For managers & above i.e GM , DGM’s , VP’s etc what do you think is the %age of variable pay to CTC ???
From India, Mumbai
From India, Mumbai
Hi Chintu,
Need to know which industry specific you are associated with. However majority of the companies give variable pay in the range of 10-30% of their CTC; with few exceptions for Sales and Business Development team. The frequency of payout is annual for the majority of companies. However for sales staff, the payout is observed to be monthly or quarterly, depending on organization compensation policy.
In a growing economy, the role of Senior and Top management is pivotal in the growth of organizations. This is reflected in the Variable Pay structure of their compensation. The spread in the variable pay range is seen highest at the middle and senior management levels. Across industries the average variable pay should be between 15% - 20%.
From India, Bangalore
477Need to know which industry specific you are associated with. However majority of the companies give variable pay in the range of 10-30% of their CTC; with few exceptions for Sales and Business Development team. The frequency of payout is annual for the majority of companies. However for sales staff, the payout is observed to be monthly or quarterly, depending on organization compensation policy.
In a growing economy, the role of Senior and Top management is pivotal in the growth of organizations. This is reflected in the Variable Pay structure of their compensation. The spread in the variable pay range is seen highest at the middle and senior management levels. Across industries the average variable pay should be between 15% - 20%.
From India, Bangalore
ours is an FMCG organisation & the sales team incentives are set we were just talking about the back end people like HR, marketing, accounts, finance, operations etc
From India, Mumbai
From India, Mumbai
Their is no specific guidelines or structure that specify the %age of break up. Its all based on the individual organization financial strength as they have to pay to the employee at one go and kind of employees / location & industry they are in.
Rohit
From India, New Delhi
Rohit
From India, New Delhi
In addition to logics given by Rohit, the % variable depends upon company’s philosophy - especially that regarding the Incentives.
If company wants employees’ motivation to achieve certain targets/goals/expectations- the considerable portion of their CTC needs to be variable . Apart it needs to be weighed with market trend, level of employee, psychological comfort/surety expected from employee for committed CTC etc.
Hence as said by expert above there is no One Size Fits All solution or “Manual” available for Variable Pay.
Once having it in place you also need to review it regularly to arrive at Most Effective variable pay policy for your organization as the post implementation scenario would provide you the feedback.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
If company wants employees’ motivation to achieve certain targets/goals/expectations- the considerable portion of their CTC needs to be variable . Apart it needs to be weighed with market trend, level of employee, psychological comfort/surety expected from employee for committed CTC etc.
Hence as said by expert above there is no One Size Fits All solution or “Manual” available for Variable Pay.
Once having it in place you also need to review it regularly to arrive at Most Effective variable pay policy for your organization as the post implementation scenario would provide you the feedback.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
Variable pay concept has its base as 'performance linked incentives'. As already pointed out by some experts above, there are no standard norms in terms of percentages associated with it. Mature organizations first put in effort to define the KRAs/ Goals of employees, in their departments such as HR, marketing, accounts, finance & operations, which directly contribute to the bottom/ top line of the company. Then they evolve measures (KPIs) to determine individual achievement. Such an elaborate exercise is difficult to manage unless there is some goals tracking mechanism.
What I wish to convey is the need to have a proper system to manage the variable component of employees remuneration. Where the goals contribute to the company revenues on a monthly basis, as is applicable to employees in the business development role, the payment should preferably be on a monthly basis. In other cases, it can be quarterly/ half-yearly/ annual, but essentially based on performance (contribution to only the financial goals of the company, which include optimization of expenses for departments which are cost centers).
I am aware that 'EmpXtrack' has helped organizations in the FMCG/ Retail sector with solutions to manage Variable component. I may suggest a visit to their website (through Google search) & going through various details (including some articles in their Blog) & contacting them if you find something valuable.
From India, Delhi
What I wish to convey is the need to have a proper system to manage the variable component of employees remuneration. Where the goals contribute to the company revenues on a monthly basis, as is applicable to employees in the business development role, the payment should preferably be on a monthly basis. In other cases, it can be quarterly/ half-yearly/ annual, but essentially based on performance (contribution to only the financial goals of the company, which include optimization of expenses for departments which are cost centers).
I am aware that 'EmpXtrack' has helped organizations in the FMCG/ Retail sector with solutions to manage Variable component. I may suggest a visit to their website (through Google search) & going through various details (including some articles in their Blog) & contacting them if you find something valuable.
From India, Delhi
Dear Chintu,
In addition to above responses, the variable portion of remuneration can also depend on which stage of growth the organisation is in.
For an organisation growing rapidly in initial stage, the variable pay can be more. Same goes when the company is into expansion mode, or looking at achieving specific objectives. Even the higher management variable pay can also be related to achievement of those specific objectives.
Where a company is stabilised, and the higher management is focused on strengthening the internal processes and bringing growth with stability, the percentage of variable pay can reduce.
`How much\' is a subjective question and can be answered only with reference to the involvement, control, responsibility and others.
From India, Pune
In addition to above responses, the variable portion of remuneration can also depend on which stage of growth the organisation is in.
For an organisation growing rapidly in initial stage, the variable pay can be more. Same goes when the company is into expansion mode, or looking at achieving specific objectives. Even the higher management variable pay can also be related to achievement of those specific objectives.
Where a company is stabilised, and the higher management is focused on strengthening the internal processes and bringing growth with stability, the percentage of variable pay can reduce.
`How much\' is a subjective question and can be answered only with reference to the involvement, control, responsibility and others.
From India, Pune
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VARIABLE PAY.doc
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