Planning Compensation Strategy for 2011

SYMBIOSIS INSTITUTE OF MANAGEMENT
STUDIES
Compensation Strategy for 2011
DISSERTATION
Submitted By: Tanvi Garg

Roll No 61
HR- Batch 2009-2011
PRN: 09020441225
Submission Date: 31st Jan’ 2011

Dissertation
Compensation Strategy For 2011
ACKNOWLEDGEMENT
I take this opportunity to extend my gratitude to everyone who was involved with this
Project at various stages
I am extremely grateful to my project guide, Mr. Vinit Sharma, for his support,
encouragement and guidance. It was a good learning experience working with him.
I extend my warm gratitude to the corporate & HR professionals for their valuable inputs,
support & encouragement during the project.
Tanvi Garg
Roll No. 61
HR Core
Batch 2009-2011
SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

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INDEX
S.No. Topic Page No.

1 Abstract 4
2 Introduction 5
3 Literature review: 7
3.1 Components of a compensation System 7
3.2 Different types of compensation 8
3.3 Current Trends in India 11
4 Research Methodology 13
5 Data Collection on the Critical Planning Questions (Primary 15
& Secondary)
6 Data Analysis & Findings 23
6.1 Compensation practices that are followed in industries 23
6.2 Analysis on the critical compensation planning questions. 26
6.3 Findings- How to plan the compensation strategy for 2011 31
6.4 Examples of Compensation aligned with Business Strategy 33
7 Recommendations 35

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Economists at the National Bureau of Economic Research (NBER) decided that June 2009
marked the end of the Great Recession, putting us over a year into the economic recovery.
When it comes to setting compensation strategy for next year, one equally powerful
message throughout all regions shines through: Talent reigns supreme. Now in order to
determine a Plan for compensation strategy of 2011 and to remaining globally competitive,
Organizations are focusing on engaging key talent through thoughtful spending – a back-to-
basics approach, if you will – to quickly spur growth and gain a competitive advantage.
Many, however, are struggling with decisions about where to invest – whether to focus more
on base pay, funding the incentive pool, or training and career planning programs.
Five critical planning questions for 2010:

1. What is the current mindset regarding base pay increases for 2011?
In countries that were more affected by the economic downturn, organizations are weighing
restraint regarding base salary increases against playing “catch-up” after a year or two of
frozen salaries. Yet, in both situations, employers are concerned about retaining talent and
the tug of war between cash, career programs and retention.
2. What is the status of pay for performance?

For many organizations, paying for performance is easier said than done. The many
roadblocks in place include cultural (more focus on the team), financial (not enough funding
of the pool), target setting (defining performance parameters) and pay equity.
3. How are companies managing employee expectations for 2011?

What and how are employers communicating about their compensation programs these days?
For the most part, the channels of communication are as diverse as the messages, which
include discussion of the business situation, total rewards concepts, career development, job
mobility opportunities and pay for performance.
4. How are employers incentivizing and engaging high-potential employees?

As they say, cash is king – at least in areas that have been least affected by the economic
downturn – for companies able to play “catch-up” and for workforce segments offering high-
growth potential for their companies.
5. Where will employers place their compensation investment bets in 2011?
Ensuring that people resources are optimized is a top priority for many organizations around
the world. In response, talent development is receiving careful and direct investments,
including training and career planning, and infrastructure – that is, processes to ensure
equitable pay, track return on investment, and assist line managers with decision making and
employee conversations regarding remuneration.

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How do we Plan a compensation strategy 2011 and how to remaining globally competitive.
Analysis of the latest compensation trends Our objective is to understand how does the
compensation program aligns with current business strategy, how can we make it affordable
and sustainable , to what extent does it drives productivity & engages key talent and
minimizing the chance for pay inequity.
“The risk of losing key employees is top of mind as the economy recovers and certain labor
markets improve. And while non-monetary awards such as career development and training
are effective in retaining employees, employers realize that top-performing employees are
loathe to going another year without an increase in pay. Investments in both cash and non-
cash solutions will have a significant impact on avoiding post-recessionary flight.”
Compensation
"If you pick the right people and give them the opportunity to spread their wings - and put
compensation and rewards as a carrier behind it - you almost don't have to manage them."
Compensation is a systematic approach to providing monetary value to employees in

exchange for work performed. Compensation may achieve several purposes assisting in
recruitment, job performance, and job satisfaction.
Compensation is a tool used by management for a variety of purposes to further the existence
of the company. Compensation may be adjusted according the business needs, goals, and
available resources.
Compensation may be used to:
• Recruit and retain qualified employees.
• Increase or maintain morale/satisfaction.
• Reward and encourage peak performance.
• Achieve internal and external equity.
• Reduce turnover and encourage company loyalty.
• Modify (through negotiations) practices of unions.

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Recruitment and retention of qualified employees is a common goal shared by many

employers. To some extent, the availability and cost of qualified applicants for open
positions is determined by market factors beyond the control of the employer. While an
employer may set compensation levels for new hires and advertise those salary ranges, it
does so in the context of other employers seeking to hire from the same applicant pool.
Morale and job satisfaction are affected by compensation. Often there is a balance
(equity) that must be reached between the monetary values, the employer is willing to pay
and the sentiments of worth felt be the employee. In an attempt to save money, employers
may opt to freeze salaries or salary levels at the expense of satisfaction and morale.
Conversely, an employer wishing to reduce employee turnover may seek to increase salaries
and salary levels.
Compensation may also be used as a reward for exceptional job performance. Examples of
such plans include: bonuses, commissions, stock, profit sharing, gain sharing.

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What are the components of a compensation system?
Compensation will be perceived by employees as fair if based on systematic components.

Various compensation systems have developed to determine the value of positions. These
systems utilize many similar components including job descriptions, salary
ranges/structures, and written procedures.
The components of a compensation system include:
• Job Descriptions: A critical component of both compensation and selection systems,
job descriptions define in writing the responsibilities, requirements, functions, duties,
location, environment, conditions, and other aspects of jobs. Descriptions may be
developed for jobs individually or for entire job families.
• Job Analysis: The process of analyzing jobs from which job descriptions are
developed. Job analysis techniques include the use of interviews, questionnaires, and
observation.
• Job Evaluation: A system for comparing jobs for the purpose of determining
appropriate compensation levels for individual jobs or job elements. There are four
main techniques: Ranking, Classification, Factor Comparison, and Point Method.
• Pay Structures: Useful for standardizing compensation practices. Most pay structures
include several grades with each grade containing a minimum salary/wage and either
step increments or grade range. Step increments are common with union positions
where the pay for each job is pre-determined through collective bargaining.
• Salary Surveys: Collections of salary and market data. May include average salaries,
inflation indicators, cost of living indicators, salary budget averages. Companies may
purchase results of surveys conducted by survey vendors or may conduct their own
salary surveys. When purchasing the results of salary surveys conducted by other
vendors, note that surveys may be conducted within a specific industry or across
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industries as well as within one geographical region or across different geographical

regions. Know which industry or geographic location the salary results pertain to
before comparing the results to your company.
• Policies and Regulations
What are different types of compensation?
Compensation has become a far more complicated issue than just deciding how much to pay
your employees. In addition to salary, employers must consider many other components —
401(k) plans, stock options, bonuses and vacation — that have become part of compensation
packages today.
Employees also have greater expectations of what should be included in their compensation
packages, and they may demand specific benefits that can be costly for small businesses.
Costly or not, building a fair and attractive compensation packages is critical for attracting
and retaining employees. When setting up your compensation package, consider the
following components:
a) Basic wages/Salaries:-
These refer to the cash component of the wage structure based on which other elements of
compensation may be structured. It is normally a fixed amount which is subject to changes
based on annual increments or subject to periodical pay hikes. Wages represent hourly rates
of pay, and salary refers to the monthly rate of pay, irrespective of the number of hours put in
by the employee. Wages and salaries are subject to the annual increments. They differ from
employee to employee, and depend upon the nature of job, seniority, and merit.
b) Dearness allowance:-
The payment of dearness allowance facilitates employees and workers to face the price
increase or inflation of prices of goods and services consumed by him. The onslaught of
price increase has a major bearing on the living conditions of the labour. The increasing
prices reduce the compensation to nothing and the money’s worth is coming down based on
the level of inflation. The payment of dearness allowance, which may be a fixed percentage
on the basic wage, enables the employees to face the increasing prices.
c) Incentives:-
Incentives are paid in addition to wages and salaries and are also called ‘payments by
results’. Incentives depend upon productivity, sales, profit, or cost reduction efforts. There
are: (a) Individual incentive schemes, and (b) Group incentive programmes. Individual
incentives are applicable to specific employee performance. Where a given task demands
group efforts for completion, incentives are paid to the group as a whole. The amount is later
divided among group members on an equitable basis.
d) Bonus:-
The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid
annually or in proportion to the profitability. The Government also prescribes a minimum
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statutory bonus for all employees and workers. There is also a bonus plan which
compensates the Managers and employees based on the sales revenue or Profit margin
achieved. Bonus plans can also be based on piece wages but depends upon the productivity
of labour.
e) Non-monetary benefits:-
These benefits give psychological satisfaction to employees even when financial benefit is
not available. Such benefits are: (a) Recognition of merit through certificate, etc. (b) Offering
challenging job responsibilities, (c) Promoting growth prospects, (d) Comfortable working
conditions, (e) Competent supervision, and (f) Job sharing and flexi-time.
f) Commissions:-
Commission to Managers and employees may be based on the sales revenue or profits of the
company. It is always a fixed percentage on the target achieved. For taxation purposes,
commission is again a taxable component of compensation.The payment of commission as a
component of commission is practised heavily on target based sales. Depending upon the
targets achieved, companies may pay a commission on a monthly or periodical basis.
g) Mixed plans:-
Companies may also pay employees and others a combination of pay as well as
commissions. This plan is called combination or mixed plan. Apart from the salaries paid,
the employees may be eligible for a fixed percentage of commission upon achievement of
fixed target of sales or profits or Performance objectives. Nowadays, most of the corporate
sector is following this practice. This is also termed as variable component of compensation.
h) Piece rate wages:-

Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for
each of the Quantity produced by them. The gross earnings of the labour would be equivalent
to number of goods produced by them. Piece rate wages improves productivity and is an
absolute measurement of productivity to wage structure. The fairness of compensation is
totally based on the productivity and not by other qualitative factors.
i) Fringe benefits:-
Fringe benefits may be defined as wide range of benefits and services that employees receive
as an integral part of their total compensation package. They are based on critical job factors
and performance. Fringe benefits constitute indirect compensation as they are usually
extended as a condition of employment and not directly related to performance of concerned
employee. Fringe benefits are supplements to regular wages received by the workers at a cost
of employers. They include benefits such as paid vacation, pension, health and insurance
plans, etc. Such benefits are computable in terms of money and the amount of benefit is
generally not predetermined. The purpose of fringe benefits is to retain efficient and capable
people in the organisation over a long period. They foster loyalty and acts as a security base
for the employees.

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j) Profit Sharing: –
Profit-sharing is regarded as a steppingstone to industrial democracy. Profit-sharing is an
agreement by which employees receive a share, fixed in advance of the profits. Profit-sharing
usually involves the determination of an organisation’s profit at the end of the fiscal year and
the distribution of a percentage of the profits to the workers qualified to share in the earnings.
The percentage to be shared by the workers is often predetermined at the beginning of the
work period and IS often communicated to the workers so that they have some knowledge of
their potential gains. To enable the workers to participate in profit-sharing, they are required
to work for certain number of years and develop some seniority. The theory behind profit-
sharing is that management feels its workers will fulfill their responsibilities more diligently
if they realise that their efforts may result in higher profits, which will be returned to the
workers through profit-sharing.
k) Long-term incentives:-
Stock options or stock grants not only provide long-term incentives to employees, but they
can also help retain valuable team members through your organization's crucial start-up
phase.
l) Health insurance:-
Employer-sponsored health insurance is fairly standard among medium-size companies.
And it's a benefit that has great value to employees. An employer-sponsored plan saves
employees money and gives them peace of mind in knowing that they won't be denied
coverage, even if they have existing health problems.
If you think you can't afford it, think again. Providing insurance to your employees sends the
message that you care about their health and the health of their families. To minimize costs,
consider having employees pick up part of the tab. Employees who have coverage through a
spouse may want to opt out of a plan, particularly if there's a cost associated with it.
m) Life and/or disability insurance:-
This is also a benefit that usually costs less when it's purchased by an employer rather than
an individual.
n) Retirement plans.
401(k) plans have become popular because they are relatively easy to administer and are less
expensive than traditional pension plans. Many employees like these plans because they
maintain some control over the amount of their contribution and how the money is invested.
Most small companies try to put some kind of savings or 401(k) plan in place, even if they
don't contribute money to them.
o) Time off and flexible schedules.
This includes holidays, vacations, sick days and personal days. An employer unable to offer
competitive salaries may close part of the gap by offering more time off or flexible work
hours. Some employers make no distinction between sick, vacation and personal days and
allow employees a set number of days off each year to be used at their discretion. This
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prevents employees from abusing sick days and keeps employees from feeling that they need
to lie when a child is ill or a personal emergency arises.
p) Miscellaneous compensation.
Other forms of compensation to consider include employee assistance programs, which can
provide everything from psychological counselling to legal assistance; discounts on company
products; use of company cars; and any other incentives that motivate employees and give
your company a competitive advantage.
Compensation package of a top executive

The total compensation package of a top executive will generally have some Combination of
the following components: base salary, short-term bonus based on Performance over the past
twelve months, long-term bonus based on performance over the past 3-5 years, stock options
(qualified and/or non-qualified), restricted stock, stock purchase and profit sharing.
Everything in addition to base salary is not typical of what the average worker receives, and
each item should be examined in dividable. On op of the above there will also be a pension,
all the usual insurance (health, dental, disability, life) and special fringe benefits ranging
from tax preparation to country club membership. Any practicing economist who has ever
dealt with the compensation package of a highly paid executive will have an understanding
of the complexities involved in valuation, compared to a normal wage earner.
Compensation trends in India
India’s transition to a market driven economy began in 1991 with the introduction of
liberalization (pro-market economic reforms). Prior to 1991, the Government was (and still
is) the biggest employer and job creator, accounting for over 85% of post-matriculation
(High School) jobs. Pay was largely determined by high-level agreements between employee
unions and the Government and was largely guaranteed in nature. A similar situation was
prevalent in the private sector, where Government pay scales were often used as a benchmark
in fixing and revising pay. Compensation packages were low on cash and high on fringe
benefits such as accommodation, cars, and subsidized loans. Variable pay was largely
restricted to top and senior management in few private sector enterprises. Grading systems
were largely industry-wide and salary progression was purely determined by length of
service.
CURRENT TRENDS
Productivity gains, fast growth in real wages, a booming but extremely competitive economy
(GDP growth of 8.5%), simplification of tax rules and emergence of knowledge-based
industries such as Information Technology & Outsourcing Services, Healthcare etc are key
factors that have influenced compensation in India post liberalization. Compensation is now
characterized by a Total Cost of Employment approach, a rapid movement to flexible
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benefits, and increasing levels of variable pay (variable pay now forms about 7% - 35% of
fixed pay). Grade structures have become organization specific and salary progression is
driven by market forces and individual performance. Average salary increases over 2010-
011 is estimated to be ranged from 10% - 15%. While most organizations benchmark
compensation nationally within a select group of competitors, a few organizations are
beginning to benchmark themselves internationally at senior management levels. India has
the fastest compensation increase rate in the Asian region at 11.7% and it also has the highest
labor turnover in the region.
Companies are practicing certain schemes that require the use of fair values of the share
options or shares for the recognition of the compensation expense over the vesting period.
As in latest trend the company grants employees the right to subscribe for new shares in the
company at a fixed price. As far as the Share Option Scheme is considered the employees are
required to pay the company the exercise price in consideration for the shares. Employees
can generally only exercise the right after remaining in service with the company for a
period of time and/or after meeting certain performance targets. The right would generally
expire after a period of 5 to 10 years from the date of the grant. Performance share scheme is
another trend that is followed by the companies as the compensation strategy.
The company grants employees shares in the company. Employees will generally receive the
shares, at no cost, after remaining in service with the company for a period of time and/or
after meeting certain performance targets. Share Appreciation Rights: Similar to the share
option scheme except that ,Upon exercise of the option, the employees do not pay the
exercise price to the company nor receive the shares; instead, they are paid the difference
between the exercise price and the market price of the shares in cash.
Particularly in an entrepreneurial, market-driven company, the compensation philosophy
needs to include a method for grouping similar jobs for purposes of broad banding, since
promotional opportunities are limited.

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Compensation planning 2011
The global recession is morphing into a global recovery – some countries are already there
while others are cautiously optimistic. When it comes to setting compensation strategy for
next year, one equally powerful message throughout all regions shines through: Talent reigns
supreme.
Around the world, organizations are focused on engaging key talent through thoughtful
spending – a back-to-basics approach, if you will – to quickly spur growth and gain a
competitive advantage. Many, however, are struggling with decisions about where to invest –
whether to focus more on base pay, funding the incentive pool, or training and career
planning programs.
To help you with planning a 2011 compensation strategy and remaining globally
competitive, I asked HR professionals around the Country to provide data and insight into
compensation trends. With objective to know how to design and implement a compensation
program that aligns with current business strategy, is affordable and sustainable, drives
productivity, engages key talent and minimizes the chance for pay inequity.
Five critical planning questions for 2010

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2. What is the status of pay for performance?

Methodology:
1) Primary Research:
-Interviews: Have conducted interviews with the HR Professionals for various
companies of Information & Technology Industry & of Manufacturing Industry.
Number of companies contacted was five in number. The identity of those HR
professionals & companies are kept confidential due to the certain policies and
procedures.
2) Secondary Research:
-E-Research
• http://www.paycheck.in/main/work-and-pay/paycheck-articles-
archives/job-recruitments-and-pay-hikes-to-boom-in-india-in-2011
• http://www.forum4finance.com/2010/03/26/12-salary-hike-by-india-
inc%E2%80%99s-in-2010-11/
• http://www.gscurrentaffairs.com/attrition-rate-may-go-up-25-in-2011-
with-hefty-hikes/
• http://www.complianceweek.com/survey-shows-whats-on-tap-for-pay-
plans-in-2011/article/191905/
• http://www.accountants.org.sg/press_detail.asp?id=617
• http://www.2sbdigest.com/Employee-Confidence-Rose-in-Q3
-Journals & Magazines

• Human Capital
• Human Factor
• HRM Review
-Books
• Compensation by George Milkovich and Jerry Newman.
• Compensation Management in a Knowledge Based World by Richard
I. Henderson

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PRIMARY DATA:
Around the world, generally speaking, the mindset is cautious optimism. Still, there is a
growing reluctance in some Manufacturing Industry and the Start-ups to sustain double-digit
base pay annual increases. In countries that were more affected by the economic downturn,
organizations are weighing restraint regarding base salary increases against playing “catch-
up” after a year or two of frozen salaries. Yet, in both situations, employers are concerned
about retaining talent and the tug of war between cash, career programs and retention.

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Company 1:
Industry Type: Information Technology
Interviewed: HR Professional
Answer: We want to ensure that our company continues to attract, retain
and motivate high-performing people. As such, we offer a cash
compensation structure that will recognise your specific skills and
business expertise. After all, they allow us to deliver best-of-class
solutions for our clients. Our compensation structure takes different forms
to reflect individual performance levels. It includes Base Pay, Fixed
Bonuses, Allowances, or Other Payments relevant to the local market. We
ensure that we pay our employees are paid competitively within the
market. Therefore increasing the base pay will definitely take place. It is
expected to be between 10-17%. The boom is expected to pervade
throughout the services sector, and this sector is already contributing
almost two-thirds to India’s GDP as of now.
Company 2:
Press Release
Answer: Hiring and retaining engineering and project management staff
to address rising demand is the top worry for the companies, which saw
employee attrition rise to 14.1% during the September quarter, despite
giving an average wage hike of 10% six months ago.
“If I want to retain one of the project managers involved in delivering $50-100 million
project, and that account has potential to grow much bigger, even 20-25% hike is not a bad
idea,” the CEO quoted above said.
Company 3:
Industry Type: Manufacturing
Answer: However, it appears that in 2011 the Indian corporate sector is
all geared up to hire and pay more aggressively in order to attract the
best talent and build global competitiveness. Definitely, there would be
salary hike in this sector. Our company we are expecting it to be around
15 %. The auto, manufacturing and pharma are the hottest sectors of
2011 which will see an average hike of 13 percent.
Sub Question: Do you consider CPI?
Answer: Yes, we calculate Dearness Allowance using CPI, as the Industrial workers (Blue
Collar Employees) are largely effected by the Inflations among the other grades of
employees. Thus we do include it.
Company 4:
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Answer: Companies are more concerned in retaining their employees but the focus will be
more on increasing the variable pay- P4P rather than the base pay , as our’s is a new
company we want aggressiveness in the performance of the employees thus meeting the
goals and objectives of the Company. We believe more in the benefits as a tool being given
to the employees for retaining them. There would be normal hike as far as base pay is
concerned. But the variable pay and benefits will be given more. We are still conservatively
recovering from the economic downturn.
Secondary Research
• Double-digit salary hikes and ESOPs are back in 2011 in a big way, which had taken
a beating in the last few years across many industries such as hospitality, aviation and
manufacturing industries, in addition to the IT industry.
• Double-digit salary hike is set to become the norm.” In 2010, the IT industry in India
hired around 80,000 new employees. This number is set to exceed 200,000 in 2011.
• India Inc may give salary hikes in the range of 9-12 per cent in the coming financial
year to retain talent amid revival in the job market, according to consultancy Ernst
and Young said.
• Human Resource managers are devising ways to retain talent next year that will see
companies paying annual increments up to 30%. The average attrition in 2010 was
10% across Indian companies, a rate that may rise to 25% in 2011-12 with improved
salaries.
• Employees treat a 10% pay rise as satisfactory and call it a boom year when salaries
jump by 30%. Indian companies are forecast to grow 9% and salaried class expects
higher increments during 2011-12.
Source:
a) http://www.paycheck.in/main/work-and-pay/paycheck-articles-archives/job-
recruitments-and-pay-hikes-to-boom-in-india-in-2011
b) http://www.forum4finance.com/2010/03/26/12-salary-hike-by-india-inc
%E2%80%99s-in-2010-11/
c) http://www.gscurrentaffairs.com/attrition-rate-may-go-up-25-in-2011-with-hefty-
hikes/
Q2. What is the status of pay for performance?
Company 1:
Answer: Company definitely has plans to provide the high amount of variable pay.
Somewhere around 150%
Company 2:

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Answer: We are expecting variable pay component to be more than100% with other
incentives and benefits.
Company 3:
Answer: We are expecting variable pay component to be maximum 140%. While our
minimum is 0%. It totally depends on how the employee performs.
Company 4:
Industry Type: Information technology
Answer: We are really being competitive with 200% as variable pay component.
Company 5:
Industry Type: Retail
Answer: Would be offering high variable component up to 150%, we also offer other
related performance incentives which have been proved as biggest retention plan for us. We
Give this in the end of the financial year thus employee make sure that he/she stays with us
till the end of the year, thus engaging him for more months meanwhile we have done our
ROI.
Secondary Research:
With investor advisory votes looming, executive compensation strategy and philosophy, pay-
for-performance relationships and compensation-related risk are at the top of the list of pay
topics companies are reviewing in 2011, according to the latest survey by compensation
consulting firm Pearl Meyer & Partners.
"All companies are a doing a much more rigorous analysis on their pay-for-performance
analysis in particular,"
Some of the biggest changes to pay plans in 2011 are expected in long-term incentive plans,
according to the survey of 279 executive officers, board members and human resources
professionals.
Companies are shifting their LTIPs, which typically make up the bulk of executive pay in
most industries, more toward performance-based shares and continuing to migrate away from
stock options. Those programs are expected to account for 47 percent of executive incentive
values in 2011, up from 37 percent in 2009. Meanwhile, use of "plain vanilla" options and
stock appreciation rights is expected to drop to 24 percent of award value in 2011, down
from 34 percent in 2009.

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In addition to a performance angle, performance-based restricted stock reduces compensation

risk better and offers lower dilution than options. However, Heim says companies "need to
have strong goal setting processes to ensure the right level of performance is being
rewarded."
Companies are also increasing performance targets linked to incentive payouts. For fiscal
2010, 44 percent of respondents said their company increased fiscal 2010 performance
hurdles from a year earlier, and 41 percent expect to raise the bar again in fiscal 2011.
More than half (54 percent) project "above target" payout levels. Among lower performing
companies, 81 percent plan a bonus payout, while only 35 percent expect "above target"
payouts. Strong performers use more performance-based awards, such as tying payouts to
meeting multi-year goals, or vesting option or restricted share awards only upon achievement
of specific performance objectives. For strong performers, such awards will account for 45
percent of expected fiscal 2011 long-term incentive value, compared to 26 percent for poor
performers.
Source:
a) http://www.complianceweek.com/survey-shows-whats-on-tap-for-pay-plans-in-
2011/article/191905/
Company 1:
Answer: We are providing them better work options, Promotions are what we planning to
give at large extent. In press release we have mentioned that we are expecting 30%
promotions to happen especially at mid level management.
Company 2:
Answer: Since competitors are aggressively trying to attract the talent pool, we have a
pressure on providing the promotions (Vertical Movement) and job mobility in terms of
horizontal movement i.e. Job rotation as well. We have communicated to our employees
about their career development program which has been initiated at our level.
Company 3:
Answer: What employees look for is the place where he can have great learning & growth
opportunities; hence we are mainly focusing on training & development. We engage them for
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some fixed time period which provides them that learning environment and we are able to
retain that talent for some more duration.
We have certain policies, where we send the employees for the onsite experience working
with client directly, thus in turn they have to serve company for at least compulsory six
months after onsite trip.
Company 4:
Answer: Employees have an expectation of better job profile thus providing them the
promotions and investing on their trainings. We are also doing our succession planning
which shows employee there scope of growth.
Secondary Research
• “Another key factor in talent retention is flexible working conditions. In today’s
world, employees look for employers that enable them to balance their work
responsibilities, alongside their personal and family needs. Hence, work-life harmony
is a strategic business tool that will be increasingly vital to the attraction, retention
and development of talent at the workplace. Employers can look at having pro-family
measures such as family and paternity leave as well as family health insurance as part
of their talent retention strategy”.
• Employment Confidence Survey :

Employee confidence rose in the third quarter, but along with it rose employee
expectations of a significant rise in costly rehiring and benefits when the recession
abates, an important survey shows.
The Q3 Glassdoor.com Employment Confidence Survey of 1,195 employees was

conducted by Harris Interactive.
The survey indicates a significant number of employees believe the worst of the
economic crisis is over, as several important measures of employee confidence
appear to be rising.
In the third quarter, employees reported fewer layoffs and actions that reduced
employee compensation at their companies than in the prior two quarters, and
employees indicated high rates of confidence and optimism related to future layoffs,
pay and bonuses, company outlook and their ability to get hired or rehired. Should the
economy and unemployment rates return to prerecession levels, employees indicate
their expectations represent far more than the status quo, which could have significant
implications for company bottom lines, employee morale and turnover.
Specifically, of the employees surveyed:

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* 57% expect a raise, bonus and/or promotion

* 35% expect hiring freeze to be lifted and/or more employees to be hired in their
department
* 24% expect health benefits and perks that were previously reduced to be restored
* 19% expect to look for a new job
The quarterly survey measures four key indicators of employee confidence in the
areas of job security, salary expectations, rehire probability and company outlook. In
addition, the survey tracks recent employer actions, as well as the concessions
employees are willing to take to keep their jobs.
Here are highlights for the third-quarter survey:
Employer Actions: Reports of layoffs and pay reductions subside amid more forced
leave and cuts in perks.
Slightly more than half (51%) of employees report their company made changes to
the number of staff, organizational structure, compensation and benefits, or other
perks over the past six months, which was down three points from Q2. Of those
reporting these changes, 54% said their company laid off or communicated plans to
lay off employees, down from 58% in Q2, while 55% said their company changed or
reduced compensation, down from 60% in Q2. Nearly one in three (30%) said their
individual pay and/or bonus was reduced or eliminated in the past six months, down
slightly from 31% in Q2. More employees in Q3 said their companies initiated
furloughs, unpaid leave or mandatory vacations (23%) up from 18% in Q2; and, 22%
reported a reduction in perks, such as commuter subsidy, up from 16% in Q2.
Job Security: Layoff concerns edge down overall but highest among men, especially
baby boomers.
Fewer employees report concerns they could be laid off in the next six months (22%)
than seen in Q2 (24%) and Q1 (26%). Layoff concern among men is considerably
higher (26%) than women (17%), especially among male baby boomers, 45-54,
(30%), whereas younger females, 18-34, have the lowest concerns (10%). The gender
divide carries through to concerns about co-workers as well: while 38% of employees
report concerns that employees other than themselves could be laid off in the next six
months, among men this is 42%, compared with 34% for women.
Salary and Bonus Expectation: One in three expect a pay raise; more than half of
those eligible expect a bonus.
One in three (33%) employees said they expect a pay raise or cost-of-living increase
in the next 12 months, up slightly from Q2 (32%), while 49% don't. Those in the
Northeast continue to exhibit the greatest optimism here where 40% of employees say
they expect a pay increase as compared to the West (29%), Midwest (34%) and South
(31%). More-mature workers (55-plus) have the lowest expectations for pay raises, as
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only 25% expect an increase, compared with 38% of those 35-44. In terms of bonus,
nearly seven in 10 (66%) employees report they are bonus-eligible and, of these,
more than three in five (62%) expect a bonus while 34% don't. Of those who are
bonus-eligible, 11% expect to get more than their last bonus, 28% expect to receive
the same, and 14% expect less. Bonus expectations have edged up since Q4 2008,
when 57% of those eligible said they expected a bonus and 40% didn't.
Company Outlook: Nine in 10 believe their company's outlook will stay the same or
get better in next six months.
Employees' outlook for their company has improved considerably over the past two
quarters. Only one in 10 expect their company's outlook to get worse in the next six
months, while 44% expect it to get better, and 47% expect it will remain stable. By
comparison, 35% expected their company performance to get better in Q1, which
edged up to 39% in Q2. Optimism is highest among younger workers ages 18-34,
with 50% expecting their company's performance to get better compared to 34% of
those 55-plus.
Re-Hire Probability: Employees and jobseekers more confident in ability to get new
job.
If they were to lose their job, 44% of employees (including those self-employed)
believe they could find one matched to their experience and compensation level in the
next six months, up from 39% in the prior two quarters. However, 27% think it's
unlikely and 29% are uncertain. For those who are not employed but currently
looking for work, optimism is lower but up from last quarter. Of these jobseekers,
nearly one-third (32%) think it is likely they will be employed in six months in a job
matched to their experience and compensation level, and 27% think it is unlikely. By
comparison, in the previous quarter more job-seekers thought that getting hired
within six months was unlikely (37%) than likely (25%). However, older employees,
55-plus, including those self-employed, think it is unlikely (41%) versus likely
(31%), while the inverse is true for younger employees (including self-employed),
18-34. More than half (51%) of the younger group think it is likely they would find a
job, while just 20% say it is unlikely.
Source:
a) http://www.accountants.org.sg/press_detail.asp?id=617
b) http://www.2sbdigest.com/Employee-Confidence-Rose-in-Q3
Company 1:

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Answer: The risk of losing key employees is top of mind as the economy recovers and
certain labour markets improve. And while non-monetary awards such as career development
and training are effective in retaining employees, employers realize that top-performing
employees may resent going another year without a pay increase. Companies would do well
to balance all levers of total rewards and deliver holistic value propositions to their
employees.
Company 2:
Answer: Companies are incentivizing and engaging high-potential employees mainly
through non-monetary measures, such as training and career opportunities. Overseas
assignments can be an effective way to develop global leaders, who are scarce resources, to
achieve a company’s global strategies.
Company 3:
Answer: Cash, such as retention and deferred bonuses, is first. Also popular are career
planning, including job rotation and leadership development programs, and supplemental
medical and pension plans; other benefits, such as education and car benefits, are also on the
rise.
Company 4:
Answer: For much of India, cash remains king. There will be a strong focus on the overall
value proposition to support retention, and high potentials will be the subject of increasingly
targeted strategies.
Company 1:
Answer: Organizations, are funding leadership and talent development, and more are
beginning to show interest in flex benefits and employee annuities (supplemental pension
plans).
Company 2:

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Dissertation
Answer: Companies are focusing on acquiring management talent for overseas operations.
They are also investing more in leadership development for selected high-potential
employees.
Company 3:
Answer: In this industry, it looks like the use of salary increases is back. However, company
will remain cautious about this investment, wisely focusing on salary increases as well as
short- and long-term incentives for top performers and critical workforce segments.
COMPENSATION & BENEFIT PRACTICES THAT ARE FOLLOWED

COMMONLY ACROSS ALL INDUSTRIES:
Employee Benefits
Benefit Plan Costs Flexible Benefit Plans
Health Care Plans Disability Benefit Plans
(PPO, POS, HMO, HSA) Group Life & AD&D Insurance Plans
Dental Care Plans Benefits for Part-Time Employees
Retirement Plans Domestic Partner Benefits
Retention Bonuses Paid-Time Off (PTO)
Referral Bonuses
Benefit Plan Costs Health Care Plans (PPO, HMO, HSA Qualified Health
POS) Plans
• Benefit Costs as
• Monthly Premiums • Impact on Other
Percent of Payroll
○ Premium Cost Healthcare Options
○ Medical,
• Monthly Premium
Dental, Vision, ○ Percent of Premiums
Costs
Disability, Paid by Company
Life, AD&D • Percent of
• Deductibles
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Dissertation
Plans ○ Percent of Plans Premiums Paid by

○ Retirement with Deductibles Company
Plans ○ Annual Deductible • Annual
Amounts Deductibles
• Benefits Costs as a
Monthly Amount Per • Coinsurance • Out-of-Pocket
Employee Maximums (OOP)
○ Percent of Expense
○ Medical, Covered by Plan • Lifetime
Dental, Vision, Reimbursement
• Out-of-Pocket Maximums
Disability, Limits
(OOP)
Life, AD&D • Prescription
Plans ○ Percent of Plans
Expense Coverage
with OOP
○ Retirement • Company
Maximums
Plans Contributions
○ Annual OOP
Amounts
• Lifetime Reimbursement
Limits
○ Percent of Plans
with Lifetime Limits
• Office Visit and
Prescription Co-Payments
• Domestic Partner Medical
Benefits
Retirement Plans Flexible Benefit Plans Dental Care Plans

• Types of Retirement • Premium • Types of Dental
Plans Available to Conversion/Premium Only Plans Offered
Employees Plan (POP) • Timing of
○ Defined • Unreimbursed Medical Employee
Benefit Plan Expenses (UME) Eligibility to Enroll
○ 401(k) • Dependent Child Care • Expenses Covered
Expenses (DCC) • Costs of Monthly
○ Simple-IRA
• Dependent Adult Care Premiums
○ Profit Sharing
Expenses (DAC) • Percent of Monthly
Plan
• Adoption Assistance Premium Paid by

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Dissertation
○ ESOP Expenses (AAE) Company

○ SEP-IRA • Cafeteria Plan • Deductibles and
• Transportation Benefit Plan Co-Insurance
○ Salary
Reduction SEP • Out-of-Pocket
(OOP) Maximums
• Eligibility
Requirements • Orthodontic
Expense Coverage
• When do Employee
Contributions Fully • Orthodontic
Vest Reimbursement
Limits
• Retirement Plan Costs
○ as a Percentage
of Payroll
○ per Employee
• 401(k) Matching
Policy
Disability Benefit Plans Group Life & AD&D Insurance Benefits for Part-Time
(Short- and Long-Term) Plans Employees
• Who Pays the • Group Life Plans • Benefits Available
Premium ○ Benefit Amounts • Work
• Eligibility for Requirements for
○ Cost Coverage
Disability Benefits Eligibility
○ Supplemental Life
• Waiting Periods • Covering the Costs
Insurance
• Duration of Plans
• Accidental Death &
• Setting Amount of Dismemberment (AD&D)
Disability Benefits Insurance
• Disability Payouts ○ Benefit Amounts
Domestic Partner Benefits Paid-Time Off Policies Retention Bonuses

• Domestic Partner • Number of Days Paid Time • Retention Bonus
Healthcare Benefits: Off Provided by Type of Eligibility by
Coverage Day: Employee Type
• Eligibility ○ Holidays and Level

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Dissertation
Requirements ○ Floating Holidays • Calculating

Retention Bonuses
○ Sick Days
• Retention Bonus
○ Vacation Days
Amounts by
○ Personal Days Employee Type
○ Annual Leave Pool and Level
○ Other Paid Time Off • Payment of

Retention Bonuses
• Number of Days Paid Time
Off Provided by Type of
Model:
○ Traditional Model
with Specified Sick
Leave
○ Traditional Model
without Specified
Sick Leave
○ Annual Leave
Model
• Treatment of Unused Paid-
Time Off:
○ Unused Vacation
Days
○ Unused Sick Days
○ Unused Annual
Leave Days
○ Time Limits on the
Use of Carried-Over
Paid Time Off
○ Accrual of Paid
Time Off
○ Upon Termination

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Dissertation
Referral Bonuses
• Referral Bonus Eligibility by Employee Type and Level
• Referral Bonuses Awarded by Type of New Hire
• Referral Bonus Payments by Type of Hire
• Amount of Referral Bonus
• Timing of Referral Bonus Payout.
Analysis on Five Critical Planning Questions:
Around the world, generally speaking, the mindset is cautious optimism. Still, there is a
growing reluctance in some Manufacturing Industry and the Start-ups to sustain double-digit
base pay annual increases. In countries that were more affected by the economic downturn,
organizations are weighing restraint regarding base salary increases against playing “catch-
up” after a year or two of frozen salaries. Yet, in both situations, employers are concerned
about retaining talent and the tug of war between cash, career programs and retention.
71% of companies being approached for this survey said Yes they are positive in giving
hikes.
Unemployment
Average pay increases (%)* GDP (%) Inflation (%) (%)
forecast 2011 forecast 2011 forecast 2011 forecast 2011

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Dissertation
11 8.4 6.3 –
Future Insight: In India, many multinationals are reluctant to continue granting double-digit
increases in the future. Meanwhile, the talent market is getting hot with an increase in hiring
and growing attrition. There is also concern that the high rate of salary increases will
severely hamper the attractiveness of India as a destination for business, particularly for
outsourcing and software development.

Individual performance, coupled with company performance will be the most commonly
used criterion for determining performance bonus. Across levels, variable pay component of
compensation packages is likely to go up.
For many organizations, paying for performance is easier said than done. The many
roadblocks in place include cultural (more focus on the team), financial (not enough funding
of the pool), target setting (defining performance parameters) and pay equity. Yet, when
done right, pay for performance effectively allocates limited rewards investments and retains
top performers. It is a back-to-basics approach to pay strategy that result in thoughtful
spending.
A number of the companies have displayed a continuing drive for performance pay, and this
can be expected to continue if the outlook remains positive.
In addition, the pay-for-performance agenda can be influenced different dynamics between
multinational and local companies in terms of compensation planning and reactions to
market needs.
Q3. How are companies managing employee expectations for 2011?
Employee Type Expressive legacy Secure Progress

The role of work Work is about increasing Work is lot about increasing
something with lasting value one’s life in finding a
predictable path
What appeals and engages Autonomy, entrepreneurial Fair predictable results,
opportunities, Creative concrete compensation, solid
opportunities, enabling tasks benefits and retirement
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Dissertation
and continuous growth packages, stability, structure

and routine, career training
Many companies are communicating employees how they plan to meet their employees
expectations. Managing expectations and facilitating frequent communication are essential
ingredients for employee engagement – a top concern of many organizations. But what and
how are employers communicating about their compensation programs these days? For the
most part, the channels of communication are as diverse as the messages, which include
discussion of the business situation, total rewards concepts, career development, job mobility
opportunities and pay for performance.
Managing employee expectations is going to vary by sector and location. In the high-growth
market, it will be difficult to restrain expectations
Leadership development is one of the top themes, another theme will be total rewards, which
will focus more on non-cash components such as work/life balance and development and
learning.

As they say, cash is king – at least in areas that have been least affected by the economic
downturn – for companies able to play “catch-up” and for workforce segments offering high-
growth potential for their companies. But cash – in the form of base and incentive pay – can
only go so far. Many organizations around the world are using a total rewards philosophy
and are fine-tuning and communicating their employee value proposition.
S.No. Incentives
Total Reward Philosophy
1

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Cash Component – Variable pay, base pay hike,

2 Bonuses.
More responsibility Allocation.
3
Non Monetary Measures: Training & Development
4
Leadership Development plans
5
Supplementary Benefits
6
Holistic Value Propositions.
7
Ensuring that people resources are optimized is a top priority for many organizations around
the world. In response, talent development is receiving careful and direct investments,
including training and career planning, and infrastructure – that is, processes to ensure
equitable pay, track return on investment, and assist line managers with decision making and
employee conversations regarding remuneration.

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Planning of Compensation Strategies for 2011
The economy has forced just about every organization to examine compensation practices
that previously went unquestioned and to make some difficult decisions. As thoughts turn to
economic recovery and planning for 2011, organizations face another crucial decision:
whether to restore cuts and changes to their compensation programs – essentially reverting to
business as usual – or to carve a new path going forward.
Companies should design and implement broad-based compensation program that aligns
with current business strategy, is affordable and sustainable, drives productivity, engages key
talent and minimizes the chance for pay inequity.
1. Total rewards strategy should be in alignment with business strategy.

• Compensation program is considered holistically to include career development, training
and other intrinsic work factors (for example, work-life balance, etc.).
• Focus of practices and plans to retain mission-critical talent and reward the talent most
responsible for creating value for your organization.
• Analytics should be used to support human capital decision making; combine multiple
sources of financial and HR data from systems, surveys and external benchmarks into a
single view to help track, measure and monitor internal and external workforce trends and
reward program effectiveness.
1. Use market compensation data responsibly.

• Balance internal affordability with being market competitive during this time of financial
unrest.
• Use aggregate base-pay increases, including those for participants that froze salaries, if
companies are concerned about the overall labour market; if companies are concerned about
a specific peer group, and then use the actual average increase for that group.
• One should be aware of how survey samples may differ from prior years.
1. Reinvesting the compensation budgets with purpose – allocate to key workforce

segments.
• Determine the distinct employee groups or workforce segments (for example, business units,
job functions, geographies) that are most critical in creating value for the organization.
• Differentiate the reward types and opportunities for these performance drivers.
• Helping line managers to understand how segmentation helps them deliver better business
results.
1. Pay for performance to be meaningful.

• Businesses have fundamentally changed, thus introduction of a new performance measures
to alignment of them with new business strategy is important.

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Dissertation
• Select targets that are meaningful (an outcome that results in corporate value) and relevant (a
set of results that appropriately reflects short- and long-term performance, and individual or
team contributions).
• Use absolute and relative performance measures.
• Create a performance mindset by: Securing line managers’ understanding and buy-in early;
investing in educating key employee groups; and Developing and delivering an ongoing
communication strategy.
1. The mix of compensation vehicles.

• Demonstrate a clear line of sight between employee contributions and long-term results; if
this is not possible, reduce broad participation in your long-term incentive plan.
• Ensure balance between pay vehicles, performance time horizons and risk.
• Address excessive risk taking for certain employee groups by deferring a portion of the
annual bonus award to see if the short-term wins really translate into creating enduring
business value.
1. Consider which actions made as a result of the economic downturn should stay in
effect for 2010.
• Companies should not jump back into business as usual once you are prepared to reinvest in
your human capital.
• Consider which strategies or tactics may remain in place, such as: (Assessing the current
degree of pay at risk and embracing more of a pay-for-performance culture; Reassessing
desired market positioning; Making base pay increases only every two to three years as
responsibilities change; Segmenting your workforce to best allocate limited resources;
Getting serious about improving your performance management program; and Balancing
permanent with temporary or contingent workers to flex labour costs.
1. Engage talent in other ways besides cash compensation.

• Create career paths to provide development opportunities.
• Employ special project opportunities that elevate an employee’s corporate visibility and
develop new skills that enhance employment security.
• Fine-tune your performance management program through manager training and technology
to enhance processes and analytics. n Implement an employee communication plan to quell
fears, minimize distractions and increase productivity.
1. Clarify and communicate your employee value proposition.

• Re-examine if employee value proposition has changed – perhaps organization is keeping
more pay at risk or using more temporary or contingent employees.
• Articulate the new value proposition, moving from tactical employee communications to
more strategic total rewards discussions with employees.
• Equip managers for such discussions.
9. Ensure against pay discrimination practices.

• Use regression-based statistical analytics to uncover existing pay inequities and proactively
manage any inadvertent consequences of workforce actions.
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Dissertation
• Assess, identify and correct compensation, promotion and performance management

practices that may cause risk.
• Improve manager education and training regarding pay administration and diversity.
1. Develop an effective global compensation strategy. (If your organization is focused

on facilitating talent mobility and reinforcing common organizational cultures and
values.)
• Define an enterprise-wide global compensation strategy, not just at the executive levels.
• Establish strong governance at a global level and locate pay management as close to line
management as possible.
• Consider the HR resources to make this all happen.
1. Retain our critical employees – when has retention been more critical?
2. Don’t overpay a dime, if possible – what company has profits to burn needlessly?
3. Pay everyone fairly (enough) so that they can focus fully on their work
Working Examples of Compensation Plans for Critical Employees on whom business
Success depends. Thus aligning their compensation keeping business strategy in mind.
Top employee retention seems to be a frequent missing logic step in designing compensation
plans. Here are two examples of how to recognize if you have a critical employee on your
hands:
Compensation Plan Example #1: What do you pay your star retail salesperson?
Probably high, as in above market median, but you can’t open the vault for this employee.
Even if they’re brilliant, a salesperson’s success is dependent on many other employees’
tasks being done well. The buyer has to buy the right goods at the right price. The inventory
person has to ensure the appropriate stock is in the right store. The floor designer has to
display the merchandise to its best advantage. Many, many tasks are required for success.
So in retail, ultimately, the entire system is more likely to be critical to company success than
any one employee in the system, no matter how well they do their job. Overpaying a star
salesperson isn’t likely to give you much of a return on that investment.
Compensation Plan Example #2: What do you pay Sid Meier?
Sid Meier is the video game designer responsible (well, I also played a role) for really
irritating my family a few years back. That was after our son taught me how to play Sid’s
computer game, Civilization II. The dog – I got addicted.
“Where’s Dad?”
“On the computer.”
Sid was the dog visionary who designed the game. It was a bestseller. The latest version still
may be but I won’t allow myself to go near it.
The point is that rarely, in certain jobs and companies, one person really can have a big
impact on the success of the entire company. The costs of employee turnover for one person
might threaten a company’s future. Steve Jobs seems to have had this impact on Apple. You
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Dissertation
can think of your own examples. Here’s a case where you might want to open the vault! Like
hiring the “hot” movie star, you could get a great ROI on off-the-charts pay for a top talent.
Sid, I hope it worked out for you; it’s really an entertaining game!
The Cost of Overpaying in Employee Compensation Plans
Rigor, such as the compensation data from Payscale.com makes possible, is more than a
nicety. It may be a key to survival. Let’s do the math.
Say your company has 1,000 employees. Revenues are $100,000,000 a year, profits will be
$1,000,000 next year, and the Board is pretty happy – after all, $1,000,000 in profits during a
recession is a lot better than many companies are doing.
So you give all of your employees a raise on January 1 and, because you’re nice, you end up
overpaying everyone by only $1,000. On an average salary of, say, $50,000, that’s nothing.
But then, we do the math. Uh-oh. $1,000 x 1,000 employees is (yikes) your entire profit. Get
your compensation data from a reliable source, like Payscale.com, and make your profit
target for the year instead of gobbling it up. It’s much nicer than layoffs in the long run.

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Dissertation
Q1. What is the current mindset regarding base pay increases for 2011?
1) Determine the distinct employee groups or workforce segments (for example,
business units, job functions or geographies) that are the most critical in creating
value for your organization.
2) Differentiate the reward types and opportunities for these “performance drivers.”
3) Help your line managers understand how segmentation helps them deliver better
business results.
1) Many business strategies have changed the last 12–24 months. If so, it’s time for new
performance measures. Select targets that are meaningful (an outcome that results in
corporate value) and relevant (a set of results that appropriately reflects short- and
long-term performance, and individual or team contributions).
2) The recession led your organization to new strategies and tactics, so consider which
ones should remain and which ones should not, such as putting more pay at risk or
making base pay increases only every two to three years as job responsibilities change
Q3. How are companies managing employee expectations for 2011?
1) Has your employee value proposition changed? Maybe you are keeping more pay at risk
or focusing less on pay and more on employee training and development. Articulate the
new value proposition, moving from tactical employee communications to more
strategic total rewards discussions.
2) Equip managers with talking points to help with such discussions.
3) Tailor the messaging to your current and future workforce values; consider generational
differences.
4) Be realistic and straightforward in your messaging; do not overpromise and

underdeliver.
5) Vary the communication medium to include in-person, video, online and e-mail.
Q4. How are employers incentivizing and engaging high-potential employees?

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Dissertation
1) Use all reward levers available; cash compensation is not the only way to encourage
employee engagement.
2) Consider creating career paths to provide development opportunities. Alternatively,

employ special project opportunities that elevate an employee’s corporate visibility and
develop new skills that enhance employment security.
3) Fine-tune your performance management program, through manager training and

technology, to enhance processes and analytics.
4) Implement an employee communication plan to minimize distractions and increase

productivity.
Q5. Where will employers place their compensation investment bets in 2011?
1) Ensure that your rewards strategy aligns with your business strategy.
2) View your compensation program holistically to include career development, training

and other intrinsic work factors (for example, work-life balance).
3) Focus on retaining mission-critical talent and reward the talent most responsible for
creating value for your organization.
4) Use analytics to support human capital decision making; combine multiple sources of
financial and HR data from systems, surveys and external benchmarks into a single view
to help track, measure and monitor internal and external workforce trends and reward
program effectiveness.

37

Planning Compensation Strategy for 2011

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SYMBIOSIS INSTITUTE OF MANAGEMENT

Compensation Strategy for 2011

Submitted By: Tanvi Garg

Submission Date: 31st Jan’ 2011

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

S.No. Topic Page No.

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Five critical planning questions for 2010:

2. What is the status of pay for performance?

3. How are companies managing employee expectations for 2011?

4. How are employers incentivizing and engaging high-potential employees?

5. Where will employers place their compensation investment bets in 2011?

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Compensation is a systematic approach to providing monetary value to employees in

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Recruitment and retention of qualified employees is a common goal shared by many

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

What are the components of a compensation system?

Compensation will be perceived by employees as fair if based on systematic components.

industries as well as within one geographical region or across different geographical

h) Piece rate wages:-

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

o) Time off and flexible schedules.

Compensation package of a top executive

Compensation trends in India

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Compensation planning 2011

Five critical planning questions for 2010

2. What is the status of pay for performance?

-Journals & Magazines

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Industry Type: Information Technology

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

In addition to a performance angle, performance-based restricted stock reduces compensation

3. How are companies managing employee expectations for 2011?

• Employment Confidence Survey :

The Q3 Glassdoor.com Employment Confidence Survey of 1,195 employees was

Specifically, of the employees surveyed:

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

* 57% expect a raise, bonus and/or promotion

Here are highlights for the third-quarter survey:

4. How are employers incentivizing and engaging high-potential employees?

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

5. Where will employers place their compensation investment bets in 2011?

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

COMPENSATION & BENEFIT PRACTICES THAT ARE FOLLOWED

Plans ○ Percent of Plans Premiums Paid by

Retirement Plans Flexible Benefit Plans Dental Care Plans

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

○ ESOP Expenses (AAE) Company

Domestic Partner Benefits Paid-Time Off Policies Retention Bonuses

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Requirements ○ Floating Holidays • Calculating

○ Other Paid Time Off • Payment of

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Analysis on Five Critical Planning Questions:

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Q2. What is the status of pay for performance?

Q3. How are companies managing employee expectations for 2011?

Employee Type Expressive legacy Secure Progress