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DEC. 31, 2006
SALARIES
Boom At The Bottom
Junior management salaries are soaring, with automotive, FMCG and telecom companies doling out the biggest salaries. A BT-Omam Consultants survey. By Aman Malik
Airtel's young executives: Hot property in the job market
India Inc. is on a shopping spree; only, this time for a rare commodity-talent. And if figures-such as those thrown up by the BT-Omam Salary Survey for Junior Management, which looks at remuneration in over a hundred companies across 14 sectors-are any indication, India Inc. appears to be going all out to woo and retain talent. The numbers only confirm the classic demand-supply dynamic that governs who gets paid how much. The faster the growth in a sector, the hungrier it is for talent and the higher it is willing to pitch for it.
Consider this: management trainees (MTs) from a second-rung B-school at a reputed FMCG company, can, upon conformation, demand anything from Rs 50,000-1 lakh-and get it. Incidentally, nearly a tenth of the total compensation offered to the junior management cadre across sectors is now variable and based on performance; basic pay constitutes only about 30-50 per cent of the package. And if you are working for a frontline it or telecom company, you could be making twice as much as your counterparts in sectors like textiles and engineering.
JUNIOR MANAGEMENT
SALARY SURVEY 2006
The last point, say hr managers, is alarming. The results of the survey indicate that the average payout across sectors has risen steadily, but they also point to the fact that the stupendous growth in the services sector is creating problems for the manufacturing and heavy engineering sectors. "IT and telecom companies are poaching from companies like ours," laments P.V. Bhide, President (Corporate HR), JK Paper, "and now, with retail on the verge of take off, the situation will worsen. The manufacturing sector often cannot match the compensation offered by these sectors." This race for talent has had its impact on the balance sheets of companies. "The wage bill, which was earlier never a problem, is now a significant cost; one that will only rise," says the hr head of an automotive major.
Samsung's young ones: Getting a taste of MNC culture
Rakesh Sharma, VP (HR), Dabur Pharma, however, offers a different take on the matter. "The issues are really those of education and mobility," he says. Employers say they find it hard to convince junior management employees, especially mbas from top-rung B-schools or technical graduates from well-known institutes, to move to mofussil towns where most manufacturing units are located. "A graduate from one of the top B-Schools or engineering colleges will want to work in a metro and will, therefore, in all probability, be absorbed by the banking, financial services and insurance (VFSI) or services sectors. Besides, their salary expectations are very high," says Bhide. Old Economy companies face other problems as well. Often, their only selling point is the job security that the manufacturing sector offers. But this cuts little ice, forcing manufacturing companies to visit lesser known B-schools and technical institutes, often those located in or near their areas of operation.
This, however, is not to say that the "offenders" (as the hr head of a consumer durables major would like to call them) have had it any easier. "True, we have enough people willing to join the telecom sector," says Atul Khosla, hr Head, Bharti Airtel, "but there is still an acute shortage of quality talent." Most hr heads that BT spoke to, agreed with this assessment. Says Tapan Mitra, Chief, hr, Apollo Tyres: "We are constantly endeavouring to attract and retain the right talent."
And, it appears, companies are going to any length to do that. Some, like Dabur Pharma, have hiked their compensation packages by as much as 45 per cent (from Rs 4.5 lakh to Rs 6.5 lakh per annum) over the last one year. Others, like Tata Motors, claim that "trainees are now blooded in live projects, including in the expansion plans".
METHODOLOGY
To capture compensation trends in corporate India, Business Today collaborated with the Delhi-based research consultancy, Omam Consultants, to publish data on salaries across a range of industries (14) and companies. The survey covers junior managers. This is the first of BT's annual salary sweeps for 2006. For the current survey, Omam compiled management trainee salaries across 102 companies in 14 sectors. Since salary data is confidential, the names of the companies have not been revealed. However, the sectors have been mentioned in the survey, and these are: automotive, banking, chemicals/petrochemicals/fertilisers, core, consumer durables, engineering, FMCG, IT, ITEs-BPO, pharma, real estate, retail, telecom and textiles. The survey looks at compensation data from a number of angles, including inter- and intra-industry averages.
The Omam team that collated and analysed the data was led by Director Rajeeva Kumar, Executive Director Anil Koul, and General Manager Ashutosh Kumar.
But none of these have impacted attrition rates. While it and ITEs companies consider it "normal" to lose nearly a third of new recruits within a year, the FMCG and consumer durables industries have seen attrition rates climb to 12-15 per cent. This is forcing some companies to resort to desperate measures. But most hr personnel think that such strategies will not go too far. "You can call a sales executive an area manager and retain him for a while, but eventually, it is the job profile and growth prospects that matter,'' says Sanjay Bali, Head (HR), Samsung India.
This brings us to the inevitable trade-off between growth and money. If you are a second-year management student, should you aim for big money (and become an investment banker or a consultant) or should you look to fast-track your growth and give money a pass for a while (and choose, say, telecom, which does not offer comparably high compensation to start with)? Most managers think you should go for the second option. "Areas like investment banking, though financially rewarding, offer little scope for qualitative and divergent growth," says Bhide, adding, "besides, most people burn out by the time they are 35." Khosla agrees: "I would say that a young management graduate should invest the first three-to-five years in himself and look for avenues to climb up the corporate ladder rather than looking for money right away."
The Novelty Perk Factor
The latest on the race to offer enviable perks.
OCTOBER 24, 2004
Cushy perks: It's virtually pamper time for employees now
I wish I had the chance to learn music somewhere along my career," sighs Deepak Dhawan, Vice President (HR), EXL Service. It's a wish employees of this BPO unit have had granted. They can enrol for weekend salsa and yoga classes, and train their vocal chords as well. It's a perk. Or, more correctly, "a move to align employees with the work place by offering holistic employment opportunities", in the words of
Rajeeva Kumar, Executive Director, Omam Consultants.
Concierge desks to do your odd jobs (spectacle repairs, film tickets, even escorting relatives to hospitals) might be getting common, but Wipro has a wealth management desk to help you make investments. Then there are crèches-at ICICI Bank, Wipro and The Times of India offices. And if the workload is stiff, some firms have started maintaining fully-equipped 'home offices' for its execs. At Adobe, though, it's office freedom that works; so you can have your workstation done up to your idiosyncrasies by an interior designer at your personal service. "Cushy perks like these are 'psychic income'," explains Dhawan. Quite.
Home A-loan
JULY 20, 2003
Five years ago, mortgage rates ranged between 16 per cent and 18 per cent; today, the range is 8.5-10 per cent. This has coincided with India's growing upwardly mobile population (2.5 million households actually earn over Rs 3 lakh a year) becoming debt-friendly. Thus, most housing finance companies have grown at between 30 per cent and 300 per cent over this period. Five years ago, market leader HDFC's loan portfolio was worth Rs 3,425 crore; today, it is Rs 9,951 crore, a CAGR of 30 per cent a year. Mortgages minnow Vijaya Bank's housing loan portfolio stood at Rs 66 crore in 2001-02; a year later, it was Rs 482 crore, a growth of 700 per cent. In the past five years, reckons Niranjan Hiranandani, the Managing Director of Mumbai-based Hiranandani Constructions, the market has zoomed from Rs 13,000 crore to Rs 65,000 crore. "My prediction is," he grins, "it will rise to Rs 120,000 crore in five years."
THE EMERGENCE OF THE SUBURBS
Across Delhi, Mumbai and Kolkata, the emergence of the suburbs has boosted the housing market.
Whether it is Delhi's wannabe-city of a satellite township Gurgaon (left), or Mumbai's Thane (centre) and Mulund areas, or the area adjoining Kolkata's eastern bypass (right), suburbia has become a way of life in some cities.
Cheaper home loans and a debt-friendly populace are only part of the picture. The other pieces include rising salaries, especially in telecom, it services, organised retail, biotech, financial services, and banking sectors, and more rational real-estate prices. Since 1997-98, claims HDFC, prices have dropped 25-30 per cent. According to
Rajeeva Kumar, Executive Director, Omam Consultants, salaries have grown two-and-a-half to four times since 1997. Not too long ago people bought homes worth 10-12 times their annual salaries; today, they buy those priced at thrice their annual salaries, an indication that affordability has stimulated demand. Banks, flush with funds dues to poor credit offtake by industry, are diverting money to their housing divisions.
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