Revitalizing Sales Compensation - Aon

04 

Flexible Benefits 

An Effective Prescription 

in China 

09 

Theory of 

Subjectivity 

The Indian C-Suite 

Pay Packet 

29 

Rethinking the Future 

of Total Rewards 

India • Volume 2 • Issue 2 

Revitalizing Sales 

Compensation

14 

www.aonhewitt.com/india 

what’s inside 

CoveR StoRy 

04 09 

21 


An Effective Prescription 

in China 

04 

Theory of Subjectivity 

The Indian C-Suite Pay Packet 

09 

02 

Aon Hewitt Rewards that 

Work – The Genpact Story 

21 

Global Mobility in the 

IT Sector: 

The Cost Factor 

26 


Compensation 

There are many paths to the 

desired business outcomes, 

and the right results tend to 

come from a deeper, strategic, 

sequenced evaluation of the 

business model and a workforce 

ultimately supported – not 

created – by sales compensation. 

Rethinking the Future of 

Total Rewards 

29 

Survey Calendar 

35

Total Rewards Quarterly 



editors 

Shilpa Khanna 

shilpa.khanna@aonhewitt.com 

Sushil Bhasin 

sushil.bhasin@aonhewitt.com 

Tel: +91 124 4155000 

editorial, Reprints & 

Syndication office 

Aon Hewitt Tower, DLF Centre Court 

Sector-42, Gurgaon, India-122002 

Tel: +91 124 4155000 

Fax: +91 124 4052010 

Subscription Requests 

totalrewards@aonhewitt.com 

editorial Feedback 


Design 

CREATIVE InC. (www.creative-inc.in) 

Total Rewards Quarterly is published 

four times a year by Aon Hewitt 

Copyright © 2012 Aon Hewitt 

The Indian economic growth is expected to remain moderate in 2012-13 

unless substantive policy measures are undertaken. Advance estimates released 

by the Central Statistical Organization (CSO) place GDP growth for 2011-12 at 

6.9%, marginally higher than the 6.7% growth seen in 2008-09. India faces an 

awkward combination of slowing growth and still-elevated inflation. 

Our conventional wisdom of investing in salaries has not brought us any closer 

to winning the talent game. We continue to face higher attrition and low 

engagement among employees. We are at the point of inflection where we can 

either carry on the current legacy, or, try and rethink the future and how best 

we can influence it to create sustainable growth. 

Expectations from rewards are fast changing. Instead of aligning to the market, 

the need of the hour is to differentiate and be the early adopters and innovators. 

By viewing the combination of rewards elements as a portfolio, and recognizing 

that some elements have higher returns than others, in terms of perceived 

value, impact on engagement, etc., organizations are able to optimize rewards 

programs by aligning costs and employee preferences. I personally have been 

discussing the change it requires and look forward to spread the message in my 

interactions with you. 

In this issue, we have our global expert sharing his views on 'diagnosing your 

sales compensation issues' where he rightly emphasizes the fact that 

organizations need to identify the root cause across the gamut of salesforce 

management issues before jumping to redesign sales compensation. 

In addition, we share the key highlights of our annual executive compensation 

study. The fact, that we saw over 200% increase in participation in its second 

year, tells us the growing significance of this topic. The results show a strong 

global alignment on levels and methods of pay, but fall short on fairness and 

accountability. In our engagement with organizations on the ongoing Best 

Managed Boards Study, this has emerged as an area that needs better governance. 

And finally, an interesting tête-à-tête to bring you CEO’s, Investor's and HR 

Heads' perspectives on the future of Total Rewards. 

We hope you enjoy the read and look forward to receiving your comments 

and feedback. 

Sandeep Chaudhary 

Partner, 

Talent and Rewards, 

Aon Hewitt 

For more information, please write to us 

at totalrewards@aonhewitt.com 

totalRewards quarterly 


03


An Effective Prescription in China 

04 

www.aonhewitt.com/india

Since its first appearance in the 1970s, flexible benefits 

(flex) have become a common benefits element in the 

Western countries. Flex is a benefits program that provides 

a variety of supplemental benefits options to employees 

based on a predetermined budget. A typical flex program 

usually includes healthcare and insurance for employees 

and their families, pension/savings, and work-life benefits 

such as gym membership, travel benefits, and a flexible 

spending account. In China and many Asian countries, 

flex is a recent emergence that has quickly gained the 

attention and favor of many companies. 

Companies most attracted to flex are multinational 

firms in leading industries (such as pharmaceutical, auto, 

hi-tech, FMCG, etc.) with large workforce populations and 

relatively comprehensive pay and benefits systems. All are 

experiencing the fierce war for talent. To further enhance 

their employer value proposition and boost recognition 

of their employee benefits as a way to attract and retain 

talent, these organizations began to look at flex as 

a solution. 

According to the chart below, about 9.4% of the 

multinational firms operating in China have already 

implemented or are currently implementing flex, 

17% have plans to implement flex shortly, and 63% 

are considering flex. 

Source: Aon Hewitt 2010 Benefits Hot Topic Survey China 

A typical flex plan includes components such as group 

insurance, medical benefits, pension/savings plan, and paid 

leave. Several companies without flex plans have begun to 

follow the market trend by offering some self-paid plan 

options for employees. 

Why is flex becoming increasingly popular in China? 

What are the keys to a successful flex project? What are 

some of the common challenges and solutions encountered 

in the implementation of flex? 

PERSPECTIVE 

Flex Advantages 

As the talent competition intensifies in China and salary 

cost continuously increases, we observe that the following 

issues are becoming headaches for most HR professionals 

in China: 

According to the 2011 Aon Hewitt Total 

Compensation Measurement (TCM) survey, for 

companies operating in China, the benefit cost usually 

reaches 20% to 40% of the total compensation cost. 

Along with the annual increase in salary, benefits cost 

is also rising year-on-year 

Healthcare costs in the China market have risen faster 

and faster and have outpaced the Consumer Price 

Index (CPI) since 2008. The supplemental medical 

premium paid by employers has gone up significantly 

in the recent years, and is still on the rise 

Inspite of companies’ considerable spending on 

employee benefits, there has been limited positive 

feedback from employees. Moreover, they have 

voiced a lot of complaints about how current benefits 

programs are not meeting their actual needs 

In order to compete with rivals, companies are using a 

variety of methods to attract and retain talent, but the 

effects so far have been unsatisfactory, according to many 

HR professionals. 

Flex therefore, emerged in response to these 

challenges. It helps companies improve employee 

satisfaction, enhances the organization’s competitiveness 

in the talent market and effectively controls 

long-term costs. 

Improve Employee Satisfaction 

Flex allows employees to make their own selections 

from a range of benefits programs – an approach that 

better meets the diverse needs of employees. In the 

implementation and continual management of flex, 

companies should communicate more with employees 

to increase their understanding of the employee benefits 

provisions and thus, further improve employee 

satisfaction levels. 

A common feedback Aon Hewitt has received 

from clients who have implemented flex is that their 

employees’ satisfaction with such benefits has improved 

significantly. The leading pharmaceutical company, 

AstraZeneca’s 2010 focus group study shows that after 

implementation of flex, the employees’ engagement 

levels reached 93% and the satisfaction levels 86%, a 

record high. 



05

Flex, as an innovative benefits 

solution, can help companies 

maximize the value of benefits, 

boost employer brand 

and improve their overall 

remuneration advantage. 

Improve the Competitiveness of Companies in 

the Talent Market 

Talent war in the Chinese market has grown more 

competitive and the marginal effect of traditional benefits 

programs on talent retention is falling. Flex, as an 

innovative benefits solution, can help companies maximize 

the value of benefits, boost employer brand and improve 

their overall remuneration advantage. The implementation 

of flex sends out positive messages both to the external 

market and internally within the organization, so the 

effect on talent attraction and retention is measurable. 

Improve Control Over the Long-Term Cost 

of Benefits 

In Western countries, rising benefits cost is another major 

motivation for adopting flex. In the traditional benefits 

system, companies that have committed to an employee 

benefits program will have to bear the full cost, even 

though, it may be increasing year-on-year. Companies 

trying to control costs by cutting down on the benefits 

face a dilemma in terms of the impact on employee 

satisfaction levels, as well as potential legal disputes. In 

such circumstances, the advantages of flex are that benefits 

options are provided according to a predetermined budget 

for each employee. Therefore, in the case of increase in 

benefits cost, the companies can choose not to cover the 

increased portion or can share it with their employees. 

Keys to Success with Flex 

Tailor-Made Plan Design 

The flex plan design should be fully tailored to the 

company and employees’ profile. Besides focusing on the 

external market, internal human resource strategies and 

cost budget, it is also important to ensure that the plan 

complies with the demographics of the employees. In the 

06 


China market, basic insurance for employees and medical 

care are usually placed as the core plan, and based on 

this, some top up programs such as family insurance/ 

medical care and various other options are provided. 

According to a recent study of 15,000+ employees in 

Aon Hewitt’s flex database: 

76.7% of employees have actively chosen their benefits 

plan; the rest (24.3%) used the default plan preset by 

the company 

In companies where housing assistance and/or 

reimbursement benefits are provided, these often 

become the most popular benefits for single employees 

aged below 30; these two items satisfy young, single 

employees’ short-term cash needs. Housing assistance 

attracts 42% of them, while reimbursement benefits 

attract 41.9% 

For young to middle-aged employees with families, 

the medical plan is the most popular, with an average 

49.9% of employees choosing to upgrade this benefit. 

42% of them also choose to provide protection to their 

children, and 34% to their spouse. Parents’ healthcare 

is subject to stricter underwriting conditions, as well as 

higher risks of claims and cost, which is why not too 

many companies provide it 

For employees above age 45, pension and medical plans 

are the most popular. On an average, 42.8% choose 

to top up their pension contribution, and 44.8% top 

up their medical plan. This employee group has a high 

demand for a tax effective benefits plan; however, this 

is restrained by the tax regulations in China 

Employees of different companies have different 

characteristics, which could play out in different choice 

inclinations. To ensure that the benefits program suits the 

needs of a particular organization’s employees, the flex 

plan should be tailored to fit their employee demographic 

features (including age, family status, place of work, etc.). 

For instance, if the employees of a company are mostly 

middle-aged or above, a better medical benefit and pension 

plan would be highly welcomed. In some companies where 

young employees account for the majority, downgrade 

options lower than the default insurance plan are provided, 

so employees are able to trade the insurance default plan 

for other benefits items deemed more attractive. 

Excellent Service Providers 

Excellent service providers are also the key to the success 

of flex. They can ensure smooth functioning of the flex 

programs and provide sufficient support to employees

in terms of the selection and ongoing management of 

their benefits. As a comprehensive benefits platform, flex 

may require many service providers to fuel its operation, 

such as insurance companies, medical check-up centers, 

pension trust companies, and flex system operators, 

among others. 

There are many such vendors in China. However, 

considering the fact that flex places higher requirements 

on service providers, companies need to be more cautious 

in vendor selection. Take insurance companies, for instance, 

what needs to be evaluated are not only their traditional 

services (claims settlement, insured registration and 

administration, etc.), but also their capacity to connect 

with the flex system and provide relevant support. 

Thorough Employee Communication 

The acceptance and appreciation of flex by employees is 

closely linked to sufficient communication in both plan 

implementation and ongoing management. Usually, the 

employee communication strategy and plan is one of the 

key elements in the flex design and implementation stage. 

Before implementation, companies should use mail 

notification, seminars, brochures, promotional videos and 

other means to mobilize employee enthusiasm and ensure 

their understanding and acceptance of the plan. In the 

process of ongoing management, smooth communication 

channels must be made available to collect employees’ 

feedback and suggestions. The flex plan must also be 

constantly improved to better serve both the employees 

and the company. 

For any optional plans, the employee participation 

rate is a kind of feedback in itself. A high participation 

rate usually means high acceptance and understanding 

of the plan. Among Aon Hewitt’s flex clients, employees’ 

active enrollment rates averaged at 76.7%, while some 

plans have succeeded in attracting more than 90% of 

employees to participate. While this seems to indicate 

that flex is appealing to employees, it is crucial to note 

that during the implementation and management 

process, incorporating the principles listed above 

ensures that the advantages of flex are fully optimized. 

Reduce the Risk of Anti-Selection and 

Maximize the Advantages of Flex 

If flex is a good antidote for solving various kinds of benefits 

problems for companies, then the rising risk of anti-selection 

can be considered its 'side effect'. Raised by American 

economist, George Arthur Akerlof, a nobel prize winner in 

PERSPECTIVE 

Economics, the theory of adverse or anti-selection refers to 

the survival of the weakest, instead of the survival of the 

fittest. In the case of an optional medical plan, this can be 

observed in the behavior of employees. Employees who 

usually go to the hospital are more inclined to top up their 

medical plan, while employees enjoying good health display 

relatively low purchase willingness. 

The negative impact of anti-selection is obvious. The 

cost of benefits bears the brunt – anti-selection leads 

directly to an increased claims ratio, which then puts 

pressure on health costs. However, in China, increased 

claims ratio doesn’t always mean increased insurance 

premium. Whether or not the premium would go up and 

by how much often depends on the size of the client’s 

workforce, its bargaining power, the insurance company’s 

market strategy (whether to seize market at low price or 

to guarantee profits), and even the personal relationship 

between the client and the account manager. Of course, 

for those clients that don’t bring profit or even cause loss 

for insurance companies, the pressure on health costs will 

certainly increase continuously. 

A successful flex plan can achieve a win-win result. 

The employees can choose better health protection for 

themselves and their families, companies can better 

attract and retain employees, and insurance companies 

can profit by offering more insurance products. So how 

can we contain the risk of anti-selection and achieve a 

win-win result? The following are some feasible solutions 

for your reference: 

Identify the 'Minefields' of Anti-Selection 

First, before plan design, full evaluation of the risk of 

anti-selection should be conducted based on market data 

and the employee demographic characteristics of age, 

family status, region of working and job nature of the 

employees concerned. Finding the high risk minefield can 

The acceptance of flex by 

employees is closely linked to 

sufficient communication in 

both plan implementation 

and ongoing management. 

It is therefore, one of the key 

elements in the flex design 

and implementation stage. 



07

help companies and service providers take effective 

measures to address the risk. For instance, if a company’s 

employees are largely located in a region where the 

overall claim result is relatively poor, in addition to 

considering these employees’ needs, stricter claims rules 

should be established during the plan design phase to 

control anti-selection. 

Set Out Claims Rules in Plan Design 

In plan design, certain rules can be introduced to control 

the risk of anti-selection. The typical practices include: 

Grouping benefits items with a higher claims ratio 

(medical insurances for employees and their families) 

with those that have a relatively low claims ratio 

(life insurance, accident insurance, etc.) 

Setting out a two or three-year lock-in period during 

which the options selected cannot be altered 

Stipulating a rule with employees that the benefit level 

of the insurance/medical plan selected for their families 

shall not be higher than the plan for themselves, and 

so on 

Leverage Pricing Strategy 

The pricing strategy of the insurance company is of vital 

importance. An in-depth analysis of the claims data and 

a comprehensive grasp of employee information will be 

helpful in determining the insurance item with the higher 

risk of anti-selection, and then the price of that particular 

item can be altered to control the claims ratio. If the 

insurance pricing simply focuses on the overall claims ratio, 

some items with an abnormally high claims ratio would 

go neglected and the development of anti-selection 

indulged, gradually increasing the pressure on health costs. 

In a recent customized study of high-end medical and 

voluntary benefits, Aon Hewitt compared the claims ratio of 

three flex clients and four other clients that provided top up 

options in their insurance program. They discovered that 

the claims ratio of top up options in the simple optional 

insurance plans is relatively higher (most exceeded 100%) 

than that in the comprehensive flex programs (most below 

80%). The underlying reason is that compared with optional 

insurance plans, flex programs usually incorporate a number 

of effective rules to control anti-selection that were based on 

comprehensive analysis and evaluation during the plan 

design phase. 

08 


It is foreseeable that with 

the participation of more 

and more companies, the 

increasing maturity of 

the vendors and growing 

acceptance by employees, 

flex will gradually manifest 

its enormous potential and 

evolve into a prevailing mode 

of benefits solution in China. 

Conclusion 

In summary, so long as corresponding measures are taken, 

the risk of anti-selection in flex can be minimized. As an 

effective prescription for employers to retain talent and 

control benefits costs, the advantages of flex are obvious. 

Its successful operation in Western countries and some 

mature markets in Asia, like Singapore, indicate that it is a 

tested, effective benefits solution. It is foreseeable that with 

the participation of more and more companies, the 

increasing maturity of the vendors and growing acceptance 

by employees, flex will gradually manifest its enormous 

potential and evolve into a prevailing mode of benefits 

solution in China. 

Angela (Shanyan) Zhou 

Senior Consultant – Health and Benefits Practice, 

Aon Hewitt, China 

For more information, please write to us at 

totalrewards@aonhewitt.com

In response to our first executive compensation study, the 

highlights of which were presented through this journal 

about a year back, we got two often repeated reactions 

from people. The first was a perhaps pleasantly surprised, 

“Wow… that much” and the second was an incredulous, 

“but why?”. And therefore, as we went through our 

second edition of this study, our objective was to try 

and answer these two questions with greater conviction. 

There were only two ways to get this conviction – one 

was to ensure we had a much larger participant base 

to get a more representative sample of companies, and 

two, was to ensure we asked the right questions and 

probed for the right data. It pleases us to say that we hit 

the mark on both. not only did we get data from more 

than double the number of companies as compared 

to the previous year (166 compared to 65 last year), 

we also tested this compensation data through a wider 

range of analytical filters. We would like to begin this 

article by first thanking the compensation teams of these 

166 organizations who helped us with their data and 

practices. Without their active support, we would not 

PERSPECTIVE 

Theory of 

Subjectivity 

The Indian C-Suite 

Pay Packet 

have been able to share the perspective and trends that 

this data throws up. 

The Story the Media Loved 

Over the last few months, you would have noticed at least 

one article every month in any of the leading dailies, on 

how pay levels for Indian CEOs seems to be mirroring the 

pay for CEOs at global or American companies. That, in 

effect, was our story – and we found takers from across 

other compensation and recruitment firms and the media 

loved it. While it is absolutely true that Indian CEOs are 

paid not too far from their global peers, there is a fair bit 

of mathematical approximations that are involved in that 

premise. Let’s look at the numbers: For an organization in 

the US, in the range of USD 4-7 billion in revenues, the 

median CEO compensation ranges around USD 6-7 

million per annum. now if you were to multiply it with 

the USD/` exchange rate, the Indian equivalent 

compensation would be a massive ` 30-35 crores per 

annum. A more realistic way of looking at this would 

be to multiply the dollar value with a Purchasing Power 



09

Parity (PPP) adjusted currency conversion rate. This would 

translate into an approximate value of ` 9-11 crores. now 

compare that with the median compensation of the CEO 

of an Indian company (in a revenue range of USD 2-4 

billion), and you would find the CEO pay to be in the 

range of ` 5-7 crores. 

Source: Aon Hewitt TCM Studies, OECD PPP Database 2011 

Note: Figures represent Total Fixed Pay 

There are two other interesting dimensions to this 

story. The first is around how the CEO compensation 

grows in India vis-à-vis other countries. At an average, 

executive pay in India has seen a Compound Annual 

Growth Rate (CAGR) of approximately 13-14% over the 

last decade. In the same period, the average growth in 

executive compensation across most Western economies 

has been in the range of 1-3%. If we assume that growth 

rates remain unchanged over the next five years, Indian 

CEOs would earn greater than their Western counterparts, 

albeit on a PPP basis. 

The second, and slightly nuanced story, is around 

how compensation is structured for executives in India vs 

the Western world. Typically, Indian CEOs have between 

45-50% of their compensation delivered through fixed 

(and non-performance linked) elements of pay, while their 

Western counterparts usually don’t have more than 20% 

of their pay as fixed. If you apply these percentages to the 

total compensation numbers, you will find that on a fixed 

pay basis, Indian CEOs already make more than their 

Western peers! 

The Story You Need to Know 

Let us now turn to the fundamental construct of executive 

pay practices that our study and the subsequent analysis 

threw up. Beyond this point, we will focus on the data as it 

is and some of the stories behind the data. 

10 www.aonhewitt.com/india 

a. Executive Pay Levels Significantly Vary 

by Industry 

This year, our survey represented a similar pattern in 

executive compensation differentials across industries 

as we had seen in the previous years. While we kept 

financial services out of this analysis on account of the 

wide differentials in pay levels between different subsectors 

under this industry definition, we found a variance 

of about 160% between the median CEO pay across 

the lowest and highest paying industries. Interestingly, 

we found a combination of new and old – ITeS and 

manufacturing – as the leading paymasters at the CEO 

level across all industry definitions. We believe much of 

it can be attributed to the fact that the ITeS business is 

dominated by organizations that have a global footprint 

and very often are also listed abroad. Thus, their approach 

towards executive compensation management is different 

from the way Indian Boards look at it. We noticed that the 

manufacturing industry definition covered some of the 

largest companies in the survey and therefore, it was not 

surprising to find that pay in these organizations should 

be higher than their peers. The manufacturing industry 

also represents a host of companies that have larger global 

aspirations and their executives are, very often, not just 

responsible for the India operations. 

It would be important to highlight that interestingly, 

the width in compensation levels for the direct reports to 

the CEOs across these industries was far narrower (~75%). 

Source: Aon Hewitt Executive Compensation Study 2011-12 

Note: Figures represent Total Fixed Pay (a summation of Fixed Pay, 

Monetized Benefits, Annual Incentives and Long-Term Incentives) 

b. CXO Pay Varies by Function 

We found interesting patterns in CXO pay levels across 

different functions. While it is intuitive that the Chief

While globally the variance in 

CEO and CXO compensation is 

largely on account of the much 

higher stock grants that the CEO 

gets; in India, this difference 

is primarily on account of the 

higher annual incentives that 

the CEO seems to be receiving. 

Operating Officer (COO) and the Chief Financial Officer 

(CFO) occupy the higher end of the spectrum on the 

compensation ranges, we found (to significant rejoicing 

around the office) that the Chief Human Resources 

Officer (CHRO) comes up third in the list of highest paid 

CXOs. What is interesting however, is the fact that, at 

the higher quartiles of the market range, the CFO’s total 

compensation seems to be higher than that of the COO. 

At the CXO levels, the nature of the industry significantly 

impacts the pay for different roles. For instance, the 

Head of Service is compensated significantly more in the 

telecom industry as opposed to most other industries. 

Similarly, the Head of Sales earns the maximum premium 

in the FMCG business. 

Source: Aon Hewitt Executive Compensation Study 2011-12 

Note: Figures represent Total Fixed Pay (a summation of Fixed Pay, 

Monetized Benefits, Annual Incentives and Long-Term Incentives) 

Organizations often focus on the metric of ratio 

between CEO and CXO compensation as a parameter 

to analyze the approach towards the management of 

executive compensation. Our analysis of this metric 

PERSPECTIVE 

revealed some interesting results. Firstly, the ratio in India 

is distinctly different from global levels. While in India the 

ratio of total pay for the CEO and CXO is about 2.23x, 

the global benchmark is at 5.8x. In India, industries 

such as ITeS (which largely have globally aligned pay 

practices) occupy the higher end of the spectrum, while 

most industries with a domestic focus have a much 

lower ratio. The second interesting aspect about this 

ratio is that while globally the variance in CEO and CXO 

compensation is largely on account of the much higher 

stock grants that the CEO gets; in India, this difference is 

primarily on account of the higher annual incentives that 

the CEO seems to be receiving. 

c. The Delivery of Pay Still Retains the Strong 

Alignment Towards Fixed Compensation 

The fixed to performance pay ratio usually forms the core 

of the discourse on executive compensation. There is 

naturally no right mix between fixed pay, annual and 

long-term incentives and there exists a wide range of 

beliefs on what the mix should look like for companies 

across different industries and in different stages of their 

growth/maturity. The mix of pay is also very often 

dictated by the culture of the organization and the 

country of operation. Our survey found that the executive 

population in India broadly follows a 50-50 split between 

fixed and incentives and within incentives again, there is 

an equal split between annual and long-term incentives. 

The mix of pay varies by role and level with the CEO 

usually showing the maximum alignment to incentives 

(46 to 54), while support roles at the next level show a 

much stronger focus on fixed compensation. The ITeS 

sector seems to be the most aggressive in its pay mix with 

more than 67% of pay being delivered through incentives 

of which two-thirds are delivered through long-term 

incentives. The IT and Banking, Financial Service and 

Insurance (BFSI) industries also represent significantly 

aggressive pay mixes. 

As we highlighted above, the Indian compensation 

structures reflect a far greater alignment towards fixed 

pay as compared to north American standards, where 

fixed pay represents approximately 20-25% of total pay 

and long-term incentives constitute the bulk of the pay 

delivered. Indian structures are possibly more aligned to 

European standards where 35-40% of the pay is delivered 

through fixed pay and the rest through a combination of 

annual and long-term incentives. As a matter of fact, while 

responding to our questionnaires, we found many 



11

organizations complain about their inability to position 

incentive pay as an equally important and relevant 

compensation component as fixed even to top executives. 

Culturally, Asian countries retain a distinct preference 

for fixed compensation across all levels of management 

and perhaps that has, in some ways, protected these 

economies from compensation mishaps like the rest of the 

world! However, as compensation levels keep growing, it 

needs to be seen the extent to which companies bring in 

performance leverage into the compensation structure and 

therefore, change the mix of pay. 

*AI – Annual Incentives, **LTI – Long-Term Incentives 

Source: Aon Hewitt TCM Studies 

d. Long-Term Incentives (LTI) Remain at the 

Core of Executive Compensation Practices 

The importance of LTI as a critical differentiator in executive 

compensation has only been exacerbated with a distinct 

reduction in the coverage of employees through LTI plans. 

Over the last five years, we have seen the coverage of 

mid-management employees go down from 50% of all 

companies to approximately 30%. With a decrease in 

the size of the employee base being covered, LTI plans 

have focused on delivering higher values to the executive 

With such a clear uniformity in 

the benefits structure and limited 

innovation in the recent times in 

this area, it will be interesting to see 

whether companies use benefits as 

the key differentiator in their Total 

Rewards package in the future. 


population and we have seen the contribution of this 

element of pay for CEOs go up from about 20% of total 

compensation to about 31% over the last four years. 

LTIs in India have traditionally been delivered through 

Employee Stock Option Plans (ESOPs). This vehicle 

remains dominant even today with more than 55% of all 

plans being structured as ESOPs. Over the last few years, 

with India almost coming to the brink of introducing IFRS 

accounting norms, a wide cross section of organizations 

chose to shift their programs to full value vehicles such as 

restricted stocks or performance shares (on account of the 

almost identical accounting expenses between ESOPs and 

these vehicles). Consequently, we found these vehicles 

constituting almost 35% of all the long-term incentive 

programs in India. 

Most long-term incentive plans in India are 

structured to vest over a 3-4 year period with the total 

term of the vehicle being between 7-10 years. 

e. Benefits Practices Present a Largely 

Uniform Picture 

Our study found organizations have a fair degree of 

uniformity in the approach towards benefits design. 

Regardless of size or nature of industry, the core benefits 

structure was defined around a set of anchors such as car and 

related benefits, housing, medical and life insurance, club 

memberships, etc. While there was variance in the value 

of the benefits being offered, almost all executives were 

covered under these benefits policies. Loans were the only 

area of benefits where there was a clear divergence based on 

the nature of the company and while financial institutions 

were most prominent in advancing loans to their executives, 

only 40% of all other companies provided this benefits. 

With such a clear uniformity in the benefits structure and 

limited innovation in the recent times in this area, it will be 

interesting to see whether companies use benefits as the key 

differentiator in their Total Rewards package in the future. 

The Story That Made Us Think 

We started this article by talking about the two simple 

questions that our study this year was focused on addressing, 

and we now turn to the second of the two – the “but why” 

of executive pay levels. We ran a few simple statistical tests 

on the compensation data that we had gathered – a 

measurement of the co-efficients of correlation and 

regression between compensation data and financial/ 

operating metrics that act as proxies for business size. We 

took revenue, profit after tax and employee size (because

We have seen organizations 

broaden their questioning 

around executive pay and we 

are working with them to audit 

their executive compensation 

practices with a view to ensure 

that there is fairness – both for the 

company and for the executive. 

of the large constitution of unlisted companies, we could 

not take market capitalization). The results reveal a 

rather disconcerting picture – the predictive relationship 

(reflected through the regression co-efficient) between 

financial metrics and compensation came out to be very 

low both from a statistically 'acceptable' range as well as 

when compared to global standards on these parameters. 

The average regression co-efficient between the CEO’s 

pay and revenue was approximately 0.20 while between 

the CFO’s pay and revenue was approximately 0.30. The 

global comparables for this were approximately 0.70. The 

results were very similar across the other metrics as well. 

This raises a range of sticky issues. Firstly, there doesn’t 

seem to be a fundamental data-driven rationale for pay 

levels. Business size fundamentals clearly do not have 

any distinct bearing on the pay for executive positions. 

Secondly, there is a huge effort that goes in, both by 

organizations and pay consultants, to ensure that a correct 

peer group is defined for benchmarking. This peer group 

definition is based on ensuring that companies with 

similar business and financial fundamentals are used for 

comparing compensation levels. But inspite of that, pay is 

only very marginally aligned to financial and business size 

fundamentals, thereby, negating the logic of the peer 

group selection process. 

As a part of this study, we also asked companies on their 

approach towards pay determination for their executive 

population. The responses did not provide us with a clear 

canvas on the thinking behind executive pay decisions. 

Almost 70% companies talked about total cost to company 

(not including LTI) as their anchor for pay determination 

PERSPECTIVE 

and 88% companies said, they would set their pay at 

between the median and 75 th percentile of the market. 

Most organizations (76%) did not differentiate their 

peer group for executive compensation benchmarking 

from the one used for other management levels. Most 

organizations highlighted their inability to manage the 

pressures of attracting the right talent and managing the 

compensation costs for executives. These companies also 

pointed out that most compensation decisions at that 

level were still largely determined on the basis of 

incumbents as opposed to the role. 

In Conclusion 

The airwaves today are packed with bad news for the 

business and economy. There is a general sense of 

discomfort around an impending doom. We are all sure 

that there is no certainty of how the next few years will 

shape up for the world and more importantly, for India. In 

our niche of executive compensation, we are wondering 

if all of this means that we will see a gradual slowing down 

in the rapid advance of executive compensation levels. We 

are wondering if this situation will make organizations sit 

up to the fact that executive compensation costs in many 

cases have perhaps gone out of sync with the sizes of the 

business that these executives manage. We have seen 

organizations broaden their questioning around executive 

pay and we are working with them to audit their executive 

compensation practices with a view to ensure that there 

is fairness – both for the company and for the executive. 

Albert Einstein, in the mid 1940s said, “The problems 

we have today, cannot be solved by thinking the way we 

thought when we created them.” His observation applies 

remarkably well to all walks of economic life today. At a 

larger level, we need to rethink the way our polity and 

economy is linked and in our little space of executive pay, 

rethink the principles that we have used in the past 

to determine compensation for the individuals running 

our companies. 

Anandorup Ghose 

Director – Executive Compensation and Governance, 

Aon Hewitt, India 

For more information, please write to us at 




13

Instead of over relying on sales 

compensation, companies need 

to develop a more sophisticated 

diagnostic system to identify 

the underlying drivers of 

cost and dysfunction. 



Compensation

Diagnosing Your Company’s Sales 

Compensation Problems 

There is no sales compensation plan that can solve 

all business problems. While this may seem intuitive, 

a challenging economy and tremendous professional 

pressure are taking a toll on business leaders, and many 

find themselves asking for sales compensation to work 

miracles. Instead of over relying on sales compensation, 

companies need to develop a more sophisticated 

diagnostic system to identify the underlying drivers of 

cost and dysfunction such as talent gaps, coverage holes 

and mismatched sales channels. Successful companies 

start by looking for these types of root business issues 

before beginning any redesign of sales compensation. 

Often, the root business issue lies in the structural 

clarity and characteristics of the salesforce the company 

is trying to attract, motivate and retain. A detailed model 

to help companies apply the best techniques for workforce 

planning brings many of these root issues to light. Such 

a model helps companies construct a fully aligned and 

focused salesforce that creates lasting competitive 

advantage while also achieving immediate business 

goals. While this work may appear to be outside of the 

responsibilities of most compensation professionals, it is 

critical to ensure compensation is addressing appropriate 

goals and issues. As a cautionary example, companies 

sometimes try to create aggressive sales compensation 

programs in an effort to overcome weak sales coverage 

models, creating alignment, cost and equity issues. 

In order for companies to have the right salesforce for 

a specific market, they must first compare their current 

workforce design to their business objectives. As illustrated 

by the representative case study that follows, nine major 

steps in workforce planning for sales emerge (see Exhibit 1). 

Nine Steps to Salesforce Planning 

1. Identify business goals and constraints 

2. Quantify opportunity in customer segments 

3. Develop productivity equation(s) 

4. Determine talent requirements 

5. Evaluate the current talent supply 

6. Quantify talent gaps 

7. Select talent gap closure levers 

8. Build the talent plan 

9. Execute salesforce transition 

Exhibit 1 

COVERstory 

A Hypothetical Business Situation 

A company, let’s refer to it as 'Acme Widgets,' is delivering 

USD 1 billion in annual revenue with 40% gross margins 

and 15% operating margins. The immediate problem is 

that two years ago, the company was delivering USD 1.2 

billion in revenue, 50% gross margins and 20% operating 

margins. The decline experienced in the previous two years 

has placed immense pressure on the senior management 

to orchestrate a turnaround in the company’s performance 

and to show the levels of shareholder return to which 

Wall Street had grown accustomed. The company has 

only 10% market share (ranking third to larger 

competitors who have 30% and 20% shares, with the 

remaining 40% of the market spread out across a 

fragmented group of smaller competitors), so both 

executives and investors believe there is an opportunity 

for expansion in a market that is growing at 5% per year. 

Acme Widgets employs approximately 400 salespeople 

and sales managers who are largely generalists. The 

company operates on a fairly simple sales compensation 

plan that pays sales representatives an average of USD 

150,000 per year, half in base salary and half from a 2.5% 

commission based on total revenue in a geographical 

territory. When the company was growing, these territories 

would grow and then divide as new sales representatives 

were added. Recently, the company has trimmed back 

the number of representatives, resulting in accounts, 

sales and commissions being distributed to the remaining 

representatives somewhat arbitrarily. Compensation 

Cost of Sales (or CCOS – the sum of all base salaries and 

actual cash incentives paid as a percentage of revenue) 

has hovered around 6% in the recent years despite 

headcount reductions. 

The CFO has decided that Acme’s return to greatness 

should begin in 2011, with goals of: 

10% revenue growth to USD 1.1 billion 

48% gross margins 

18% operating margins 

The CFO and CEO believe that much of the revenue and 

gross margin increase can be driven by selling more 

solutions to their customers’ senior-most C-Suite buyers. 

The operating margin increase, they believe, can come 

from improved gross margins plus further cuts in 

headcount and compensation. The first premise makes 

sales and marketing nervous, because the company does 

not have a track record of successful solution sales. The 

second premise makes human resources uneasy, because 

most compensation professionals understand that the 



15

chances of cutting everyone’s pay in one year and still 

fielding an engaged salesforce is slim. Talent management 

and change management experts would also contend 

that the challenge of converting an entire salesforce from 

volume-oriented commodity sellers to value-oriented 

solution sellers in a year is significant. So how should Acme 

HR help make such a transition and convince the senior 

leadership that there is a right and wrong way to attempt 

this feat? 

The Solution 

One of the critical success factors for this type of transition 

is an explicit workforce plan for sales. For companies 

engaging in successful salesforce planning, there are nine 

major steps: 

1. Identify Business Goals, Situations 

and Constraints 

If an organization, such as Acme, plans to sell solutions 

faster than the market is growing, there are different 

strategic, talent and motivational implications that exist 

for a zero growth company. Resources that manage the 

existing procurement relationships to sustain orders of a 

commodity typically possess one set of skills, while taking 

market share from competitors by selling new conceptual 

product/service bundles to senior leaders in larger 

accounts requires a very different set of competencies. The 

question that workforce planning should ask, therefore, 

is “How many of each type of resource do we need?” 

One of the basic mistakes that companies make as 

they attempt to become solution sellers is deciding 

that all of their salespeople need to possess the new 

competencies (whether through training or outside 

hiring). That is often not true for three main reasons: 

The supply of good solution salespeople in the market is 

constrained. Short of a risky acquisition, few companies 

can access a reliable talent pool to hire 300-400 of 

these resources 

Leading sales organizations 

quantify the sales potential in 

each account, the penetration 

rates, close rates, retention 

rates, sales resource seniority, 

selling time and workload 

for each sales process. 


Solution sellers command a higher price in the market 

than transactional sellers (see Exhibit 2), an economic 

reality that would create an unaffordable salesforce for 

many companies 

not all customers are willing to buy solutions, even 

under ideal circumstances 

2. Quantify the Opportunity in 

Customer Segments 

Any increase or change in the mix of revenue must come 

from a finite market. Companies can use several methods 

for sizing that market and its segments, from customer 

surveys to statistical regression. Once a company knows 

how much revenue and profit opportunity is in the market, 

how much is accessible by its salesforce, which customers 

are loyal, what market share is in the hands of major 

competitors and which prospects would be inclined 

to purchase if price, service level or product quality is 

changed, then it can determine how much of the business 

plan can be delivered from each segment. 

note that some portion of the business plan could 

still be delivered from customer segments that value only 

transactional commodities. Therefore, companies may 

decide to keep some transactional salespeople deployed 

against accounts that will most likely continue to buy 

in this manner. This can also create a gradual transition 

that takes some pressure off change management and 

salesforce transformation. In pure compensation terms, 

pay level premiums may not need to be as high to recruit 

150 new solution salespeople as they would be to get 300. 

In the case example, Acme had 50,000 total customers 

who, on an average, purchased USD 20,000 worth of 

widgets each year. Based on Acme’s customer surveys, 

there are 1,000 potential strategic accounts that can be 

targeted with solution selling and that can be expected to 

be successful in 2011. On the other end of the spectrum, 

the bottom 10% of the market is actually unprofitable. 

Profits and margins could go up by simply not deploying 

sales resources against those customers going forward, 

or by using very different resources or terms. 

The Pareto principle (also known as the 80-20 rule) 

applies to Acme just as it does to most other companies, 

meaning a significant number of accounts purchase very 

small amounts each year. These buyers state that they 

would be just as happy with a telesales representative 

as their touchpoint with Acme (in all honesty, there are 

many of these smaller customers who received no personal 

touch when the generalist territory sales representatives

Source: Aon Hewitt 2010 Sales Compensation Survey 

Exhibit 2 

Average Impact of Individual Attributes on Total Cash – Sales Representative 

were assigned more than 120 customers each). Therefore, 

Acme might be able to get higher productivity at lower cost 

with telesales resources deployed against these accounts. 

3. Develop a Productivity Equation 

Specifically define how much a single resource in a specific 

channel can be expected to produce. Many companies 

seek this information in sales compensation benchmarking 

surveys. note, however, that while there are a few surveys 

that provide reliable quota and revenue production 

information, surveys are probably best used as sanity checks 

and not the basis for a sales productivity model. Crediting 

rules for companies contributing to the surveys aren’t 

always consistent, as recurring revenue and long-term 

contracts often prevent an 'apple-to-apple' comparison. As 

a result, the numbers may have bits of apple and orange 

mixed up into a dangerously misleading fruit salad of data. 

COVERstory 

Leading sales organizations quantify the sales potential 

in each account, the penetration rates, close rates, 

retention rates, sales resource seniority, selling time and 

workload for each sales process. This creates a model that 

will help companies determine the sales resources needed 

to achieve business objectives as allocated to segments. 

For example, if Acme’s goal is to land a new strategic 

account with USD 20 million of sales potential (of which 

40% is secured in the first transaction), it might require 

a team of three people to pursue 10 prospects through a 

sales process that demands 50% of their time over the 

course of six months to yield one successful sale. 

4. Determine Talent Requirements 

What size (and shape) salesforce is needed to cover a 

company’s target markets and deliver against the business 

plan for an acceptable cost? Start understanding the sales 



17

talent requirements by using the productivity model to 

determine how many accounts a sales resource can cover. 

In Acme’s case, if each strategic account requires 60 hours 

of selling time per year, and a Strategic Account Manager 

(SAM) has a selling capacity of 1,200 hours per year, then 

each SAM can cover 20 accounts, and 50 SAMs are needed 

to cover the targeted 1,000 accounts. If strategic accounts 

can deliver USD 400,000 each in revenue, and SAMs cost 

USD 180,000 each, there is now a cost associated with the 

talent required to cover this segment and deliver targeted 

revenue. Going segment by segment, complete this initial 

sizing exercise for each type of resource. 

By articulating talent requirements and identifying the 

types of resources that will be assigned to customers, it is 

apparent that five different types of sales resources will be 

deployed (see Exhibit 3): 

SAMs (blue in Exhibit 3) – assigned to large accounts 

Territory generalists (maroon in Exhibit 3) – assigned to 

mid-market accounts 

Product specialists (maroon in Exhibit 3) – overlay 

resources assigned to assist in the sale of new offerings 

Inside sales representatives (green in Exhibit 3) – 

assigned to small transactional accounts 

Sales managers (blue in Exhibit 3) – oversee front 

line sales resources 

For each resource deployed, companies should have a 

rough number required and a set of competencies defined. 

5. Evaluate the Current Talent Supply 

It is imperative for companies to identify a set of 

competencies for each sales role within the organization. 

Exhibit 3 


Creating a workforce plan is not just about numbers of 

resources required, but also the skills or competencies that 

must be demonstrated by each. This can make a transition 

like Acme’s more complex. For example, in order to sell 

solutions to senior buyers in larger accounts, SAMs may 

need competencies such as problem solving or financial 

acumen, where previously, sales representatives were hired 

based on their negotiation or communication capabilities 

only. Acme should perform a fresh evaluation of all sales 

resources based on the new competencies defined. Leading 

companies will embed these competencies in their 

interviewing tools to screen recruits, training curriculum 

and performance management systems. 

6. Quantify Talent Gaps 

After evaluating the qualities needed in the salesforce, 

organizations need to also evaluate how many individuals 

in the salesforce possess those skills in order to determine 

how much additional hiring (and/or attrition) is needed. 

In Acme’s case, assessors may determine that just 10% of 

Acme’s original 400 territory sales representatives score 

high enough in financial acumen, leaving a gap of at least 

10 SAMs to hire from outside sources. Each role may have 

a surplus or deficit of internal talent to be addressed over 

time. The higher the talent gaps, the more the company 

will lean on the talent gap closure levers in Step 7. 

7. Select Talent Gap Closure Levers 

There are many tools that a company can use to recruit new 

sales talent, improve existing sales talent or coax additional 

productivity from resources. These talent gap closure levers 

Individual Sales Contributor Planning (Managers Driven by Span of Control)

include many of the HR programs companies often address 

in isolation, including: 

Process improvements to create more selling time, loop 

in new resources or improve sales yield 

Recruiting initiatives to access new talent pools or 

improve offer acceptance rates 

Training and development to focus on new competencies 

Outsourcing (i.e., using channel partners or agents) to 

reduce dependence on internal talent 

Career path development to accelerate the movement 

of desired talent 

Changes to compensation or benefits to attract the 

specific talent demographic in the labor market 

Leadership initiatives to get sales managers in place 

who can orient resources for strategy execution 

These levers all have time, resource and other hard or soft 

financial costs associated with them. A good workforce 

plan can accommodate a variety of scenarios and respond 

to external factors (economic conditions, competitor 

actions, etc.) with different talent management levers. 

For Acme’s SAM role, sales compensation surveys 

confirm that these resources command approximately 

a 20% premium over the legacy sales representatives. 

This means Acme would probably need to use the 

Exhibit 4 

High Level Workforce Plan 

COVERstory 

compensation lever to pay for the added skills required 

to close this talent gap. This premium could make 

the transition more attractive for successful internal 

candidates, making it a part of Acme’s sales career path. 

Alternatively, training and development programs might 

make financial sense if Acme can deploy the improved 

skills with less pay increase. Whatever the combination 

of levers used, companies must have refined market and 

employee value propositions to avert salesforce planning 

pitfalls such as increased turnover, customer churn and 

poor strategic execution. 

8. Build the Talent Plan 

A basic workforce planning model (see Exhibit 4) 

can help reinforce this approach across the necessary 

functional resources within any company. The output 

of this step should be a clear, actionable roadmap 

that directs sales, HR, finance, IT and other functional 

project leads to execute on a series of activities over a 

defined period of time with specific outcomes. Beyond 

documenting all of the supporting analysis previously 

outlined, the plan creates recipes for organizational 

success that are readily supported by existing and new 

programs and initiatives. 



19

Exhibit 5 

9. Execute the Salesforce Transition 

Execution is where many workforce plans fail. For sales, 

there are additional factors to consider, including customer 

relationships and geographically dispersed employees. 

Successful execution typically requires a clear case for 

action, a universally understood plan, adequate resources, 

visionary leadership, coordinated management, effective 

communication and frequent progress checks. In Acme’s 

case, the company chose to: 

Designate the worldwide Vice President of Sales 

as the central leader of the transition, supported by HR, 

marketing and finance and governed by a CEO mandate 

Create regional task forces composed of sales, HR and 

IT executives 

Develop standardized tools for everything from 

competency evaluation to customer communications 

Meet monthly to review key metrics, including salesforce 

turnover, revenue, customer churn and CCOS 

Use a combination of best internal resources and new 

external talent pools to fill out the new salesforce 

structure as quickly as possible, creating a hiring 

calendar that accounted for attrition and ramped up 

to a sustainable flow of new candidates without 

overloading the recruiting function 

The Result 

By following this process, Acme is able to effectively grow 

the business while still showing a drop in CCOS using key 

workforce planning levers for sales (see Exhibit 5). Acme’s 

reallocation of headcount, resource mix and associated 

pay levels reduce overall salesforce expense while 

improving talent quality and productivity to ensure greater 


Workforce Planning Drivers of CCOS 

yield. This approach brings out the best results from 

workforce planning and sales compensation when used 

together with sound market intelligence. 

Effective salesforce planning is a multi-year exercise 

for most companies. Even with a detailed plan, turning 

around a supertanker can take some foresight and 

patience. Identifying the constraining function or 

element in a specific workforce plan can help speed 

the process and exploit any bottlenecks in the system. 

The ultimate lesson is that there are many paths to the 

desired business outcomes, and the right results tend 

to come from a deeper, strategic, sequenced evaluation 

of the business model and a workforce ultimately 

supported – not created – by sales compensation. 

Contents © 2010. Reprinted with permission from WorldatWork. 

Content is licensed for use by purchaser only. No part of this article 

may be reproduced, excerpted or redistributed in any form without 

express written permission from WorldatWork. 

Scott Sands 

Principal and Salesforce Effectiveness Practice Leader, 

Aon Hewitt, Atlanta 

Marilu Malague 

Senior Consultant, Talent and Rewards, 

Consulting Practice, 

Aon Hewitt, The Woodlands, Texas 

For more information, please write to us at totalrewards@aonhewitt.com


Rewards that Work 

As companies continue to wrestle with profound business 

challenges and the ever changing workforce needs, business 

and HR practitioners are eager to gain clear insights on 

how some organizations are continuing to use rewards 

as a lever to manage talent and drive business results. 

With that in view, we had recently launched 

'Rewards that Work' – a study which aims to capture 

and showcase leading and distinctive rewards programs 

and practices. 50+ organizations shared over 100+ 

programs in the area of compensation, benefits and 

PERSPECTIVE 

wellness. The study findings along with our experience 

tells us that what determines the success of a rewards 

program is not so much the design of the program but 

how strongly aligned it is to the business strategy, how 

relevant it is to the employees and how well it has 

been executed. 

We are thankful to the winning organizations for 

sharing their success stories during our annual Rewards 

Conference and as caselets in this and subsequent issues 

of Total Rewards Quarterly. 


India • Volume 2 • Issue 2 21

Winners** 

** In alphabetical order 

Transforming Potential Into Value 

Our recent Total Rewards Research across 750 

organizations shows that high performing organizations* 

do five things differently: 

Articulate Clearer Strategies and Goals for 

Total Rewards 

High performing companies declare Total Rewards as an 

area of focus and clearly articulate a Total Rewards strategy 

at almost twice the rate of other sampled organizations. 

High performing companies are purposefully differentiating 

in the areas that are hard to replicate: culture, leadership, 

learning and development, and work-life balance. 

Balance Multiple Inputs for Decision Making 

Across the board, high performers use more data inputs. 

They balance multiple inputs that include business 

alignment, competitive position, cost and compliance. 

Connect to the Business and Employees 

High performing companies connect to employee 


American Express: 

Straight from the Heart 

For their innovative Benefits Offering 

– Dil Se and for driving employee 

health and engagement through their 

comprehensive wellness programs 

Genpact: 

Understanding Changing 

Workforce Preferences 

For driving higher productivity and 

engagement through their flexible 

working arrangements 

HDFC Bank: 

Analytics that Work 

For the innovative Benchmark Salary 

Trending and Fitment System: BeSTFit 

Hindustan Unilever: 

Building an Owner's Mindset 

For distinctive design, implementation 

and communication of the Long-Term 

Incentives (LTIs) programs 

HSBC: 

Balancing Risk and Reward 

For effective design, governance 

and measurement of their sales 

compensation programs 

Tata Sons: 

Sharing-Learning-Leveraging 

For the practice of driving governance 

and consistency in rewards management 

through capability building with the 

initiative – the Tata Rem Club 

value at a higher rate than other companies – they do it 

through flexibility, first-mover advantage, and 

follow-through communication. Also, their programs 

and strategy are much better business-aligned than 

the rest. 

Define Effectiveness Differently 

Quite simply, high performers are much more likely 

to define and measure success through a balance of 

employee value and RoI – in addition to, but at a 

higher rate than, budget and cost management. 

Earn Better Outcomes 

High performing companies are more likely to achieve 

the best business and people outcomes because they 

have achieved significant, sustainable competitive 

advantage with the Total Rewards they offer. 

*High performing organizations are defined as those that achieve 

the highest levels of revenue against objectives, innovation and 

high employee engagement. Using this definition, 150 out of 750 

(approximately 20%) fall in this category.

The Story 

Flexi Work @ Genpact 

The Beginning 

As an organization, we associate great importance to our 

value ‘We grow when our people grow’ and believe in a 

holistic approach that meets the employee needs for a 

'dream career' and not just a job. 

It is our constant endeavor to design processes 

and policies to attract and retain the best talent in the 

industry. Like most people practices at Genpact, the 

flexible work practice germinated through recurring 

employee feedback. We captured employee feedback 

through multiple forums and felt the need to design 

these options to meet the demands of a vibrant, 

dynamic and younger workforce, build a diverse work 

environment, help employees optimize personal 

productivity and optimize cost. 

As we grew in size and multiple sites within cities 

emerged, one recurring and important feedback from 

employees was to find a way to reduce travel time so that 

they could spend more time with their families. Many 

team leaders felt it was a workable solution for employees 

in non-customer facing roles to work from home (WFH) 

on a rotation basis or take up part time work. 

It was a great thought but since it was implemented 

in pockets without any central support or guidelines, 

it was not a viable or long-term solution and we still 

CASEstudy 

What stands out for Genpact is not only its agility as an organization to recognize the changing workforce 

preferences and be bold enough to apply models that redefine the workplace, but also, the robustness with which 

it implemented the program to ensure success and drive higher productivity and engagement. 

We believe that organizations can build a competitive advantage for themselves in how they attract and manage 

their workforce if they embrace these practices as a deliberate strategy and not as a one-off benefit offered on a need 

basis. Flexible work arrangements can drive benefits ranging from significant cost saving, higher productivity, better 

ability to attract and retain a diverse and geographically dispersed workforce to benefits of business continuity and 

organization sustainability. 

Here, Genpact shares with us their journey. What led them to evaluate flexible work arrangements – the 

challenges they faced and more importantly, how they got around them. 

We are sure that there is tremendous learning that other organizations can leverage from this and would like to 

thank Genpact for providing us this opportunity. 

witnessed a lot of attrition due to these reasons especially 

among female employees. This forced us to look at 

the option of providing employees with an alternate 

mechanism to continue their work from remote areas 

without compromising on data security. The popularity 

and availability of broadband connections by 2006 gave 

a boost to this idea and we shared this idea with some 

of our key customers. While some customers bought 

the idea easily, others were not very keen as they were 

worried about safeguarding their data, connectivity with 

employees and utilization of work hours. Hence, to begin 

with, we initiated this program in small pockets with a few 

customers and employees. Our internal IT team ensured 

robust controls to safeguard critical data and we put in 

place a detailed policy explaining the do's and don’ts of 

Rewards that Work 



23

flexi work to employees. The testimony from employees 

and customers and our increasing capability to attract and 

retain talent gave us the reinforcement to launch this 

program across our various businesses. 

Flexi Work = Smart Work: The Options 

Traditionally, 'flexible work' is a term used to describe all 

kinds of employment which differ from the traditional 

9:00-5:00 full time job. Our ‘part time work’ and 

‘tele-work’ practices go back to 2004-05. We realized that 

with increasing competition and the constant battle for 

good resources, we needed to expand our hiring pool. 

The part time work program gave us the flexibility to hire 

undergraduates, housewives and retired employees on 

a part time basis. These employees were trained under 

specialized training programs and helped us maximize 

our people productivity. The success of this initiative 

encouraged employees and managers to explore more flexi 

work options and through continuous employee feedback, 

we developed and institutionalized work from home and 

telecommuting practices. 

Some of the options that our employees across 

regions and levels can choose from are: 

Work from home: Employees work from home for most 

part of the week and come to office at least once or twice 

Tele-work: Employees work up to several days a week 

at sites other than their primary location 

Flextime: Employees vary the start and end times of 

their work days, whether on-site or off-site, covering 

core hours 

Remote work: Employees exclusively work from 

locations outside the primary work site (satellite or 

client office) 

The flexi work program has 

developed into a sustainable 

and enriching experience. 

To measure the overall 

effectiveness and success 

of the program, we use 

measures such as employee 

productivity, cost effectiveness, 

attrition rate, net promoter 

score and diversity at each 

business unit level. 


Part time work: Employees work in shifts and 

cover 'prime time' or high call volume hours. These 

employees are usually undergraduates or those 

pursuing higher education and work for 4-5 hours a 

day instead of regular shifts 

The Barriers and Enablers 

Every change comes with its challenges and our flexi work 

program had its share of challenges too. There were more 

questions than we had answers for. It required a paradigm 

shift in the thought processes of leaders/managers, 

employees and customers. 

While employees questioned their appraisal process, 

and were afraid of biases, managers were afraid to delegate 

critical responsibilities. We learnt that employees who 

work from home or work flexibly during select hours, were 

some times left uninformed of key developments in the 

organization thus, leaving them detached and disengaged. 

We also saw that there was limited face time between 

the employee and the supervisor. Customers had their 

own share of worries. They had questions on data security, 

utilization of resources and employee commitment. 

We realized that the success of this program was 

contingent on employee commitment and the manager’s 

and customer’s buy-in. And hence, it was important for us 

to address these challenges. 

We launched series of floor walks and communication 

efforts to educate employees about the benefits of this 

program. We ensured a non-discriminatory environment 

with no biases towards employees availing these options 

on policies that deal with employee promotion, merit 

increments and bonuses. All important information was 

shared with them through articles, blogs, write-ups and 

video clips through the intranet page. To ensure employees 

stay connected with their supervisors, we further tuned the 

flexi work guidelines to include at least 1-2 days of work

“I have been with Genpact for the 

last 13 years now. It was a tough 

decision once I became a mother 

to continue to work. Thankfully, 

I was offered to work from home 

due to which I could fulfill two big 

aspirational goals… build my career 

and look after my baby. Genpact 

trusted me to lead the Executive 

Hiring for India and that too, 

by working from home. I saved 

a lot on travel time and spent 

those hours productively to do 

my job and be with my baby!” 

Ritu Bhatia 

Assistant Vice President, 

Executive Hiring, Genpact 

from office. We groomed our managers on handling virtual 

teams and shared success stories and program case studies 

with our customers. Our strong IT setup ensured that 

employees availing the flexi work options were provided 

with special IT assets and adequate IT support to carry on 

day-to-day work. The team also ensured regular audits to 

protect critical information. Any kind of remote work was 

permitted only after specific approvals from business owners 

and at times even customers. 

We provide work from home employees with a 

company sponsored broadband connection, VPn ID, a 

laptop lock and a laptop with security controls to address 

the data security issues. We have also set up a toll-free 

helpdesk number for employees to get IT support at home. 

Additionally, a separate agreement on data confidentiality is 

signed with the employees availing these options to protect 

data and copyright materials. 

Measuring the Impact on Businesses 

and Employees 

We stayed extremely focused on measuring the 

effectiveness of flexi work programs. Employee 

productivity, cost effectiveness, attrition rate, net 

promoter score and diversity were measured at each 

business unit level to understand and arrive at the 

overall effectiveness and success of this program. 

The success far exceeded our expectations and we 

saw positive results in multiple areas. Some businesses 

were able to increase seat utilizations by approximately 

65% which contributed significantly to reducing their 

fixed cost. Another business showed a consistently 

higher eSat score for employees working from home in 

comparison to employees working from office. Typically, 

net Promoter Scores (nPS) for WFH (work from home) 

process was way higher than the overall Genpact net 

Promoter Score, a clear indicator that satisfied employees 

bring better results and are working well for our clients too. 

Employees who avail of flexi work are not shortchanged 

when it comes to annual appraisals and are in fact, more 

productive than other peers. In our analytics business, only 

~2% of our employees on flexi work were rated ‘below 

meets expectations’. 

These practices are now highly appreciated by the 

employees and their families alike. It reinforces our belief 

that 'We grow when our people grow'. It continues to be 

a very successful model and with the advances in 

technology over time, we will continue to ensure more 

robust data security systems and provide better 

connectivity for employees. The flexi work program has 

developed into a sustainable and enriching experience 

and has now become a business imperative and is 

measured at leadership levels. 

Contributors 

Co-contributors 

Smitha Pillai 

Senior Manager, C&B, 

Genpact, India 

Urvashi Singh 

Vice President, Genpact Executive Hiring 

and C&B Leader, 


Richa Sharma 

Assistant Vice President, 

Global Compensation and Benefits 


Garima Derozarieux 

Senior Manager, Corporate Communications, 


CASEstudy 



25

Global Mobility in the IT 

Sector: The Cost Factor 

2011 was a year of uncertainty for the world economy. 

Global activity reduced in its intensity; many countries in the 

Euro Zone witnessed financial crises; Japan had to endure 

the twin strikes of the earthquake and tsunami followed by 

the nuclear disaster; there were many upheavals across the 

Middle East; and closer home, in India, there was a fall in 

the growth rate to near recession levels. In such a scenario, 

one would have expected employee mobility, a phenomenon 

that is inevitable for companies competing in global 

markets, to go down significantly. 

Similar to the post recession scenario, however, 

international mobility to and from India remained resilient. 

This was driven by factors such as moderate but steady 

economic activity in emerging markets – sustaining the 

need for international assignments, rapid international 

expansion by Indian organizations – leading to more 

diverse assignments and lack of locally available qualified 

professionals in many countries driving the need to send 

employees to overseas locations. A headcount analysis of 


five of the large IT players in India, for example, reflected 

an increase in overseas headcount in 2011 by about 

10% vis-à-vis 2010 levels. 

Having said that, a key change that has been brought 

about by recession and the resulting period of continued 

low economic growth, is the significant pressure on 

organizations to reduce costs of international assignments. 

In no other sector is the impact of expatriate movements 

on costs as significant as the IT sector in India, wherein 

thousands of employees are relocated overseas every year, 

typically for projects, career development, training or 

business development. 

The decision of whether an organization deploys local 

talent for an overseas assignment or deputes employees 

from the headquarter country, primarily depends on three 

key factors: 

The availability and quality of local talent 

Visa/work permit and legal norms governing the 

mobility of talent

The differentials between local salaries and 

international assignee salaries 

In this article, we have attempted to address the latter, 

i.e., the subject of salary differentials. 

We carried out a comparison of last year’s 

compensation data of international assignees of 14 of the 

large IT firms (in India) in the Aon Hewitt database, across 

countries, with local employee compensation data in 

these countries from the Radford GTS Survey conducted 

last year. 

Negative figures signify lower local salaries vis-à-vis international 

assignee salaries 

*Data not available 

Source: Aon Hewitt Database 2011, Radford GTS Survey 2011 

The data throws up some interesting insights. In case 

of north America and Western Europe, local salaries are 

consistently higher than Indian international assignee 

salaries across management levels with the differentials 

increasing with increase in the management levels. 

Considering that the number of employee movements 

from IT organizations in India is the highest to these 

two regions, this does reflect a significant opportunity 

in cost savings on account of labor arbitrage, one 

which these organizations have traditionally been 

capitalizing on. 

Local salaries in APAC and Eastern Europe are 

significantly lower than Indian assignee salaries at 

the junior management level. Therefore, movements 

to these regions, at the junior management level, 

are more a factor of availability and quality of talent 

rather than labor arbitrage, with the exception of 

Japan where local salaries are significantly higher than 

PERSPECTIVE 

Indian assignee salaries. However, salaries across APAC 

tend to significantly increase as one goes higher up the 

management levels. Interestingly, local employee salaries 

in Eastern Europe continue to remain lower than Indian 

international assignee salaries in these regions even at the 

middle management levels. 

Though the differentials between expatriate salaries 

and local salaries in the assignment country serves as an 

important factor in decisions around employee mobility, 

the differentials of expatriate salaries across regions may 

also drive some of these decisions. 

Figures reflect annual average total cost to company in USD thousand 


Source: Aon Hewitt Database 2011 

A comparison of Indian expatriate salaries in the 

IT sector across regions reflects the highest salaries across 

all management levels in the region of north America, 

followed by Western Europe. This is primarily on account of 

higher market rates for IT professionals prevalent in these 

geographies, as well as, on account of higher cost of living 

in countries within these regions. APAC emerged as 

the third most expensive region in terms of labor cost of 

Indian IT professionals, closely followed by the Middle East. 

Salaries in Eastern Europe are the least, the differentials 

between Western Europe and Eastern Europe ranging from 

64-79% at junior/middle management levels. In case of 

specific country combinations (such as norway-Poland), 

these may be as high as 130-135%. 

As IT organizations struggle to reduce international 

assignment costs, they may find merit in evaluating the 

need to have assignees based out of high-cost/salary 

locations. For example, it may be possible in some cases to 

depute Indian assignees such as business development 

professionals to less expensive locations in Eastern Europe, 

undertaking more frequent travel to locations in Western 

Europe, rather than having them based out of more 



27

APAC emerged as the third 

most expensive region in 

terms of labor cost of Indian 

IT professionals after North 

America and Western Europe. 

expensive locations in the latter region (assuming low 

availability or quality of local talent with similar skillsets in 

Eastern European countries). It is obvious that this model 

has its own advantages and disadvantages in terms of 

possible impact on project deliveries and client relationship 

management, which need to be taken into consideration 

while taking these decisions. 

It is also interesting to note that salary differentials (in 

percentage terms) between Indian international assignees 

across regions decrease as one moves higher up the 

management levels. This may be on account of the fact 

that talent at these levels may be considered as critical and 

sometimes even ‘global’, and therefore, many organizations 

while determining the salaries of senior management 

professionals, consider the roles of individuals to be the 

major deciding criteria without as much emphasis on the 

assignment location. 

So how do salaries of employees increase when 

expatriated overseas and what is the impact on 

organization costs? 

Figures reflect multiplier of Indian international assignee salaries over the 

Indian local salaries 


Source: Aon Hewitt Database 2011 

When comparing the salaries of Indian international 

assignees to their peers in India, a significant differential can 

be observed especially in case of movements to the regions 


of north America and Western Europe – the assignee 

salaries at lower levels in these geographies are as high 

as nearly six to seven times the salaries of their peers in 

India. These differentials in salaries, however, reduce to a 

multiplier of around only two at senior management levels. 

Having said that, these when combined with additional 

costs in terms of pre-assignment, relocation and onsite 

administration support further increase the organization 

costs, thus making each expatriation expensive. 

It has always been a tight rope walk for most HR/ 

mobility practitioners in IT organizations to balance 

the expatriate assignment costs with maintaining 

competitiveness of the expatriate salaries. Going by the 

growth forecasts for the global economy for the coming 

year, the rope is expected to become narrower. 

Regional Categorizations: 

North America: Canada and USA 

APAC: Australia, China, Hong Kong, Japan, Malaysia, 

new Zealand, Philippines and Singapore 

Western Europe: Denmark, Finland, France, Germany, 

the netherlands, norway, Ireland, Italy, Spain, Switzerland 

and the UK 

Eastern Europe: Poland and Romania 

Middle East: Qatar, Saudi Arabia and the UAE 

Kartik Rishi 

Solution Lead – Expatriate Compensation Practice, 


Udit Narula 

Consultant – Compensation Practice, 


For more information, please write to us at totalrewards@aonhewitt.com

Rethinking the Future 

of Total Rewards 

PERSPECTIVES 

Our Annual Rewards Conference, held on April 26, 2012 gave us the opportunity 

to meet an extremely impressive lineup of industry stalwarts. We managed to 

catch up with some of them for a short tête-à-tête in between their sessions, and in 

this feature, we bring to you a CEO’s, an Investor's and HR Heads' perspectives on 

the future of Total Rewards. They talked to us about the expectations from HR, the 

evolving governance environment for compensation and lots more. 



29

Parag Shah 

Managing Partner – 

Mahindra Partners 

Q. In today’s context, what are the 

key expectations that you have 

from Hr as a business leader? 

A. I think the first would be for HR 

to be a ‘partner’ to business. To 

do that, they need to begin with 

playing an active role in the business 

planning meetings, in strategy and 

budgeting sessions, and not limit 

their contribution only to aspects 

‘traditionally‘ related to human 

resources. HR needs to be a key 

contributor in shaping and positively 

impacting the business over time. 

The second, clearly, HR needs 

to think out-of-the-box. For example, 

in our industry, we have businesses 

which are at different life stages – 

from startups to mature businesses, 

and many with global footprint. 

There is rapid technological 

development with social media 

network available at all times. Under 

such dynamic internal and external 

environment, the HR strategy must 

also change and that’s where I feel 

HR needs to step-up. They need to 

ensure that they bring in flexibility to 

deal with complexity. 


The third is about governance. 

The focus on governance has 

sharpened, and HR has a critical role 

to play in ensuring that not only are 

they able to liaison with the regulatory 

bodies, but also develop robust 

systems and practices that will help 

create a culture of self-governance. 

Q. on the point of governance, how 

do you see it evolve, going forward 

in India? 

A. I think there will be two types 

of governance mechanisms: selfgovernance 

and government-defined 

or regulatory-driven governance. 

I personally feel, organizations 

today need to focus on ensuring the 

former, while the latter will follow. 

We at Mahindra Group, have had 

great success in this area. In 2009, 

Forbes ranked Mahindra among the 

top 200 most reputed companies in 

the world and we pride ourselves for 

living up to our Core Values. Even our 

new corporate brand, Mahindra Rise, 

launched in 2011, is not so much a 

rebranding initiative as it is a culture 

transformation initiative. It’s about a 

common purpose, a common goal 

and has governance as an integral 

part of it. 

If we can get the self-governance 

aspect right, the mandatory or 

regulations will only be a secondary. 

Right balance is critical to the success 

of governance in any context. 

Q. What are your views on the 

disparity of pay between entry level 

and CEo compensation in India? 

A. I think there is always going to be 

a difference. The moot point is how 

much of a difference? One way to 

look at it is to study the GInI index 

as that is a fairly standard metric that 

will show where India stands. If I am 

not mistaken, we are quite low in 

our scorecard. However, it has a 

lot to do with perspectives. The 

top management believes in being 

co-owners to the success of the 

organization and therefore, feel that 

they need to be rewarded differently. 

Whereas those at the grassroots 

level believe that they are the real 

drivers of the business – the brick 

and mortar part. I definitely think 

there is high disparity in India, and 

a correction is likely, going forward. 

Though I do hope that it is driven 

by the stakeholders and not so 

much by the government. A healthy 

difference is important since it puts 

the accountability with the person to 

perform and be rewarded accordingly.

Q. As a business leader, what 

are the expectations you have 

from Hr? 

A. Knowledge of the business and 

the ability to think strategically and 

in step with business/line managers 

is really the single most important 

expectation from HR. We need 

HR professionals who understand 

the business so that they can create 

fair and transparent HR models 

around the business requirement 

and not separate from it. 

Also, I strongly believe that talent/ 

HR management is as much a business 

manager’s responsibility, and they 

need to own the people strategy 

along with HR. Business framework 

and the people framework specially 

in a services organization need to be 

very closely aligned and integrated. 

One way to facilitate this is 

through job rotation and through 

being ‘engaged’ in the day-to-day 

operations of the business. In my own 

organization, one of our business 

managers has recently moved to take 

on the Head HR portfolio. 

Q. Compensation today is possibly 

the single largest investment that 

the organization makes for its 

people. As a business leader, what 

is your view on the effectiveness or 

on the returns from this investment 

and what is the best way to 

measure this? 

A. I think this is an extremely 

important question. An increase 

in salary should be commensurate 

with an increase in efficiency or 

productivity of an individual or else 

there is a risk of creating a ripple 

effect, which will take the employees 

to a point where they are non-hirable. 

We didn’t see organizations 

focusing on this aspect till 2007, 

especially in our industry, which for 

7-10 years saw a CAGR of 30%. Post 

the downturn, however, as businesses 

came under pressure, this issue came 

to the forefront. now, when we look 

at compensation benchmarks, we are 

also parallely looking at performance 

and productivity benchmarks. An 

employee who is at the 90 th percentile 

on compensation is being evaluated 

on whether the same bears out when 

we benchmark his/her performance 

or competence. 

Defining the right performance 

measures and conducting 

productivity/efficiency analysis is key 

to measuring the effectiveness 

or returns from your investment 

in compensation. 

Q. Innovation vs. Execution focus, 

what do you think is the need of 

the hour for rewards professionals? 

PERSPECTIVES 

Rajeev Jain 

Chief Executive Officer – 

Bajaj Finance 

A. This is a very interesting question. 

To my mind, execution holds the 

key. Execution is about constantly 

improvising, about taking you to 

the last mile. You can have the 

best-in-class program or policy but 

if it is not executed well, it really 

does not hold much meaning. 

Barring the 2% of the population for 

whom very complex compensation 

structuring is required, for the 

remaining 98%, execution has far 

greater importance than innovation. 

Having said that, I am in no way 

advocating that innovation is not 

important. We need to constantly 

challenge ourselves, think 

out-of-the-box to stay ahead of the 

curve. If I was to give a weightage, 

I would say, it is 20% innovation and 

80% execution. 



31

Animesh 

Kumar 

Group Head – HR & 

Corporate Communications, 

IDFC 

Q. How are you seeing 'total 

rewards' evolve to meet the 

changing needs of the workforce? 

A. While it is important to look at 

segmenting rewards and making 

them more meaningful for their 

targeted groups, I believe, it is far 

more critical to create a sense of 

higher purpose within organizations. 

Great organizations are moving 

towards a 'Total Rewards approach' 

that looks at pay as just one, albeit 

important, element of the overall 

package. Simultaneously, employees, 

both current and potential, are also 

beginning to evaluate potential 

employers on a wider array of 

parameters such as organizational 

culture and purpose, employee 

experience, learning/growth 

opportunities, flexible working 

arrangements, commitment to a 

triple bottom line approach, etc. In 

this context, organizations must 

rethink the design and management 

of their rewards programs and 


showcase the total employment 

deal to be able to attract the most 

appropriate talent – talent that is 

not just functionally competent 

but also culturally aligned with the 

values and purpose of the firm. 

Q. What about Gen y in particular? 

What do we need to do differently 

to attract and retain them? 

A. The answers that have emerged 

for enabling organizations to meet the 

needs of a changing workforce would 

hold good for the 'Millennial' (or 

Gen Y's) as well. I have found that the 

'Millennial' talent gravitates towards 

firms that have a clearly defined 

and articulated sense of purpose. 

Therefore, organizations that 

succeed in creating a strong 

psychological relationship in addition 

to a competitive financial contract will 

be better able to attract and retain the 

'Millennial' employee. 

The 'Millennials' have a deep urge 

to explore and experience different 

avenues in the first decade of their 

careers. Firms need to be able to 

leverage this and create opportunities 

for them to experience different roles 

within the organization early on in 

their careers. 

Other than that, creating flexible 

working arrangements backed by a 

technology infrastructure and clearly 

defined productivity measures are 

alternatives that have been tried 

successfully by many companies. 

Q. do you think pay disparity 

(between entry level and top 

management) is an issue in India? 

And if yes, what are some of the 

strategies we should possibly adopt 

to correct this in the future? 

A. The income differential between 

an employee at the entry level and 

at the top management level in 

India is probably far higher than the 

global average. This is an important 

issue, as also a very complex one for 

which there are no easy answers. 

For one, the leadership talent in 

India is often sourced internationally 

and/or is globally mobile. This 

necessitates that pay levels are 

referenced to a wider geography and 

not constrained just by local demand 

and supply economics. However, this 

is not necessarily the case for talent 

across all levels within companies. 

This coupled with a severe shortage 

of leadership talent (fuelled by our 

economic growth since the early 

'90s), has increased leadership level 

payouts exponentially, contributing 

further to pay disparities. 

While a part of this issue will be 

corrected through an increased flow of 

Indian origin leadership talent willing 

to relocate to India (a clear emerging 

trend over the last five years), there 

is no option for companies but to 

significantly enhance the investment 

in developing leaders internally. Like 

I mentioned before, there are no 

easy answers. 

Q. do you feel that increased 

governance may in some ways help 

reduce this disparity? 

A. Pay levels should reflect as they 

always will, the play of economic 

value-added and demand supply 

dynamics. Increased governance 

therefore may not be the panacea 

or the best way to address this 

issue. What I expect increasingly 

will happen is increased shareholder 

activism, especially by institutional 

shareholders to ensure that senior 

employee income and payouts 

are sharply linked to investor 

wealth creation and long-term risk 

management in order to maintain 

a sense of fairness and proportion.

Q. How do you think employers 

should position ’total rewards’ to 

their employees in India? 

A. Well, I think, as we in India move 

from cash or cash plus benefits, to 

a more encompassing definition 

of Total Rewards, it is important to 

caution against the extreme, where 

every dollar spent on the employee 

is quantified and listed. The key 

principle is around the investment 

that the organization is making in 

an employee and the value that the 

employee sees in it. Simply put, 

your Total Rewards should be able 

to communicate the investment 

that an organization is making in an 

employee and not simply the cost. 

For example, if we were to include 

the cost of say a mobile phone 

provided to an employee, then 

there is a risk of getting viewed by 

employees as ‘too cheap’. The key 

lies in using a balanced approach. 

Q. What in your opinion would be 

the most effective measure of your 

rewards programs? 

A. Many companies struggle to 

define a measure to assess the 

effectiveness of their rewards 

programs. However, I believe, there 

are three or four simple parameters 

that you need to look at: 

First, is the program driving the 

right or desired behavior and are you 

rewarding it appropriately? 

Second, are the right performance 

metrics in place and is the rewards 

program closely tied to these metrics? 

Third, is the program helping you 

retain your key and critical talent? 

And fourth, perhaps the most 

important one – has the rewards 

program helped achieve the desired 

business result? 

There are a lot of additional 

metrics that one can look at – cost 

per revenue, etc. but my personal 

view is that there are so many other 

variables that impact these metrics 

and one cannot really look at them 

in isolation. 

In my mind these four parameters 

that I spoke about earlier are 

probably the best indicators for 

measuring the effectiveness of your 

rewards programs. 

Q. What in your opinion can the 

Hr function do to better support 

the business? 

A. I think, increasingly, people and 

organizational decisions are forming 

a part of the broader organizational 

strategy and that’s where HR needs 

to play a key role. HR needs to 

step-up and organize itself by being 

more proactive and adaptive to the 

rapidly changing requirements of the 

PERSPECTIVES 

Krish 

Shankar 

Executive Director – 

Human Resources, Airtel 

organization. It is important for them 

to be a part of the organizational 

planning process and help directly 

influence the future strategy and 

business success. They need to define 

and own the people and talent 

strategy and not have a reactive 

approach to managing talent. 

Q. do you see governance of 

compensation management 

changing in the next couple of 

years because of what we see in 

the external environment? 

A. Yes, definitely. There will be 

regulations which will see greater 

governance especially of top and 

senior management compensation. 

In my view, companies themselves are 

likely to define a strong governance 

structure to drive transparency and 

equality. Reliance on market/external 

benchmarks and audits is likely to 

increase. Also, I see the Board playing 

a much larger role in ensuring a 

balanced portfolio of what people 

get paid. 



33

SURVEYCAlEndAr 

FMCG Manpower and 

Productivity Study January-May 

The study provides credible benchmark data on 

manpower productivity. It looks at the return 

on compensation spend, while comparing 

productivity trends, headcount and payroll cost 

allocations, etc. 

Best Managed Boards Survey 

January-June 

This survey in conjunction with BSE, NSE, SEBI 

and Mint is focused on identifying the best 

practices in corporate and board governance 

in India. 

Short-Term International 

Assignment Study February-March 

The study focuses on capturing policies and 

practices as well as daily allowances paid 

for short-term international assignments. 

Salary Increase Survey 

Phase I: June-September 

Phase 2: November-February 

One of the most exhaustive studies in the area 

of performance and rewards in India. The 

study measures actual and projected salary 

increases, variable pay and performance data 

across employee categories. 

Executive Compensation Study 

September-January 

The study provides organizations with access 

to rich analysis of data and practices in 

executive compensation. 

Campus Compensation Study 

(CCS) October-December 

The study provides organizations with trends 

in compensation for MBAs and graduates from 

top business schools and engineering colleges 

across the country. 

India Telecom Forum 

October-February 

One of the flagship studies in the telecom 

sector that captures cash and benefits 

information across 170 positions. 

India Hotel Survey 

May-September 

The study covers a comprehensive list of 

200+ positions across 11 groups and 

160+ properties. It analyzes differentials by 

city, locations and covers key business metrics. 

India FMCG Forum 

June-December 

The forum brings together all major MNCs and 

Indian FMCG organizations to benchmark their 

positions, levels and benefits across the industry. 


SIAM Automobile Forum 

October-January 

A study of all auto manufacturing organizations 

covering compensation data across levels and 

functions of management. It also serves as a 

platform for sharing best practices. 

India Pharmaceutical Forum 

June-September 

The forum brings together the key MNCs 

and Indian pharmaceutical organizations 

to benchmark their positions, levels 

and benefits across the industry. 

Medical Technology Forum 

July-November 

The study covers leading organizations in the 

medical devices/technology domain providing 

robust and comprehensive information on 

cash compensation and industry trends. 

Hi-Tech/IT Industry Study 


The study provides robust and comprehensive 

information on cash compensation and 

industry trends across 180+ companies. 

ITeS Industry Study 

March-June and November-February 

A comprehensive study that covers 

500+ positions across 60+ job families. 

The study includes detailed cash compensation 

and industry trends across domestic and 

international businesses. 

Indian Semiconductor and EDA 

Forum (ISEF) July-September 

The forum brings together leading 

semiconductor and EDA companies to 

benchmark compensation and share salary 

increase trends, variable pay practices, key 

organizational metrices, etc. 

Variable Pay Practices and 

Benefits Study October-January 

A comprehensive study for the IT and ITeS 

industry capturing 35+ policies and details on 

plan eligibility, entitlement, design and other 

policy features for 100+ organizations. 

Skills Study May-August 

Upcoming Insights 

This study provides benchmark information 

and best practices with regards to managing 

compensation for niche and differentiated 

skills in the IT and ITeS industry. 

McLagan – Banking & 

Financial Services Insights 

India Banking Forum Study 

May-October 

A study for all major Indian and MNC banks 

to come together to share and benchmark 

their positions and levels across the industry. 

Capital Markets Forum Study 

April-September 

A benchmark study conducted for large 

MNCs and Indian institutional securities firms 

covering equity capital markets, debt capital 

markets and investment banking job families. 

Investment Management 

Forum Study June-October 

A flagship study in the asset management 

sector covering key job families like fund 

management and sales. 

Private Banking Forum Study 


A study covering large Indian and MNC 

private wealth management organizations to 

benchmark key roles across functions. 

Life Insurance Forum Study 

August-January 

A study of the largest life insurance players in 

India covering positions across all channels 

of distribution and key corporate functions. 

Retail Broking Forum Study 


A study covering Indian and MNC retail 

brokerage organizations to benchmark 

positions across sales, PMS and other functions. 

Private Equity Forum Study 


A study of private equity players covering key 

positions across fund management roles. 

NBFC Forum Study 

November-March 

A study of large NBFCs covering 100+ unique 

roles across sales and support. 

For more information, please write to 

us at totalrewards@aonhewitt.com

'total Rewards Statements' tRS 

Employers have seen the potential of Total Rewards for many years. Each year, they invest vast sums on their 

Total Rewards programs. But, are organizations really reaping the return on their investments? 

Aon Hewitt can help 

Quantify and define the full value of your Total Rewards programs 

Communicate them in a clear, concise and consistent manner 

Innovate and differentiate your programs for a sustainable competitive edge 

Introducing 'total Rewards Statements' tRS 

An online employee portal that can consolidate in one convenient platform – the full value of Total Rewards, 

details of relevant policies and programs, essential employee profile and career history, calculators to model 

future wealth creation, make flexible benefits choices and much more. 

For further details and queries, please contact 

Madhvi Pande at madhvi.pande@aonhewitt.com 



35


Learning Center 

For HR professionals to provide real functional expertise that is both strategic and leading-edge, they must hone their 

skills and capabilities. 

Aon Hewitt Learning Center (AHLC) provides targeted courses in Human Capital Management for HR and 

non-HR professionals. 

Leveraging Aon Hewitt’s extensive experience and research in various aspects of HR, the courses and curriculum are 

designed for a result-oriented learning experience. 

A set of courses would culminate in a ‘Role-Based Certification’, that will assist professionals in their current or 

intended roles. 

over 3,000+ professionals certified across Asia Pacific. 

Four dimensional learning 

Study Module 

e-Learning Module 

Virtual Classroom/Classroom 

Communities of Practice 

Activities/Cases/Additional Learning 

Equipping you to be a World-Class HR Professional 

For further details and queries, please contact nanjundi Karthick at nanjundi.karthick@aonhewitt.com 


Upcoming courses 

Compensation Analyst Level 1 & 2 

Short-Term Incentives and Long-Term Incentives 

Expatriate Compensation

Revitalizing Sales Compensation - Aon

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