An increasing number of companies are rejigging salary structures, across the board, to lower the fixed component and raise the performance-based variable component. In these uncertain times, organisations are looking to link salaries to the performance of both the individual and the business.
As Amit Vadera, AVP, TeamLease Services observed, the pandemic has accelerated the shift to linking pay with performance. “The variable part of the salary is becoming bigger with employees being judged on their KRAs and paid accordingly,” Vadera said.
Viswanath PS, CFO, Randstad India, pointed out that companies can no longer afford to pay the salaries they used to because the pandemic has disrupted earnings. He cited a March report from Deloitte which found that nearly a fourth of companies surveyed had changed their salary structures to raise the share of performance-linked pay.
Hitherto, HR consultants explain, this structure was reserved typically for those working in sales or senior management or where there were stiff business or financial targets. But now it’s the rule rather than the exception. Siddhartha Gupta, CEO, Mercer Mettl told FE given business risks are rising especially due to Covid-19-induced economic uncertainties, the performance-linked pay structure is the preferred option. In his view the performance of the business is now being aligned with individual remuneration and an individual’s performance with profits.
Source: Financial Express
