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Features

Benchmarking Compensation

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DQI Bureau
New Update

The BPO Sector Special Compensation Survey 2008 by Hay Groupa global
consulting firm working in the area of talent and performance
managementanalyzed compensations of 35,585 jobs from 12 participating BPO
organizations to come out with movement in average salary, break-up of
remuneration and attrition rates in the industry.

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The objective of the benchmarking survey was to gather data to assist the
participating companies to make an objective assessment of their current pay
practices in comparison with the market. The top line finding of the survey has
been shared with Dataquest.

The Principles

For the purpose of fair comparison, Hay Group has a practice of assigning
what it calls Hay Reference Levels to each job. Each job is evaluated within a
framework on three parametersknow-how, problem solving and accountability. The
comparison is done between same Hay level jobs in different organizations,
rather than going by pure designations, as is the practice in most other
surveys.

In BPOs, the higher you go, the more is the
hike. While most are expected to have a lower hike in the next twelve
months, CEOs/senior executives will actually have a sharper hike
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This, then, ensures that a corresponding designation in a small company or
large company, or in multiple organizations in different sectors/sub-sectors, or
in a specialist role and in a managerial role are compared in a way that does
not compare apples to oranges, even though the designations may be same. The Hay
Reference Levels are assigned through a job mapping exercise that was conducted
by Hay consultants in client sites in consultation with the respective HR teams.

For the purpose of easier presentation, the results are clubbed into five
bracketsclerical/operations, supervisory/junior professional, middle
management/seasoned professional, senior management and executives.

Definitions
Base Salary

Base Salary is the sum of basic payments and fixed payments. Basic
payments include basic salary and dearness allowance. City compensatory
allowance is a fixed payment.

Total Near Cash Payments

Total Near Cash Payments paid are annualized payments used where a
guaranteed cash payment has been agreed for work performed and for the sole
reason of employee tax optimization an employee is allowed to put a certain
amount of money against a nominal benefit; nominal because there is no
obligation to actually use the money for the purchase of the benefit. Near
Cash Payments include allowances such as conveyance, car, house rent,
medical, leave travel, uniform, business entertainment, books and
periodicals.

Guaranteed Cash

Sum of Base Salary and Total near Cash Payments

Total Short Term Variable Payment

Total Short Term Variable Payments are the actual award amounts paid
during the most recent 12 month period that are contingent on discretion,
performance or results achieved. The full year award is included even where
part of the payment is deferred for a period of time. Short Term Variable
Payments include both company and individual performance-based bonus
payments.

Total Cash

Sum of Guaranteed Cash and Total Short Term Variable Payments

Total Benefits

Total Benefits includes benefits like company car, driver allowance,
company housing, club membership, provident fund, superannuation, gratuity,
healthcare/life and personal accident insurance, telephones, loans (car,
housing and personal), soft furnishing allowance etc.

Fixed Remuneration

Sum of Guaranteed Cash and Total Benefits

Total Remuneration Sum of Total Fixed Remuneration and Total Short Term
Variable Payments.
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While base salary shows stability, overall
guaranteed cash will show a steeper hike. This means near cash payments like
conveyance, medical, LTA and such other reimbursements are becoming a higher
component of the salary.
Recommendations
  • Re-look at the compensation structure to allocate more towards
    benefits and short term variable pay going forward, especially at the
    junior and middle management levels.
  • Plan a more robust long term incentive system to retain employees and
    drive performance. These would include incentives such as ESOPS, Deferred
    and Retention Bonus. This can have a long-term implication in attracting
    and retaining talent.
  • Adopting other retention schemes apart from competitive pay and
    benefits such as an open two way communication, promotion of team based
    culture and a transparent performance management system. A focus on
    providing various opportunities to employees such as career planning, job
    rotation and enrichment, international and local mobility and clarity of
    roles and responsibilities.
  • Conduct an Employee Engaged Performance Study, which is designed to
    identify the degree of engagement amongst the employees. This study
    focuses on various aspects such as Internal Effectiveness, Quality of
    Work/ Job Enablement and Fairness & Reward.
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Extracted with permission from Hay Groups Special Compensation Benchmarking
Study July 2008

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