The last few years have been a period of recovery for the Indian economy. Not only established businesses have witnessed noticeable growth but even startups have emerged across the length and breadth of the country striving to become unicorns. We have also seen long-time employees quitting their secured jobs in companies to join the gig economy – there’s never been a tougher time for talent retention and hence the need for professional support and inputs from Compensation professionals to design competitive compensation and benefits packages! Organisations have realised that this activity which is so critical, can no longer be left to in-house team. They are now reaching out to the experts who can take a strategic perspective and design appropriate compensation packages.
Why resort to HR consulting or Experts for compensation design? The most obvious reason could be that not all HR teams may have the competency, exposure or the depth of knowledge required to design competitive compensation packages that align with market trends, are compliant with applicable laws and meet the expectations of employees. Those who work specifically in this area have insights related to competitive compensation practices, experience in benchmarking for compensation design, and are aware of the industry and regional variations and trends. These experts provide customized solutions which best fit the organizational requirements while keeping the market practice and laws of the land in purview.
How do the experts design the ideal compensation structure?
The first step is benchmarking. Gathering relevant industry, locational, competition and position-specific data provides valuable insights into expectations in the market and allows one to design compensation structures that are competitive in the Indian market.
Once the data is gathered, it’s analysed and compared with the existing compensation structure to make adjustments as needed. Skill-based compensation is identified in organisations where specific skills are vital for survival. While HR consultants personalize compensation packages to suit individual employee needs and preferences, they also ensure the packages adhere to legal and statutory requirements. The customization may include flexible benefits options, variable pay structures based on performance, and other tailored incentives as per company requirement and prevailing market practices.
The consultants also need to strike a balance between designing attractive compensation packages and managing costs effectively, i.e., it needs to be win-win and meet the expectations of both employers and the employees. This is where they use benchmarking data again – ensuring that compensation remains competitive within the industry while aligning with the organization’s budgetary constraints.
Emerging Trends in Compensation Packages
There are two major trends that are going to make a significant difference to Compensation packages in India:
Personalisation: Customising compensation packages to meet the unique needs and preferences of employees is gaining traction across the globe, and corporate India is already catching up. Employees have diverse needs and preferences when it comes to compensation. Offering customization and flexibility in compensation packages, such as allowing employees to choose from a range of benefits or structuring variable pay options etc, can make the packages more appealing. HR consultants can guide organizations in implementing flexible compensation structures that suit their workforce.
Total Rewards Approach: Organizations are increasingly adopting a total rewards strategy that goes beyond just monetary compensation. It encompasses benefits, career development opportunities, work-life balance, R&R programs, and a positive work culture. HR consultants can help organizations incorporate these elements into their compensation packages to create a holistic offering that appeals to the old timers as well as gen Z.
Every financial year brings new challenges for HR teams in India by way of managing and restructuring compensation packages they would be good enough to attract and retain top talent. Relying on HR consulting for compensation design is the best way to ensure that organizations offer attractive packages that align with market practices while staying true to the organisation’s business needs. Click here if you want to know more about how Pasona can help you design strategic compensation packages.
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