Infy offers new sop to retain talent
The IT major will create a compensation pool and reward employees, especially the senior officials, from it.
By Parvathy Ullatil, TNN |
MUMBAI: Three years after it discontinued its trendsetting ESOP scheme, Infosys is readying to dangle another carrot before its employees. The new incentive tool, called the deferred compensation scheme will see Infosys creating a compensation pool and rewarding employees out of that.
| Infosys may escrow a certain amount of money to create a pool and dole out portions to its employees based on their performance, staggering it over a period of time. But the scheme may be limited to the senior management, and covers a relatively small percentage of Infosys’ over 50,000 employees. |
Infosys may escrow a certain amount of money to create a pool and dole out portions to its employees based on their performance, staggering it over a period of time. The money in the pool may be calculated as a percentage of its profits.
“How this will work is very vague at this point of time, but the underlying idea behind the deferred compensation scheme is that the longer you stay the better the rewards. Basically, it will help them keep their people loyal for longer periods of time and thus stem attrition,” said Ronesh Puri, MD Executive Access (India).
But there’s a catch: the scheme may be limited to the senior management, and covers a relatively small percentage of Infosys’ over 50,000 employees. Infosys’ newly anointed HR head TV Mohandas Pai was not available for comment but the Infosys corporate communications department said, “We are still working on this option. At this point of time, we will not be able to share the details.” Sources say Infosys is testing out the acceptance for this scheme and will unveil it in 2-3 months.
Infy has seen a number of high profile exits in the last three years including its global sales head Basab Pradhan, head of HR Hema Ravichander, global brand manager Jessie Paul and director Phaneesh Murthy. Retaining people in the senior management has become a challenge for the company.
If the new incentive goes down well, it will be a matter of time before competitors catch on to it and account for the scheme as they step out to poach. Infy, which was among the first Indian companies to introduce the ESOP scheme in India, it rode high on the incentive tool as stock prices of tech companies soared in the 1990s. Its ESOP scheme became the stuff legends were made of, making millionaires of many employees.
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But as wild swings in the stock markets became the order of the day, Infy figured more people preferred cash rewards to stock options. Add to that clashing guidelines of Indian and US regulatory agencies on pricing these stock options, ESOPs didn’t look that attractive anymore.
Infosys suspended its ESOP scheme in May ‘03 and went back to rewarding their employees in cash. Like most other new-age companies Infy also has a variable pay factor build into its salaries which accounts around 20-30% of pay packets and upto 50 % in some cases.
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