The idea of linking the pay to performance with the new age variable pays, would eat up 50-55 percent of India Inc. salaries from 2020. reported Money Control.
With a drop in corporate earnings in the September quarter, an increasing pressure looms over companies to link a large amount of the pay to performance, which means that the variable pay would be raised up to 50-55 percent of the cost to company (CTC) in 2020.
“The variable component of the CTC also takes into account how a company performs and not just an individual employee’s performance. Hence, it makes sense to have a larger quantum of variable pay,” chief human resource officer at a large financial services firm told Money Control.
The report further stated that if there's a rise in variable pay, the yearly in-hand compensation could be much lower. "This is because even if an employee completes all targets and the company performs well, only 80-85 percent of the variable pay will be given," said the report.
"Instead of hiking the annual salary substantially, firms will only increase a large chunk of the variable portion in 2020. So while on paper an employee's CTC goes up, the actual salary may stay constant," Money Control was informed.
Among all the sectors, this would hit BFSI, FMCG/retail and e-commerce.