Payouts to senior executives should be in line with rest of staff hikes: HR consultants

Human resource consultants say while higher salary hikes are an attractive tool to retain C-suite executives, they should be proportional to the salary increases other employees get.

M Saraswathy

Human resource consultants say while higher salary hikes are an attractive tool to retain C-suite executives, but they should be proportional to the salary increases other employees get.

The comments come in the back drop of a fresh controversy brewing at IT major Infosys. On Sunday, Infosys cofounder NR Narayana Murthy raised objections to the 35 percent pay hike being offered to Infosys Chief Operating Officer UB Pravin Rao. Infosys informed bourses that its shareholders had ratified a move to grant the pay hike to Rao.

HR consultants say that major companies notify such hikes only after relevant people give a stamp of approval which ensures it is rational and proportional.

In a letter, Murthy said the hike was "not proper and unfair" since other employees only received 6-8 percent salary hike.A firm's chief executive officer is the final authority on pay revisions. The CEO has to ensure that such pay hike is proportionate to the employer's overall costs and equals the average hike offered to all people in the organisation, said Sunil Goel, Managing Director, GlobalHunt.

Goel also added that in case of senior leadership roles, while salary is an excitement, it is not the only retention tool. “There have been cases when people have not joined a company despite being given a double salary hike. The company and career growth also places an important role in this,” he added.

Some experts point out that though leaders in companies ensure that the salary hikes for top management are proportional to the entire workforce, the numbers are different.

“Senior management usually gets a higher hike than the rest of the staff. Being at the top of the hierarchy and being at the helm of affairs, there is always a differentiation in salaries,” said an HR executive of a rival IT firm.

Further, human resource officials are also of the view that with strict competition from peers in the industry as well new startups that are attractive as an employer, it is imperative that there is enough incentive for an individual to stay back in a company. And more often than not, salary is the most common bait.