The Human Capital Survey, conducted by Grant Thornton Bharat, has revealed that 40 percent of employees witnessed a reduction in total pay, and 45 percent of employees did not see any change in overall pay over the past year. This trend was more pronounced in mid-sized organizations (less than 1,000 employees).
While consumer-led businesses showed higher resilience to the impact of COVID-19, sectors, such as real estate, infrastructure, and hospitality, were badly hit. Amit Jaiswal, Partner, Human Capital Consulting, Grant Thornton Bharat, said, “While one-third of the respondents experienced a reduction of more than 20 percent in their fixed pay, 40 percent did not see any change in fixed pay despite an overall decrease in their earnings. This highlighted that the variable pay component of the salary took a major hit.”
Over half of the respondents (46 percent) said if, given the option, they would opt for a higher fixed salary even if their overall pay reduced. “There is an increased expectation to change the current pay mix and reduce the pay-at-risk part of the compensation, specifically in the younger workforce of mid-size organizations,” explained Jaiswal.
Despite 42 percent of organizations reviewing their strategy, operating structure, and performance evaluation framework post COVID-19, more than 50 percent of respondents said that their organizations experienced higher attrition amongst high-performing employees, compared with the pre-COVID-19 levels. “Almost half of the respondents said that the actions taken by their employers met their additional needs. However, 49 percent feel that there is a need for action from employers to meet their expectations,” said Ritika Mathur, Director, Human Capital Consulting, Grant Thornton Bharat.
As the need to relook at strategy increases, work from anywhere, life/medical insurance, home office set up and flexible hours are being sought as high-priority benefits. Over 73 percent of the survey respondents also said that organizations must introduce long-term incentives, such as ESOPs and retention bonuses.
“There are two big trends clearly emerging from the survey. First, an increased appetite for long-term incentives, especially from the younger workforce. Second, the definition of benefits. It is no longer restricted to medical insurance. While compensation managers will have to factor in all these incentives while designing their compensation philosophy, employers will have to relook at the definition of total compensation, what to include and what not to,” concluded Jaiswal.