Omam Consultants in the News
ANIL KOUL, EXECUTIVE DIRECTOR, OMAM CONSULTANTS PVT. LTD.
Indian Industry Still Learning
Indian employees are easily affected by sentiments and emotions, and any disturbances affect them internally and externally
 
Mr. Koul feels that the Indian industry is still in the “learning phase”. Hence, the visible results from individual employees or companies responsible for the attributes are not highlighted, which leads to most outsiders feeling a lack of corporate governance in our country. However, the audit function is gaining predominance and this should help bridge the gap and pinpoint employees’ roles and levels of accountability. Corporate governance, in his opinion, should be a true reflection of the company’s culture, policies, relationship with stakeholders along with clear commitment to values and ethical business practices.

Indian employees, he says, are easily affected by sentiments and emotions, and any disturbances affect them internally and externally. However, the basics in the Indian economy are still strong and it seems that we will be able to overcome the current imbalance in relatively quick time of 6 months.

Working in a consultancy firm, hours tend to be long and the workload quite strenuous. So we asked Mr. Koul to list down the major priorities formulated in his company with respect to corporate governance. He explains that the top management has always maintained focus on integrity and transparency (in their dealings with clients and employees) as well as the pursuit of excellence (in terms of in-house capability and client orientation).

Mr. Koul adds that for this mission to be accomplished, it is important to treat the causes of non-compliance rather than the symptoms. He stresses on the fact that his organisation firmly believes that employees are the “building blocks” of any company. Thus, they try to inculcate the correct values, systematic processes and culture right from inception, so that avoidable issues do not arise.

For the formulation of CEO pay packages, Mr. Koul explains that his company has a compensation committee at the board level which decides and reviews compensation levels for CEO and other business heads. They have had no issues with respect to top management level compensation so far.

Citing research done by his company, Mr. Koul tells us that traditionally, Indian organisations have averaged the ratio of top level compensation to entry level compensation at around 8 times, as compared to companies in the western world, where the average is 5 times. Secondly, he notes that the base salary levels in India are much lower than in the West. Hence, a lot of ratios can be very deceptive if looked at in isolation. Recently though, top management salaries have been catching up with those in the US and Europe due to the global movement of Indian professionals.

Nonetheless, in Mr. Koul’s opinion, these are traumatic times for employees, since they have not been directly responsible for the recent global crisis. However, such downfalls are part of the life cycle of any industry. The employees need to become strong and mature to handle such situations, as there are likely to be further events like acquisitions, mergers and bankruptcies due to the fast-changing external market scenario. Professionals of the younger generation are more confident while handling such situations. Change will always bring in better opportunities and these employees should remain optimistic.
 
Being a consultant, Mr. Koul has interacted with a lot of industry professionals and he is of the opinion that variable pay at the CEO level is now a well-accepted fact. The most representative salary composition at CEO level is a ratio of around 70:30. The variable pay at the Chief level, he explains, mostly depends on the organisational performance and less on market indices like market share, customer delight, etc. The concept of variable CEO pay is catching on due to the rapidly changing market scenario and is likely to be firmly established in India within the next 2 years.

When we asked Mr. Koul about what is important to individuals at such a high post, he said that Indian CEOs earlier were more interested in the brand name and individual challenges, while accepting a job offer. In this respect, the West has been ahead of India. The value and perception of compensation in the Indian psyche has changed in the recent past due to the fact that Indians are heading global companies like PepsiCo and Citigroup. The new competencies acquired by Indian professionals after working in diverse scenarios have given them an edge, due to which they demand higher pay packages.