Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
ON
COMPENSATION STRATEGY
OF INFOSYS
SUBMITTED TO
SUBMITTED BY
INDEX
1. Title Page 1
2. Table of contents 2
3. Acknowledgement 3
4. Letter of Transmission 4
6. Research methodology 6
7. Executive Summary 7
8. Introduction 8-9
Compensation Strategy of
9. 10-16
Infosys
10. Conclusions 17
11. Recommendations 18
12. Limitations 19
13. References 20
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ACKNOWLEDGEMENT
We, Group Number One, take this opportunity to express our sincerest and deepest
gratitude to our faculty Prof. Rashmi Sharma for her constant guidance and support
that made this work an enriching experience for us.
We are looking forward to work & learn more from her & gain from her rich
experience & wide knowledge.
Group 1
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LETTER OF TRANSMISSION
This Study was undertaken as an end term project for our Compensation Management
Course of the fifth trimester of PGDM (FT) at LBSIM, New Delhi. It is our pleasure
to submit to you our report on compensation strategy of Infosys.
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OBJECTIVE OF THE STUDY
Our broad objective of the project study is to map the compensation strategy of
Infosys. Further this included-
• Gaining a conceptual understanding of the compensation strategy of Infosys.
• Understanding its alignment with the overall business strategy.
• Studying various factors influencing the designing & functioning of the
compensation policy in the organization.
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RESEARCH METHODOLOGY
An exploratory research process is followed for our project study. We conducted both
primary & secondary research. We interviewed some of the employees & HR
manager of one of the locations of Infosys, through unstructured questionnaire and
also collected exhaustive information through various sources like company’s
literature, archives, etc.
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EXECUTIVE SUMMARY
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INTRODUCTION
Human resource is the most vital resource for any organization. It is responsible for
each and every decision taken; work done and results arrived at. Compensation is the
remuneration received by an employee in return of services rendered to the
organization. It is an organized practice that involves balancing the work employee
relation by providing monetary and non-monetary benefits to employees.
Compensation is an integral part of human resource management, which helps in
motivating the employees and thereby improving organizational effectiveness.
Compensation systems are designed keeping in mind strategic goals and business
objectives, on the basis of certain factors after analyzing jobs and linked
responsibilities.
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NEED OF COMPENSATION MANAGEMENT
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COMPENSATION STRATEGY: INFOSYS
At Infosys, a few questions need to be answered and keeping the responses in mind,
one arrives at the compensation strategy.
What are our values and what culture we would like to promote?
What is our business strategy and how could compensation fit with it?
Strategy without specified goals would be like a rudderless ship. The organisation has,
therefore, clearly laid out what it would like to achieve through its compensation
strategy. It envisages to maximize employee productivity, have employees to focus on
organizational objectives, get the former to take responsibility for their performance,
develop an understanding with the management on how to manage employee
expectations, encourage activities to make employees feel stakeholders and playing a
participative role in a process that has a direct bearing on their lot and lastly but quite
importantly acknowledge and reward performance and behaviours exhibited that
warrant reinforcement e.g. willingness to learn, openness to progressive change and
singular capacity of problem-solving etc.
The organisation takes measures to bring about the aforementioned with the aim to
secure confidence of its employees whose contribution is instrumental to business
success.
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TOTAL REWARDS APPROACH
Capturing rewards’ spectrum end to end is a gargantuan task, which has been
rendered seemingly simple by the total rewards approach that seeks to fulfill needs
and aspirations of employees placed at different levels of Maslow’s hierarchy. The
company engages its workforce by reaching them on a very real level, thus adopting a
healthy mix of benefits ranging from cash rewards to non-cash rewards and satisfying
the more sensitive with a pleasanter work environment and the more ambitious lot
with an enriched work content, encouragement and able guidance on career
development and a strengthened sense of affiliation with itself.
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What the company has to offer to its employees is not, prima facie, fatally attractive
vis-à-vis its peers in the Indian IT fraternity but the contribution amortized over time
brings about unrivaled holistic increments of benefits that take care of long term
career and personal needs of employees.
The value proposition, therefore, has three dimensions, three primary areas of concern
to respond to under the compensation framework, namely financial, which is to be
taken care of through competitive salaries and assets and wealth creation
opportunities; learning taken care through opportunities for learning and exposure to
technology and assignments as Infosys partners with clients in transforming their
businesses; and emotional via a fair and rewarding work environment and ethos and a
culture that has been built in Infosys through various initiatives.
On which drivers this value proposition has been thriving is not difficult to guess and
the company has spilled the beans too. The nature of industry being a complete
service type, peopled by a majority of white collared individuals with aspirations
riding high, has been the fulcrum around which character of the proposition is
defined.
Clients and their required services have grown exponentially in volatility owing to
ever increasing dynamism that has come characterize today’s business scenarios.
Relentless obsolescence of technology, adding to the challenge, demands strong
customer orientation that could be engendered only by a display of high levels of
adaptability and learnability by a motivated lot of individuals and teams and delivered
via a strong culture that can sustain high growth.
The compensation strategy should be such that it reinforces at all times high
performance work ethics, that compensation philosophy is aligned with business
objectives and role based organization structure, that practices in the domain are
benchmarked against the best-in-class companies and that there are structured
employee recognition approaches; one that provides talented youngsters to take up
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higher responsibilities (e.g. High potential youngsters are drafted as invitees into the
Infosys Management Council under the 'Voice of the Youth' Policy)
Feeling the pulse of human psyche, a need was felt to introduce variable pay, as
response to inexorable human desire to differentiate oneself from others in all
probable ways. This was a landmark policy change in domain of compensation at
Infosys, and was effected with a view to allow more room to employee’s potential to
earn.
The variable pay structure would cover all echelons from bottom line to top line;
providing a flexible mechanism to continuously reward and reinforce superior
performance. The ultimate aim was to drive behavior to win as an organization, win
as a team, win as an individual.
The diagram below depicts how the performance based structure has been formulated
at Infosys:
Linked
Component Linked to performance of
to
CPI :
Company Performance- Organization Revenue
linked Incentive
VCPI :
Variable Company
Unit Operating Margin
Performance-linked
Incentive
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IPI :
Individual Performance- Individual Operating Margin
linked Incentive
F
50%
E
B (excl
BT)
A2
A1
5%
VARIABILITY % OF GROSS
Team Performance
Individual Performance
Performance Allowance
Company Performance
Linked Incentive
Performance Reward
Company Performance
Linked Incentive
Individual Incentives
at Senior Grades,
Sales, Consulting
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YEARS
Prior to 2000 2001 2002 2003 onwards 2006 onwards
SHARING SUCCESS WITH INFOSCIONS
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Infosys, with years of experience has come to understand the virtues of clear
communication with respect to benefits on offer to the employees so that the latter
make a judicious use of them and appreciate their existence and the efforts made
therein.
Research shows that, an average employee at any organisation, doesn’t know the cost
of his/her benefits package, what benefits are available and/or doesn’t understand the
benefits he/she knows about.
Keeping in mind the above, Infosys has taken care to well lay out the benefits on offer
and meaningfully categorise them to render employees’ choice more convenient and
useful.
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PAVING WAY FOR FUTURE
The organisation, envisioning securing its long term interests, hopes to adopt a more
prudent approach apropos its compensation policy. IT firms, in general, would be
more wary of introducing benefits that create long term liability for the organisation.
Instead, benefits that bring instant gains, ‘here and now’ would be in vogue.
Owing to stronger global influences, menu based flexible benefit plans would
increasingly become the norm of the day. There would be uniformisation and
rationalisation across similar roles at different parts of the globe, in pay structure.
Focus would lie more with permanent employability and loyalty towards the
organisation would be a major concern.
CONCLUSION
Through the course of study, we, as researchers, found that the compensation strategy of
Infosys has, by and large, worked for the company’s well-being and is perceived in a
positive light by the employees. Numerous blogs on the subject, as posted on the web by
existing and erstwhile employees of the company, stand testimony to sanguine response
generated by its compensation structure.
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RECOMMENDATIONS
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LIMITATIONS OF THE STUDY
This project study is limited to Infosys alone and thus results cannot be generalised to
all other companies working in similar field. Further research is possible in the area
attaching quantitative figures to the compensation structure which could not be done
in the present study because of the issues of confidentiality.
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REFERENCES
• Info-prod research (Middle East) (2004). Infosys to implement new
compensation structure. http://www.highbeam.com/doc/1P2-10495815.html
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