FMCG Sector: Steady, Stable and Spot-on
While 55% of organizations promote employees to
the lower third of the pay range, a significant portion
(45%) promote employees to even the middle third/
range mid-point. This is justifiable keeping in mind that
the person promoted has shown a potential but is yet
to grow into the level and hence, cannot be paid at par
with an employee who is already present at that level.
However, the new salary can sometimes be hard
to match given the employee is coming from a lower
pay range. This statistically takes the whole pay range
down. Therefore, although organizations might provide
higher salary increases at a level, the range mid-point
movement is much lower than the salary increase figures.
Lateral hires present a whole new set of challenges.
As they are role ready, organizations typically hire
laterals around the range mid-point or slightly lower.
In order to hire the best, 20% organizations say that
they do not have specific criteria/guidelines and
are willing to use the entire pay range for hiring.
Finally, there arises the question of how to treat
red dots. While the simplest answer would be to
promote such employees, the challenge arises when
some employees are unable to display the aptitude or
behaviors required at the next level and are therefore,
not ready to be promoted. While some organizations
continue to give such employees the average increment,
other organizations instead give such employees a
one-time payout without increasing their annual pay.
Performance & Potential - Managing
Expectations
High Performers - Higher Pay for the Best
While some organizations have created a buzz
globally by doing away with bell curves, the FMCG sector
continues to rely on the traditional methods of ranking
and managing performance. Majority of the organizations
enforce bell curves fairly strictly, using this as a lever
to better reward the high performers both in terms of
salary increase as well as performance bonus payouts:
- Highest raters get up to 1.7x the salary increase of
average performers
- The maximum bonus payout for high performers
ranges from ~130% to 300% with an average of 180%
of target bonus
High Potential - The Path to Faster
Promotions
FMCG organizations are
also placing increased
emphasis on the modes
of pay communication,
such as implementation of
Total Rewards Statements
for annual increment
communications
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