India Inc adjusts variable pay to retain junior staff

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insurance sector, the focus is to make variable pay simpler and achievable. “We have recalibrated the key performance indicator to remove the organization metric from variable pay for our junior workforce . Their quarterly incentives now depend on their own performance as well as the department’s performance," said Santanu Banerjee, chief human resources officer at Bajaj Allianz Life Insurance.

For the company’s junior executives, about 85% of the variable pay is based on an individual’s own performance, while the rest 15% depends on the respective department’s performance. However, there are some companies that are contemplating increasing the variable pay component to make performance more competitive. “We will slowly increase our variable pay to focus more on business performance.

The focus will not be on hikes for all, but on annual variable payouts that will be both individual and company specific," said Praveen Purohit, deputy chief human resources officer at Vedanta Group. He said 60-70% of a junior officer’s variable pay depends on individual performance and 30-40% on the company’s achievements. For senior executives, it is just the opposite, he added.

Business houses like RPG said attaching variable pay to overall company performance “builds a culture of outperformance". “Our people do not shy away from taking stretched targets, because there is a reward attached to it. We have decided to continue with variable pay at all the levels.