The Salary Disconnect

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08 November, 2014

A job posting in the alumni network of a management college invites applications for the position of a deputy general manager in the HR domain. The company’s name remains undisclosed. The work profile is alluring and the seven-figure package looks handsome. But the terms and conditions are a bit baffling — it asks only those with a minimum salary base of Rs 28 lakh to apply, and offers a bare 5 per cent hike.

These days, it is not just minimum work experience that companies are setting as a shortlist criteria, but minimum packages as well. “Even though I met all other criteria, I could not apply because my current package is not even close to what was asked,” says Abhiram Nandanwar (name changed), an associate general manager at an auto firm. He wonders if he is underpaid.

Recruiters are increasingly introducing stringent conditions when it comes to replacement hires. Job hoppers, who in the past could negotiate exorbitant salary hikes from new employers, are now halted in their tracks. Companies just shut the door if demands are too high.

The purse-strings are being tightened not just at the middle and top levels of management, but also for those just stepping into the corporate world.

“Salaries for graduates have remained static for more than two years now,” says Subir Bakshi, head, talent and rewards, Tower Watson, an HR consultancy.

Salary expectation mismatch was one of the big issues that came up during our annual Naukri-BW | Businessworld survey. But our 2013 exercise, in which we reached out to 577 recruiters, 40,000 job seekers in India’s top cities and close to 30,000 job applicants in the rest of the country, threw up several other concerns as well.

Talent Lament
Like last year, this year too, talent shortage was a big concern for most recruiters. Some 70 per cent of the recruiters ranked finding the right talent as a major challenge. Their next big grouse was the high salary expectations that a job seeker comes with.

“Fresh graduates or even those with an MBA degree have zero communication or technical skills,” says TeamLease’s senior vice-president and co-founder Sangeeta Lala. Since recruiters have to invest more in training, they say this justifies lower entry-level packages.

Take pharma firm Lupin, which spends about Rs 20-25 crore every year on training. “Young people (freshers) are not job-ready as they are used to studying and not working,” says Divakar Kaza, HR president, Lupin.

Sapient India, an outsourcing and consulting firm, too finds paucity of talent to be its main concern. It is increasing its intake of freshers with nearly 30 per cent of overall recruits being hired from colleges, and the company expects this trend to pick up in the years to come. Says Prashant Bhatnagar, director-hiring and staffing at SapientNitro India, “We have to invest significant resources to train people at both ends of the spectrum — entry-level graduates as they do not have adequate skills to be employable, and specialists, as there are not enough of such people.” However, he adds that certain pockets of talent “are still commanding significant premium and organisations are left with no choice but to appease”.

Too Much To Ask?
Eighty-six per cent of recruiters believe that nearly 40 per cent of job seekers today are demanding higher wages than they deserve. The disconnect is found most in software services and in sales and business development roles. Of course, job seekers have a different story. Ninety per cent of job seekers said they were underpaid. “Expectations on the compensation front continue to rise,” says Mohan A.V.K., executive VP and global head, HR, at EXL Services. Rising inflation is one reason for higher salary demands, believes Mohan, though he also says that intense competition in the market in certain skill sets is also leading to higher wage demands.

But Rajita Singh, HR head at Broadridge Financial Solutions says, “If you expect firms to pay 50 per cent more than what your old company paid, you won’t get it.”

Flexi Moves
Even as companies are getting more inflexible on the salary front, they are loosening up when it comes to offering flexible work timings. Seventy-two per cent of recruiters say they are open to the idea of flexible timings — albeit on a case-to-case basis.

But Yahoo CEO Marissa Mayer, who pulled back the company’s remote working policy, has a lot of support in India, with 26 per cent of the recruiters surveyed rejecting flexi-timings outright. As Lupin’s Kaza points out: “Flexi-time and remote working options are specific to certain industries. Pharma industry is not conducive to it,” he says. Management consultants, though, are open to the idea. “Our motive is to get the work done from employees; whether they do it out of home or sitting in office is not a concern,” says Praveen Bhadada, director at Zinnov Management Consulting.

Looking Inwards
Recruiters are now turning to newer modes of hiring. On the rise are internal hiring and employee referral programmes. Ashwin Shirali, regional director, human resources, Accor India, says a definite change in the way the company hires is its increased focus on employee referrals. “We now do 35 per cent of our hiring from internal sources. It’s important because attritions at certain levels can be quite disastrous,” he says. Lupin does 55-60 per cent of its hiring through an internal referral programme called Parichay. According to the company, this brings down attrition and also attracts better talent. “Companies are leveraging internal hires more and more,” says Irfan Abdullah, director, talent solutions, LinkedIn. He also claims there has been a 20 per cent increase in the use of social professional networks by companies when it comes to searching for quality hires.

PwC India’s human capital leader Mark Driscoll agrees. “In our hiring budget, we are definitely spending more on social media. I would rather pay more referral bonuses than consultants’ fees. If I look at my hiring spends, the allocation to consultants went down, referral programme spends went up and social media spend went up.”

The advantage of social professional networks, says Driscoll, is that they bring passive candidates into the available talent pool. A lot of suitable people who are not actively seeking change suddenly come into the radar of recruitment agencies and companies.

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(This story was published in BW | Businessworld Issue Dated 12-08-2013) ]]>

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