Though western countries are embracing and adopting the concept of Total Rewards for retaining employees, a more nuanced approach is warranted when designing a compensation structure for the Indian workforce
Shwetha Ram
While the COVID-19 pandemic upended the traditional way of working, with concepts such as work from home (WFH) deployed by most organizations for the first time, the new normal has called for an overhaul in compensation structures in order to retain talent [was not just restricted to such corporal adjustments but also heralded the reconfiguration of numerous factors, including an overhaul in compensation structures to retain talent.
Developed economies are grappling with a wave of resignations emanating from a deep desire to maintain a healthy work-life balance, facilitated by perks such as a hybrid work routine, on-the-job professional development opportunities, and even flexible working hours.
As employers utilize both tangible and intangible benefits to motivate employees, the concept of Total Rewards is gaining increasing relevance with HR leaders employing all the tools available at their disposal to craft compensation packages that truly value the all-around efforts put in by the workforce.
Let us look at its relevance in a fast-developing economy like that of our country and how prepared are domestic employers to embrace the concept of Total Rewards when revising pay structures prevalent in their organizations.
Is India Inc ready for a shift to a Total Rewards regime?
Although a well-designed rewards & recognition strategy has proven to positively influence employee experience, post-pandemic shifts in employee behaviour have meant that HR leaders need to understand employee expectations and accordingly revise benefits more regularly.
While at it, they also need to balance how compensation structures impact multiple organizations and business metrics, considering the additional cost impact of enhancing the umbrella of benefits.
In India, total rewards as a concept has been implemented by more than 40% of the organizations, albeit for certain sections of their employees. White collared employees working in office environments have often benefited from a range of developmental initiatives, aimed at helping them to upgrade their skills or learn about new technologies and processes through e-learning modules.
Recognition of top performers and rewarding them for their contribution has also found its way into most top organizations.
However, enjoying partaking in such initiatives still largely remains the preserve of the managerial staff, with blue-collared workers still having to make do with the standard fare.
Despite pay structures now having various components including a fixed pay, variable pay, and allowances for food, travel, and even housing, many industries have found it difficult to extend aspects such as flexible work schedules, goal-specific rewards, and detailed performance reviews for the bulk of their workforce.
Recognizing the fact that a shift to a Total Rewards structure for all employee sections can facilitate increased loyalty, reduce employee turnover, and instill a greater sense of belonging toward the organization, HR leaders are beginning to introduce many of its elements in a phased manner. It would be fair to surmise that even though Corporate India is making large strides, a bulk of the Indian workforce is still some years away from benefiting from a holistic rewards mechanism.
Challenges in providing flexible benefits to a diverse workforce
Unlike western countries that have low population densities and high per capita income, the majority of those employed in India’s formal sector belong to the bottom rung of the pyramid. As a result, they still remain focused on seeking better-paying jobs rather than working at organizations that have a clutch of benefits to offer apart from monetary pay. With an estimated 500 million Indians employed, of which a majority are classified as blue-collared workers, there is the additional challenge of managing total rewards for such a large workforce.
What’s more, India is home to the world’s most diverse set of cultures and languages, necessitating that organizations take immense care in deciding on simple tasks such as deciding the annual leave calendar.
Aspects that may appeal to some workers could be downright rejected by another section of employees. Creating a compensation structure that offers industry-best pay along with work flexibility and a host of other intangible benefits is thus a far-fetched idea for many organizations.
The need for unique industry-specific compensation structures
Most CHROs in Corporate India agree to have implemented many elements of a Total Rewards compensation structure post-Covid, even if they have been heavily modified to suit Indian and industry-specific requirements.
For example, firms engaged in the Information Technology and Media & Entertainment industries were amongst the first to adopt the WFH model, continuing to offer their employees the flexibility to choose work timings and weekly offs in order to achieve a better work-life balance.
Other industries such as Manufacturing, Pharmaceuticals, and Healthcare have had to tweak many HR practices in the post-COVID era, allowing their employees a larger degree of flexibility within what is permissible in a labour-intensive work environment.
The way forward for HR leaders therefore will be to bridge existing gaps by taking smaller steps, till previous changes have yielded the desired effects. This approach entails a deep understanding of industry-specific nuances and catering to them using innovative thinking. It would be difficult to suggest a one-size-fits-all methodology that could be applied to all industries within the Indian economy, instead warranting that CHROs set the direction for their respective organizations based on their challenges and business goals.
Strategies that top organizations are employing to nurture talent
Despite the urge to adopt a Total Rewards philosophy, it may not be possible for most organizations within India Inc to rival companies like Google and Amazon that have set a very high bar in this regard.
However, a steely focus on implementing crucial elements such as providing a comprehensive family health cover, establishing mentoring programs and setting business target-specific rewards could ensure a happier and more motivated workforce, ultimately boding well for employee retention.
Instead, having understood the need to constantly upskill employees in order to meet changing market dynamics, HR leaders ought to fast-track internal programs that not only provide these opportunities but also help in identifying talent from within the organization.
By facilitating a plethora of relevant on-the-job development initiatives and ensuring that job requirements are first fulfilled internally, organizations can make larger strides in retaining high performers and opening up posts for fresh post-college recruitments.
With India slated to overtake larger economies like that of Germany and Japan by the end of the current decade, it will need to focus on all-round development of its burgeoning population and ensure quality delivery of diverse benefits due to its growing workforce.
Initiatives focused around this thought process will probably yield better results than going in for an all-in approach when it comes to adopting a Total Rewards regime. Actively resolving issues that are voiced by the workforce and making committed efforts to develop them into world-class professionals would be far more beneficial to retain and nurture internal talent in the long run.
The ambition is to methodically graduate from a one-size-fits-all mechanism to a let’s-see-what-fits-you scenario but recklessly rushing to realize a utopian framework can unravel your organizational culture.
Culture, by definition, is something that is forged over time, and with enterprises as well, you have to painstakingly take the gravelled route of ideating, prototyping, testing, measuring, implementing, assessing and more often than not, going back again to the drawing board.
The key when it comes to your people is never losing sight of their behavioural patterns or failing to discern the sounds of their anxiety. In essence, never letting go of their pulse.
Keeping your fingers on that is the foundation of any total rewards system which is then supplemented and taken to fruition through a comprehensive and meticulous regimen of trying, failing, trying, as outlined above.
The times are more exciting than ever, and the challenges are more formidable than before but I believe India Inc. has its sleeves rolled up for them. In this battle of acquiring, developing, and retaining talent, the outcome hopefully will be an inundation of world-class professionals, ready to take on the world.
(The author is head of human resources at Future Generali India Life Insurance Company)