India Inc is rolling out bonuses this festive season despite a hiring slowdown and falling growth in sectors like automobiles and consumer goods. The bonuses range from 10% to over 200% of basic pay. The objective is to retain star employees and maintain steady revenue inflows, say companies.
"Indian companies have realised in the last recession that it pays to reward key talent who are the growth engines. Companies need to set the right tone and be ready in case bad times come again. It is in a sense the maturity of compensation trends in India," says James Agrawal, director and head (India) at BTI Consultant, a part of Kelly Services.
Korean consumer electronics companies, LG Electronics and Samsung, will pay among the highest bonuses in India this year too. While LG has decided to give 240-250% of basic monthly pay as festive bonus this year, Samsung may pay more than 200%. Last year, LG had handed out 300% while Samsung gave 220% of the basic monthly pay across levels. "We have taken a conscious decision to pay high festive bonus despite a flattening market. Times are getting tough and we need to motivate and retain talent," says LG Electronics India chief operating officer YV Verma.
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For most companies, the move is rooted in concerns of a slowdown in India due to hardening interest rates and the impact of a double-dip recession in the US. As a result, all attempts are being made to hold employees back — additional revenues during the festive season will be ploughed back into pay packets next month in the form of festive and performance bonuses or even half-yearly/quarterly variable pay.
Sectors like manufacturing, retail, auto and consumer goods will be the top payers of festival bonus, says Sudhakar Balakrishnan, CEO of HR firm Adecco India. There are indications that companies that pay quarterly performance bonuses, such as in sectors like information technology and banking and financial services, will make high payouts for this quarter.
"The European and US threats may have moved corporates into a wait-andwatch mood — they may not be taking big decisions on projects or hiring, but otherwise it is business as usual. This means, there is no holding back on bonuses," says Balakrishnan.
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