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A Paradigm Shift in Compensation Benchmarking practice to bring in the apt Pay Philosophy and thereby building the fundamental block of Total Rewards Strategy (TRS) 

Problem Statement

An Indian fintech start-up was facing:  

  1. High Regrettable Attrition   
  1. Low Offer Acceptance rate   
  1. Significant number of exiting employees cited Compensation as the main reason for leaving  
Underlying issues with the current Salary Benchmarking Practice:
  1. The scope of sourcing the data was not curated. 
  2. Best fit consultant as per their scope was not identified.  
  3. Ineffective pay ranges as the sourced data from the consultant was used as-is.  
  4. Below market pay positioning due to ineffective pay ranges not linked or aligned with the pay philosophy.  
  5. The final market data was not aligned to the Total Rewards Strategy (TRS) and hence was used for point in time activity and decision making.   
Approach & Solution: The overall project was managed in 3 phases over a span of 8-10 weeks

Phase 1: Scope Finalization: 

  1. Determined pay elements like Fixed Pay, Bonus, ESOPs, etc. that formed Total Rewards;  
  2. Strategically selected peer group basis the talent movement and scale of operations; 
  3. Scope of the exercise was curated basis pay elements, peer group, geographies, critical functions, etc.  
  4. Vendor was finalised and jobs were diligently mapped with market

 

Phase 2: Scope Finalization: Range Finalization: 

  1. Sanitized raw market data by identifying and rectifying errors, inconsistencies and outliers. 
  2. Analysed last year’s market data and pay ranges along with past hiring trends to gauge their impact on the current pay positioning and pay structure of the organization. 
  3. Analysed current year’s market data to evaluate pay positioning of the roles as against the market 
  4. Created competitive pay ranges and devised a strategic roadmap outlining a phased approach to annual budgeting for pay corrections, ensuring a gradual progression towards the desired level of pay positioning. 

 

Phase 3: Adopting to Total Rewards Strategy: 

  1. Defined strategy for 5Ps of TRS, i.e., Philosophy, Positioning, Pay-Mix, Pay-Parity and Differentiation and Pay Transparency. 
  2. Aligned the entire exercise to the TRS focussing on fairness, equity, and competitiveness by rewarding employees based on their role, contributions, experience, and performance.  

  

Success: We helped the company to redefine their Salary Benchmarking approach which also became the foundational block towards curating their Pay Philosophy and TRS, resulting in measurable success: 
01

Regrettable Attrition came down by 3% 

02

Offer Acceptance Rate increased by 2% 

03

Reason for exit being Rewards moved down by 4% 

04

Pay positioning improved by 20 percentile points  

05

Key Talent Retention Rate improved by 3% in the last 6 months