Group heads beware! Your team members will start deciding your variable compensation.
The new human resources practice where employee issues are built into senior leaders' compensation plans has come to India too.
A domestic telecommunications company has implemented this practice whereby a group head's variable compensation package gets slashed substantially should employees' satisfaction score fall below a certain level.
The high-level of attrition in the fast growing telecommunications sector has prompted companies to use innovative human resources practices.
The telecom company, with well over 10,000 employees, has linked the 20 per cent variable compensation of individual group heads to employee satisfaction/attrition levels.
If the employee satisfaction score falls below a certain level, the group head concerned will take a substantial cut in his/her variable compensation.
IBM Business Consulting Services' interactions with chief human resources officers, as part of its Global Human Capital Study 2005, found that only a small number of companies have incorporated human capital measures into their leadership rewards.
When they were applied, the main factors incorporated into the leadership team compensation plans were the growth of key staff, employee satisfaction and the attrition/ retention of key staff, the study stated.
Employee satisfaction, growth and retention of key staff are the metrics most commonly inserted into compensation plans -- the former in almost two out of three organisations in the Asia-Pacific region.
One of the findings of the study is that people issues may not be receiving sufficient time and attention, since people metrics are often not built into senior leaders' compensation plans.
During the employee performance assessment, organisations review results achieved and professional/technical competence far more than any other factor.
The study surveyed over 300 organisations across the globe to find out how companies leverage their human capital to improve workforce effectiveness and organisational performance.
The study covered 33 companies in India and most had employee strength in excess of 10,000.
Responding to a question on their ability to retain employees, 35 per cent of the CHROs said they were "doing alright", 25 per cent declined to respond and a same number said they were "getting there".
Almost 15 per cent said they "are getting started" on efforts at retaining employees.
CHROs share their CEOs' views about people. But fewer than half of the participants in this study could confirm that their organisation was adequately equipped to respond to the growth and responsiveness priorities set out by their CEOs.
The study said technological innovation is critical for the next generation of human capital management in the Asia-Pacific.
The region's organisations are finding that the adoption of tools to plan and deploy human capital has stalled.
One in four organisations do not deploy any tools to assist in their management of human capital, while only 22 per cent can demonstrate the benefits from the tools they use.
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