Variable pay, flexi benefits emerge as major pay package attractions

Both employees and employers seem to be moving towards a compensation structure wherein the share of variable pay and flexi benefits constitute a significant portion of the total rewards, says a report.

According to the TeamLease Compensation & Total Rewards Trends Report, the average variable pay across hierarchies has increased and stood around 10.6 per cent of the total compensation mix.

The variable pay for senior management has risen to 25-30 per cent from 18-20 per cent earlier (prior to 2010). For the middle management it has increased to 18-20 per cent from 10-12 per cent earlier and for junior management it has improved to 10-12 per cent from 5-8 per cent earlier.

According to the study not only variable pay even flexi- benefits are gaining momentum and becoming a critical component of total rewards. They seem to be yielding higher value amongst employees, lower costs for employers, and better tax benefits, it said.

While the cost to business in providing flexible benefits is 25 per cent of the total HR budget, the perceived value of these benefits is much higher and hence new-age companies are implementing these policies.

Professional development and educational benefits are the most preferred for employees followed by pay raise, healthcare plan and performance bonus amongst others.

The report further noted that variable pay and long-term incentives gain more currency as one goes up the hierarchy.

For a mid-management employee the actual average variable pay stands at 15.1 per cent while the same for a CXO is 22.8 per cent, the report said.

“While flexi benefits have become a popular medium to please and retain employees, organisations need to be honest with their intent, put earnest effort and prioritise on aligning rewards with business objectives,” said Sonal Arora, VP, TeamLease Services. — PTI