Companies across industries are rolling out the red carpet for middle and junior management employees in a bid to both retain top per- formers as well as attract new tal- ent. Long-term incentives, floating stock units and global postings are being liberally handed out at a time when companies cannot afford big hikes and bonuses, industry experts and companies said.
Employee stock ownership plans (Esops), for instance, have conventionally been the preserve of senior management and CXOs. But com- panies are now using it as a tool to attract junior to mid-level people to ensure they stay around longer.
“In the IT, e-commerce, and product sectors, companies have integrated deep-discounted Esops as a core element of their rewards philosophy,” said Jang Bahadur Singh, associate partner of human capital solutions at consulting firm Aon in India. Singh noted that traditionally, sectors such as financial services, FMCG (fast-moving consumer goods), and FMCD (fast-moving consumer durables) have offered equity schemes to top and middle management.
The incentive programmes are now trickling down the hierarchy as the battle for niche talent intensifies.
“As these industries begin to recruit talent from technology-focused
organizations, they are now expanding their equity offerings to include junior-level employees as well to mirror the reward structures
of these technology organizations,” Singh said. Going ahead, he expects group incentives and flexible work arrangements, which are routine in tech companies, to permeate other industries, too.
Ironically, although the job market is muted, holding on to key talent remains a challenge. Attrition levels in IT, banking, startup, and consumer sectors have fallen in the past year or so, but top talent remains a vulnerable spot for companies.
The middle management are more prone to leave if the right compensation, stocks or career growth path are not given, making succession planning difficult for firms.
In the banking sector, for example, Axis Bank and Yes Bank have brought in stock units for their high performers in the middle management. “Over the last year and a half, we have rolled out employee stock units for the high performers in middle management. They help us in both retaining and aligning the executive to the company’s goals,” said Rajkamal Vempati, president, human resources at Axis Bank.
Meanwhile, Mint has learnt that Yes Bank is implementing selective RSUs for mid -level employees this year as a strategic retention measure for key talent. The bank did not respond to Mint’s queries.
RSUs refer to restricted stock units, where a certain number of shares is given to an
employee after she completes a certain tenure in the company. Apart from RSUs, companies
are also dishing out plain vanilla esops and performance shares.
Under Esops, employees can buy stock of the firm at a predetermined price after a certain number of years. In performance stocks, the shares are allotted only if the employee meets the goals, stays with the company for a specific tenure and the firm also meets its growth target in the sector.
A Japanese tyre manufacturer has expanded the number of employees eligible for its long-term incentive plan in India.
A senior executive in the company said on condition of anonymity that the firm has long-term
incentives that stretch over a three-year period for high performers. “That number has increased by 2x in the last five years,” the executive said.
“The long-term grants are given to those who fit the bill of critical talent and whose roles
are crucial and who do not have a successor in place.”
Similarly, at spirits major Pernod Ricard, employees are offered an opportunity to apply
internally for mid- and senior-management roles within India and beyond.
“During the negotiation process, candidates can discuss options for cash or stock, but these are only part of the equation and have limited efficacy when it comes to fostering long-term engagement,” said Nitu Bhushan, chief human resources officer at Pernod Ricard South Asia.
“Besides, we continuously explore roles and opportunities with our global teams to ensure
that talent from India gains valuable global exposure,” Bhushan added. “These conversations are ongoing, even when specific roles have not yet opened, allowing us to identify potential positions well in advance.”
Bengaluru-based mattress and home solutions startup Wakefit, which offers stocks across hierarchies, says it is a disservice to its potential if Esops are seen merely as a retention tool.
“Esops for us is to build true ownership and loyalty with the company’s mission. We provide Esops to junior and midlevel team members, too. There are target-based and tenure based top-ups to the Esop pool, which has resulted in our mid and senior management teams staying for good tenures.” said
Chaitanya Ramalinegowda co-founder of Wakefit.co.
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