PSEs beat private sector in mid-level salaries
The Central Public Sector Enterprises (CPSE) salaries are way ahead of the compensation dished out in the private sector to junior management staff.
By Bhanu Pande, TNN |
NEW DELHI: Public sector enterprises (PSEs) may have fence-sitters in their senior management rungs, but these enterprises still have enough to keep their flocks together at the junior management level. The Central Public Sector Enterprises (CPSE) salaries are way ahead of the compensation dished out in the private sector to junior management staff, and this is across all verticals.
The salary differential remains reasonably high for the first 6-7 years of service, but things start to change after that. This is due to the fact that the rate of progression of salaries in CPSEs is gradual as the ratio between the entry-level salaries and that of the CEO is to be maintained at about 1:4 in line with the specified norms.
This was highlighted in a presentation made by Standing Conference of Public Enterprises (SCOPE) on its recommendations for salary and benefit review. The recommendations based on a study by the global HR consultancy — Mercer — propose a paradigm shift in the approach to the establishment, implementation and review of salary management practices in CPSEs at higher levels.
The study commissioned by SCOPE on behalf of all the CPSEs raises concerns at the growing attrition at the mid and senior ranks and cites uncompetitive salaries as the ‘prime’ reason. “While on the one hand, several CPSEs are being held accountable for their business results and operational management through MoUs signed with the government, on the other, they are facing competition on all fronts — markets, clients, business, resources and most importantly, talent.”
To stem the attrition, SCOPE has strongly emphasised the need for greater empowerment of the board of directors on issues related to compensation including an enhanced role for them in determination of the same.
Under the proposed regime, the apex body of public enterprises recommends the government to limit its role to setting guiding principles for HR management, establishing objectives, targets and ratio to manage employee costs, articulating ground rules and periodic review mechanisms.
The major theme of the SCOPE recommendations is ‘differentiation’ which suggests that the salary levels of various CPSEs be based on their capacity to pay, relevant market benchmarks and, company, team and individual performance. It calls for flexibility for the Boards to enhance the bonus pool from allocable profits of the companies from the exiting 5% based on the individual CPSE performance and establishment of linkages with company, team and individual performance for bonus payouts.
It has also suggested that periodicity of salary review be brought down to 3 from the existing 10 years, companies to be given autonomy to introduce Esops and retirement benefits that will enhance their ability to attract and retain talent.
Such recommendations are significant coming at a time when public sector undertakings are reeling under an assault from private companies in their hunt for talent.
The salary differential remains reasonably high for the first 6-7 years of service, but things start to change after that. This is due to the fact that the rate of progression of salaries in CPSEs is gradual as the ratio between the entry-level salaries and that of the CEO is to be maintained at about 1:4 in line with the specified norms.
This was highlighted in a presentation made by Standing Conference of Public Enterprises (SCOPE) on its recommendations for salary and benefit review. The recommendations based on a study by the global HR consultancy — Mercer — propose a paradigm shift in the approach to the establishment, implementation and review of salary management practices in CPSEs at higher levels.
The study commissioned by SCOPE on behalf of all the CPSEs raises concerns at the growing attrition at the mid and senior ranks and cites uncompetitive salaries as the ‘prime’ reason. “While on the one hand, several CPSEs are being held accountable for their business results and operational management through MoUs signed with the government, on the other, they are facing competition on all fronts — markets, clients, business, resources and most importantly, talent.”
To stem the attrition, SCOPE has strongly emphasised the need for greater empowerment of the board of directors on issues related to compensation including an enhanced role for them in determination of the same.
Under the proposed regime, the apex body of public enterprises recommends the government to limit its role to setting guiding principles for HR management, establishing objectives, targets and ratio to manage employee costs, articulating ground rules and periodic review mechanisms.
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Given the autonomy — managerial and operational — to the board of individual CPSEs following the MoUs, a strong case has been built for delinking the salaries of public sector executives from those applicable to employees of government civil services, it says.The major theme of the SCOPE recommendations is ‘differentiation’ which suggests that the salary levels of various CPSEs be based on their capacity to pay, relevant market benchmarks and, company, team and individual performance. It calls for flexibility for the Boards to enhance the bonus pool from allocable profits of the companies from the exiting 5% based on the individual CPSE performance and establishment of linkages with company, team and individual performance for bonus payouts.
It has also suggested that periodicity of salary review be brought down to 3 from the existing 10 years, companies to be given autonomy to introduce Esops and retirement benefits that will enhance their ability to attract and retain talent.
Such recommendations are significant coming at a time when public sector undertakings are reeling under an assault from private companies in their hunt for talent.
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