Compensation Trends in India

Compensation Trends in India

We have to understand how strategic compensation management works in the organization, and how the organization plays an important role in fulfilling the needs of the employees in the organization. The strategic compensation management we come to know that compensation is an important issue for the organization and its employees.

Photo by -Daniel Korpai, Unsplash free 
In India, there is not much difference in the packages of employees, there are similar packages for most of the employees in different organizations.

Table of Contents

1.  Introduction

2.  Pandemic faced by Indian Industries 

3.  Compensation Trends

      3.1. Job content related compensation

      3.2. Performance-related compensation

      3.3. Competency related compensation

4.  Evolving compensation trends 

     4.1. Paying the parson

     4.2. Rewarding challenges

     4.3. Individualizing the pay system

 5.  The strategy of higher payment in India

      5.1. The trend in CEO compensation

      5.2. The trend in Director compensation 

  6.   Conclusion 


In the previous post, you will have understood how strategic compensation management works in the organization, and how the organization plays an important role in fulfilling the needs of the employees in the organization. Through strategic compensation management, we come to know that compensation is an important issue for the organization and employees.  International Compensation Trends

In India, there is not much difference in the packages of employees, there are similar packages for most of the employees in different organizations.

I thought to write about what is the trends of compensation in India. The equivalent pay structure will no longer be in practice. As per the recruitment process,  talented and good potential employees are appointed. Hence the compensation package is a motivation factor for Indian organizations.

Pandemic faced by Indian Industries

As the Indian industries are growing rapidly, and even during the pandemic period Indian scientists and Indian industries were the first to launch the vaccine, Serum Institute of India Pvt. Ltd. is now the world’s largest vaccine producing organization, which has supplied vaccines to Bhutan, Bangladesh, Maldip, and Srilanka as help to developing countries.

And ‘Bharat Biotics’ has successfully developed Covaxin India’s first vaccine for Covid-19, in collaboration with the Indian council of medicine and the National Institute of Virology.

Now Indian industries are offering the most competitive packages. And Indian industries required talented and competent people, the actual compensation structures are based on the job evaluation, job description, and organizational capability of the Indian organizations. International Compensation Trends

Compensation Trends

Compensation Trends in India are made up of ways of satisfying the employees of the organizations. The evident compensation trends are that the basic standard salary continues to remain the major component of the compensation system. The other allowances are linked to the percentage of the basic salary. And annual payments like a bonus, travailing allowance, and commission are the trends.

Benefit by the company owned or leased as vehicle maintenance, medical assistance, retirement benefits, pension as provident fund, easy loan scheme, etc. Some companies offered retirement benefits and gratuity also.   What is strategic compensation?

Compensation the review period is generally becoming faster as per the changing situations. In the recent trend, the design of compensation packages includes the following basic components:

  • Basic pay, 
  • Benefits evaluation to check the power of money, and 
  • The incentive for putting in the effort.

Basic pay is the main part of the compensation, incentives are based on productivity depending on the job characteristics.  Benefits are related designations that are the nature of reimbursement. In India, compensation is defined for various designations in the hierarchy.

The system of compensation in India is maturing towards a new environment of business. The traditional concept is disappearing and the organization is trying to adopt the new environment.  

However the Covid-19 pandemic broke India’s financial position, the early month lock-down in 2020, which was resulting in the economy down, but in 2021 India’s talented trends were reflected. Concept of compensation in the organizations

Internet-based activities increased in educational technology, all the regular activities converted online, google meet, and many other online processes involved, and all activities taken as feel like the regular study is going on.

Information Technologies have boomed in the market, all the related job opportunities have increased and digital marketing has taken the position of direct marketing, Indian businesses are supported by the human resources team has continued their meetings and seminars online and all management teams are attempting all-important meetings on time from home. 

Job content related compensation

This is the most prescribed approach to annual increment to perform is based on the basic pay. All the levels of increments are accommodated, and the necessary restrictions of the basic salary including annual increments are prescribed at a specific range. The content of compensation is related to the basic salary. 

Performance-related compensation

Progress on the traditional approach has emerged in the form of a combination of the job with specific basic pay, performance-based annual increment, periodical incentives, and individual group performance. In the approach, a significant part of the compensation package is based on basic pay.

Competency related compensation

The most recent thing in the compensation is linking the pay to the job holder’s competency, not the performance of the employees. That leads to the achievement of the compensation strategy. 

Evolving Compensation trends

This is the time when the new approach, plans, aspects, pay system of the organization. The people are leaning towards well-equipped organizations. For the organization is difficult to manage with the traditional pay practice, changing the pay system is a complex process. This all depends on organizational effectiveness.

Concept of compensation in the organizations

Organizations used to follow a pay system that should not be aligned with business challenges. The challenge now is to develop pay systems, for the three major pay practices being used.

Paying the person

Most organizations are following the trend of paying the person for a particular specified job or duties. This is based on the market value of the individual as per the related job. This is because of the high level of knowledge and skill, and the contribution that is forced to the organization to pay them as a person.

Humans must understand and evaluate based on the labor market of the industries.

This development is based on the market value that measures the knowledge skill and competencies. The greater pay challenge is the development of individual pay that is the proper measure of their skill.

The major objectives are:

  • Have a positive effect on motivating them to learn the skill and knowledge to perform better.
  • And raising the employees' pay is more valuable.

Rewarding challenges

In India, compensation-based performance is not important, and the retention of the top performer is difficult for the organization, hence, later the pay is paid as per the performance. The new compensation trend is to pay for the performance of motivational power.

Pay for the performance is effectively needed for the organization, these days compensation needs to be designed as per the performance that plans and covers the objectives, they need to accomplish. The practice of paying should be for their skill and knowledge, which, combined with the reward system, encourages the employees to develop a skill that is required by the organization, this motivates them to stay in the organization.

Individualizing the pay system

Individuals are not given the option to know, how they were rewarded. This can be a negative response to the recruitment of the employees. The pay packages are an alternative for the workforce. These days an option is given to the worker that comes to reward. This option is for having cash or benefits of package or type of pay, but the performance system is covered.

Strategy for higher payment in India

This is important for Indian organizations to have a strategy for higher payment in India. For this, organizations must have the following strategies: 

What is strategic compensation?

·       Individual payment must be rewarded for skill and knowledge according to market value.

·       Multiple pays for the performance should be used.

·       Organizations can change the pay tradition such as free time for personal work.

Some points to compare to the market can be used by the organization:

·       Match the market: Organizations need to ensure the pay must be compared with market value.

·       Lead the market: As compared to the market organizations should pay more than the market value.

·       Lag the market: Lagging the market means paying below the current levels in the market.

Organizations should manage style, structure, and strategy for the development, and this step should be involved for the development must be a good understanding of the business strategy.

The trend in CEO Compensation 

It was found that CEO compensation efforts focused on the UK and the USA. Very little is known about the trend in India. Through the research, it was found that CEO is dully proportioned to the inside director.

The chronological age of the executive and the length of an executive tenure in the organization will be positively related to compensation. The total compensation of the CEO includes salary, bonus, long-term incentive, and stock option. Reward-based on the years of service.

The trend in Director Compensation 

As per the current trends director’s compensation has changed, directors are more important than before and more responsible. Director’s liabilities have increased, usually 10% of the total shares of the organization allowed to the directors. Public companies usually make higher compensation as compared to private companies.  


Compensation is a recent trend in India concerning the design of compensation packages, which includes three components: basic pay, evaluation step to check compensation for purchasing power, and incentive for putting effort beyond the norms.

You will also, come to know that the individual is learning towards the organization with equipment of pay system design. And you will also learn how difficult it is for any company to change the compensation trend and adopt the new.

The importance of developing strategies in Indian organizations concerning a higher payment. Finally, you also have the compensation trends for CEO’s Directors.


Related links: 

What is a strategic compensation

Concept of compensation in the organizations

International Compensation Trends

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