standard