IBEF: December 03, 2021
Based on a Mercer India study, progressive incentive-based steps have been taken by India Inc. to attract and maintain talent during the pandemic with 97% of organizations having an active short-term incentive plan for in-year performance recognition.
Study based on leveraging incentives for competitive advantage covered 41 organizations and signified over 300,000 employees across India including sectors like consumer, chemicals, life sciences, IT services, and Internet-based, and E-commerce industries.
The study also concluded that the most prevalent objectives of long-term incentives were employee retention and enabling wealth creation for employees.
The study stated, “However, new-age organizations and startups seem to be following differentiated practices, such as discretionary grants, ESOPs, appraisal-based grants, etc. primarily for ring-fencing critical talent and providing liquidity to employees.”
According to the senior principal of Mercer India, Ms. Mansee Singhal, there is a distinct correlation between the pay structure and the evolution of an organization.
She also added, “Ultimately, incentives should be based on the back of a clear, transparent process of individual and organizational performance assessment- failing this, even the most creative plan design will not yield the appropriate outcomes.”
Based on the study, the variable pay is mainly determined by both the company’s and individual employee’s performance (88% and 82% respectively) in performance-based short term-incentives. The employee’s performance primarily defined the sales incentive payout to the tune of 71%.
The study added, “As is prevalent in most cases, revenue and profits were performance metrics determining variable payout, while commission-based and quota-based payouts were the most sought after sales incentives.”
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.