Praveen Goel is happy and worried. Happy when he holds the
two kids that got delivered within matter of minutes; worried when he looks at
his wife that decided to quit her job because of them. And after six years of
service in the same company, he is waiting to receive his offer letter from BeDifferent
India., an IT company, today.
How Praveen Goel was hired
Monday 10:00 HRS, HR Division, BeDifferent India.
For BeDifferent, Praveen is the ideal
candidate for the position at middle management. But there’s a catch. Based on the company’s policy, Praveen’s total
rewards aren’t going to be very different from what he is currently earning. While
he picks up the phone to ask his secretary to let Praveen in, the VP, HR
ponders over the company’s tagline,” BeDifferent:
We are just not like everyone else.”
Director HR:
Welcome, Mr. Goel. Congratulations on
the twins! Just saw their pictures on Facebook. You are a lucky guy.
Praveen: Thank
you, sir. God has indeed been very kind.
Director HR: Sit down, Mr. Goel. We are hoping to extend your streak of good fortune.
Without much ado, let us get to
your offer letter. Before I do that, thank you for being very forthcoming about
what’s on top of your mind while you seek to engage with us.
You told us that you have loans
to clear and money is on topmost of your mind. We perfectly understand that
fatherhood brings with it additional responsibilities and concerns.
To take care of your loans, the
experts at our preferred bank are ready to talk to you. They tell us that they
can reduce the rate of interest on your home loan by 2% and your personal loan
by as much as 3%.
The bank also has a great deal on children’s plans that will
ensure enough security for your children’s future while not imposing on your
present capital. And you can choose to allocate more in future based on your
requirements.
Just in case your wife happens to change
her mind in future, our best-in-class daycare center is at your disposal for a nominal fee. You can drop in to
see your kids whenever you have the time for it at office. And… if we continue to grow at our current rate, we should be able
to hire your wife as well.
For working parents, we have a flexible policy that allows
you to work from home whenever there is an emergency, or when you have to make
that urgent visit to the doctor’s.
Our HR teams have tried to ensure
that your requirements are met to the best of abilities. And this is your own, tailor-made offer
letter. Do go through it carefully and let us know when you are ready.
Monday 21:00 HRS, Vista Boulevard, Praveen’s
home.
Taking a sip of his favorite
coffee custom brewed by his mother, Praveen thinks of the offer letter he
signed that day. He had told his beaming
wife everything in the offer letter leaving
out the day care center and the prospects for her career at BeDifferent. There
will be a time for that, he had told himself.
How Sunita Matkar was hired
Monday 10:00 HRS, HR Division, HireDifferent India.
Sunita Matkar is all confidence as she steps into the room
for her final round of HR interview. Her stellar academic career has been
eminently aided by the many loans the banks have invested in her. She isn’t
worried though. Every company that has interviewed her wants her.
Sunita isn’t sure how a start up
like HireDifferent is going to match what’s already hers for the picking. But
she is curious. Three of the four top ranking students in her University picked
up offers from HireDifferent in the previous two months. She smiles as she reciprocates the handshake
from the HR Director. So far, there isn’t anything very different, she thinks
in her head.
Director, HR: Hi
Sunita, take your seat. It has been a
pleasure going through your resume. It talks of a very spirited person with
great ambition.
Sunita: That is
most flattering, thank you sir.
Director, HR: No,
you most deserve your laurels. And going by what you previously told us, there
are many companies that have been as flattering.
Sunita: Thank you
sir. It has been quite a struggle to
get to where I am.
Director, HR: Absolutely. And at this company, we appreciate such
tenacity very well. Our team of experts
went through your requirements to come up with an offer letter that I am now
going to discuss with you.
We see that you already have an
account with our preferred bank. They have agreed to reduce the interest rate
on your loan by 4%. At their current rate, and allocating 30% of the salary we
are about to offer you towards the loan, you should be able to clear your
liabilities in under three years.
To further your academich
credentials, a sum of 1 Lakh rupees is available at your disposal for
certifications that fall within your line of interest. And this is over and
above your total compensation.
The best caterers in this city
have been shortlisted to sell in our cafeteria.
As a special case, the company will be reimbursing your meals for the
next three years. Details are in your letter.
To ensure that your safety in
this city is not compromised, you can use our third-party agency to select an
apartment that is most conducive to your stay. And every time you work beyond
regular hours, a cab will be available at your disposal. All this comes at no extra cost. If you choose
to opt for a shared accommodation, our Gang-Of-Girls team at HR will be more
than willing to assist you.
Ms. Matkar, I have only covered benefits that are exclusive
to your requirements. We have much more going on in your offer letter. I will
allow you for the time that you deem sufficient to get back with your answer
for us. Have a great day!
Monday 18:00 HRS, Coffee Day
Sunita’s friend Priyanka is
exasperated. “Are you serious?” “You turned down an offer with Revensys for a
startup. What were you thinking?”
“You know me very well,
Priyanka”, Sunita smiles confidently. If I had not dared to be different, I
wouldn’t have been where I am.
What do employees really want?
Different things actually, based
on their age, marital status, gender, and ethnicity. But the one thing that
every employee desires is to feel wanted and to be special. To that end,
employee benefits, while factoring in performance, should also evaluate employee
requirements.
Because it is near impossible to
tailor the reward system for each employee, the Total Rewards System accounts
for most of what is important to employees. Total Rewards plays important role
in attracting, retaining, and engaging the talent in IT Companies in
India. The Hewitt1 system of
Total Rewards is illustrated below.
A right balance of all the
four aspects of Total Rewards can help organizations attract the right talent
and also engage and motivate existing talent in the organization. It has been
proven by Aon Hewitt in its Engagement Methodology (Say, Stay & Strive)
that highly engaged behavior in a striving culture has a positive impact on business
results.
According to SHRM2,
the right total rewards system which is a blend of monetary and non-monetary
rewards, once offered to employees can generate valuable business results.
The Preferential Rewards System?
The Total Rewards system works
very well in organizations with mature and automated processes.
For companies that do not have
automated systems, it makes sense to go with a preferential-based approach.
This approach uses buckets based off of a specific demographic segment or group
of demographic segments. It aims to minimize the administrative and manual load
of the HR organization while at the same time providing the benefits of a total
rewards system.
Preferential Rewards System: My Observations and summary
In order to understand the
need for having a preferential based Total Rewards in IT Industry, I reached
out to over 200 IT professionals from close to 70 IT firms across India. Emphasis was given to reach out to all levels
of the organization starting from Junior Professionals to Top Management. 75 respondents finally participated in the
study.
To understand the quadrant in
Total Rewards that is most preferred by all respondents, I used the following
table to classify the data at hand.
Total
Rewards Categories
|
Most Likely (5)
|
Likely (4)
|
Neither less nor likely (3)
|
Less Likely (2)
|
Least Likely (1)
|
Cash (Base Pay, Incentive)
|
37%
|
20%
|
16%
|
0%
|
0%
|
Benefits (Insurance, Paid leaves, stocks, Transport etc.)
|
7%
|
30%
|
34%
|
88%
|
100%
|
Working Environment
|
36%
|
18%
|
21%
|
12%
|
0%
|
Learning & Development / Career Opportunities
|
20%
|
32%
|
29%
|
0%
|
0%
|
Taking Most Likely and Likely
into account, Cash incentives (57%)
top the list followed closely by Working
Environment (53%) and Learning/Career
opportunities (52%). While it comes
as no surprise that cash incentives top the list, it is interesting to note the
importance given to working environment and learning opportunities over other
benefits such as Insurance and paid time off.
Participants were also asked
to rank their preferences across 10 sub categories of Total Rewards in a scale
of 1 to 10 with 1 being the most preferred option and 10 being the least
preferred. Here, base salary/fixed
salary continues to remain the most preferred option followed by work-life balance. Variable Compensation and Transport Allowance
are the least preferred options.
Rewards
: Sub Categories
|
Most Preferred
(Rank 1)
|
Least Preferred (Rank 10)
|
Base Salary / Fixed Pay
|
37
|
4
|
Work Life Balance
|
26
|
3
|
Career Opportunities
|
18
|
0
|
Learning & Development
Opportunities
|
11
|
0
|
Health and Wellness Benefits
|
9
|
1
|
Retirement Benefits
|
6
|
5
|
Stocks/Long Term Incentive
|
5
|
4
|
Transport Allowance
|
5
|
11
|
Variable Compensation
|
5
|
19
|
Paid Time Off
|
2
|
2
|
Gender Based Preferential Results>
Under most preferred rewards, there has been a consistency observed across
genders but in the case of female respondents, Health and Wellness Benefits trumped Learning and Development. For
men, learning and development was among the top 4 priorities.
Key observations:
·
Female respondents preferred work-life balance to base
compensation. For men, work-life balance comes a very distant second to base
compensation.
·
Male respondents preferred learning and development
opportunities over wellness benefits while for female respondents; it was the
other way round.
·
Surprisingly female respondents have rated Variable
Compensation on par with Learning and Development. On the other hand, for the
menfolk, variable compensation is at the ninth position from the ten available
options.
It was also observed that 65% of the Male participants and 62% of the female participants
supported the concept of preferential-based total rewards.
Age Group Based Preferential Results
Based on the respondent’s demographic details, there were five age groups under which analysis was done. Key observations from this segmented population is captured below –
The analysis gives some
interesting observations and the same can be understood as per below-
·
Respondents less than 25 years
of age: Base compensation tops the
list at 60%. Career Opportunities and Learning and Development follow in order
at 20% each.
·
The 25.1 to 30 Years of age
group: Base salary, Career
opportunities, learning and development are in the top three like the previous
group. No major changes here except that
Health and Wellness benefits are viewed more favorably (11% as compared to 0%
in the previous group).
·
The 30.1 to 35 Years age group: Work Life Balance not only
trumps Base Salary, it outperforms Career opportunities and Learning. This
could probably be attributed to employees entering into the post-marriage phase
of their lives.
·
The 35.1 to 40 years of age
group: While the preferred options
remain the same as in the previous category, the key difference here is that
the difference between Base salary and Work Life Balance is just 5%. It
indicates the relative importance of work life balance priorities for this age
group. The age group looks forward to enhanced career and learning
opportunities as well.
·
The 40+ age group: Like their youngest peers,
participants with over 40 years of age are very clear on their priorities. 60% of
the participants prefer base salary whereas the remaining 40% prefer work-life
balance. None of the other benefits compete well with these two priorities.
While research was carried out to
draw comparisons among various other demographic variables as well, it was
found that Total Rewards can best be offered as “Preferential Benefit” if
mapped with Age Group as primary
classification.
Based off this analysis, it was
concluded that Total Rewards can be offered based on a segmented
population. While cherry picking just one
analyzed option is not desirable, linking all categories of total rewards can
get very complicated.
Segmented based Total Rewards are
a strategic decision for any IT organization.
While this concept is being discussed, implementation of all four quadrants
defined by Aon Hewitt for Total Rewards has not been achieved in reality. With
the changing nature of the IT demographics in India, HR companies will have to
seriously consider their approach towards total rewards if they are to
effectively hire and retain the best employees at their disposal.
References:
1.
“Total Rewards” Definition from Hewitt’s Annual
Seminar presentation held in November, 2013 in Bangalore, India
2.
Implementing Total Rewards Strategies (SHRM
Foundation) by Robert L. Heneman, Ph.D. with assistance from Erin E. Coyne
(website: http://www.shrm.org/hrdisciplines/benefits/documents/07rewardsstratreport.pdf)
