February 2013: The changing face of compensation

Every now and then we all think about the ‘fair’ value of the work we do and have questions like these:

“I have 12 years experience in IT – how much should I be earning?”

“Am I getting the right package?”

“For a CEO (or appropriate C-suite role) what is the average CTC?”

At the end of another performance year, as you look ahead to your next raise or negotiate your salary in a new company, new trends in compensation are changing how your salary slip looks.

Forget the ‘average increase’: Whether you are discussing your annual raise or negotiating a breakthrough offer, it’s no longer about an expected, taken-for-granted increase of 20-30%. As company-wide, industry-wide salary jumps become history, the percentage change will vary from one person to another. Make the case for your next salary based on realistic goals and a sound understanding of your individual strengths.

Become a ‘rare’ commodity: Sure, your next salary depends on your performance and how you saved cost, delivered on higher revenues or impacted the bottom-line. But keep another equally important factor in mind. There is a soaring premium for exceptional, specialised talent and companies are prepared to pay. Do you have knowledge or competencies that are not easily found or are in short supply? If you have specialised knowledge (think analytics, semiconductors) or have invested in up-skilling, it’s time for the pay off!

The unknown – variable pay: Get used to not knowing what you will get in hand. Your new package may be higher than your current one, but your ‘variable pay’ is likely to go up more than your fixed pay. The share of variable pay in total compensation – seen as the performance-linked component of salaries – is steadily going up. How big is the share of variable pay likely to become? Commissions & variable pay can go up to being equal to your base fixed salary!

Now for the million dollar question – for your experience, in your function, what do others earn?

More on these trends in my next mail on the numbers game!


Uday Sodhi


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