News Release Details
"We recommend getting away from the 'one-size-fits-all' formula" – Mr. Behuria, Chairman, SCOPE
New Delhi 23-Aug-2007
"We recommend getting away from the socialist pattern (of remuneration) and want to change the 'one-size-fits-all' formula". This was the firm and resolute statement made by Mr. Sarthak Behuria, Chairman, SCOPE, while sharing with the media persons the recommendations made by SCOPE in its 'Report on Compensation Management Practices in Public Sector Enterprises' to the Second Pay Revision Committee headed by Justice M J Rao. "SCOPE has recommended an enhanced role for the Boards of Directors of Central Public Sector Enterprises (CPSEs) in determination of salary and benefits since we believe that empowered Boards will be in a better position to unlock the powers of their human resources to drive and build businesses", Mr. Behuria emphasized while adding that SCOPE has recommended a periodicity of three years for wage revision instead of the present ten years. In the report compiled by SCOPE in consultation with Mercer Consulting has made a strong case for the empowerment of Boards of PSEs for developing a compensation philosophy that is aligned to business needs. This will help in retaining talent and fighting growing attrition among its employees that is alarming at the management level and in employees engaged in core and critical functions to businesses of PSEs. Strongly recommending to de-link the salary of public sector executives from the policy governing that of employees of the government or civil services, SCOPE has suggested that the salary level of various PSEs be based on factors such as capacity to pay of each individual PSE, relevant market benchmark for pay and benefits, company, team and individual performance etc. Accordingly, starting executive salary levels for the Navratnas, Miniratnas, profit making PSEs and loss making PSEs have been recommended in line with internal relativities between the starting salary and that of the Executive Directors. SCOPE has also recommended that the Board of Directors be given the flexibility to enhance the bonus pool from the allocable profits of the company from the existing 5 percent based on the individual PSE's performance and strong linkages be established with company/team/individual performance for bonus payouts. It has also recommended that the PSEs have the autonomy to introduce stock options and retirement benefits that will enhance the ability of the companies to attract and retain talent. While recommending changes to the salary and benefit plans in PSEs, SCOPE has also made a strong recommendation for allowing individual PSEs to manage their employee strength through attractive and effective VRS schemes. In its 'Report on Compensation Management Practices in Public Sector Enterprises', SCOPE has suggested that the government as the key shareholder may set guiding principles for human resource management and outline objectives to be achieved through reward practices. It may also define broad financial objectives, targets and ratios to manage employee costs, articulating all the ground rules for PSEs to manage employee costs and establishing mechanisms to implement the same and ensure periodic review of norms. Dr. S.M. Dewan, Director General, SCOPE said that the practice of revising wages once in ten years is without a linkage to the affordability, business needs or pay practices prevailing in the market. "Present policy do not provide any opportunity to introduce performance linked schemes to reward talented and performing employees, which is very necessary to reduce the flow of talent from PSEs", he added. Dr Dewan said that the SCOPE study has found that there is a wide disparity between compensation given by private and public sector companies. This is particularly true in top and middle level officials. At the junior management levels, the salaries in the CPSEs are ahead of the salaries in the private sector across all industries. The rate of progression of salaries in the CPSEs is gradual and the ratio between the entry-level executives' salary and that of the CEO is about 1:4. SCOPE has, therefore, recommended that there is need for differential salary compensation linked to the employees' role and responsibility in its organisation, particularly for employees with technical expertise. Dr A.K. Balyan, Director (HR), ONGC and Chairman of SCOPE Pay Committee, was also present on the occasion. He said that PSEs are experiencing growing attrition amongst their executives over the last few years. Soaring salaries in the pivate sector in India have been attraction enough for executives to leave behind the benefits and lifestyle that PSEs offer them. He said that it is pertinent to note the fact that PSEs are the good source for key talent in sectors like power, oil and steel. The prevailing pay scales and the lack of adequate salary progression are cited as the common reasons why PSEs are unable to attract and retain talent in today's competitive environment.
New Delhi 23-Aug-2007
"We recommend getting away from the socialist pattern (of remuneration) and want to change the 'one-size-fits-all' formula". This was the firm and resolute statement made by Mr. Sarthak Behuria, Chairman, SCOPE, while sharing with the media persons the recommendations made by SCOPE in its 'Report on Compensation Management Practices in Public Sector Enterprises' to the Second Pay Revision Committee headed by Justice M J Rao. "SCOPE has recommended an enhanced role for the Boards of Directors of Central Public Sector Enterprises (CPSEs) in determination of salary and benefits since we believe that empowered Boards will be in a better position to unlock the powers of their human resources to drive and build businesses", Mr. Behuria emphasized while adding that SCOPE has recommended a periodicity of three years for wage revision instead of the present ten years. In the report compiled by SCOPE in consultation with Mercer Consulting has made a strong case for the empowerment of Boards of PSEs for developing a compensation philosophy that is aligned to business needs. This will help in retaining talent and fighting growing attrition among its employees that is alarming at the management level and in employees engaged in core and critical functions to businesses of PSEs. Strongly recommending to de-link the salary of public sector executives from the policy governing that of employees of the government or civil services, SCOPE has suggested that the salary level of various PSEs be based on factors such as capacity to pay of each individual PSE, relevant market benchmark for pay and benefits, company, team and individual performance etc. Accordingly, starting executive salary levels for the Navratnas, Miniratnas, profit making PSEs and loss making PSEs have been recommended in line with internal relativities between the starting salary and that of the Executive Directors. SCOPE has also recommended that the Board of Directors be given the flexibility to enhance the bonus pool from the allocable profits of the company from the existing 5 percent based on the individual PSE's performance and strong linkages be established with company/team/individual performance for bonus payouts. It has also recommended that the PSEs have the autonomy to introduce stock options and retirement benefits that will enhance the ability of the companies to attract and retain talent. While recommending changes to the salary and benefit plans in PSEs, SCOPE has also made a strong recommendation for allowing individual PSEs to manage their employee strength through attractive and effective VRS schemes. In its 'Report on Compensation Management Practices in Public Sector Enterprises', SCOPE has suggested that the government as the key shareholder may set guiding principles for human resource management and outline objectives to be achieved through reward practices. It may also define broad financial objectives, targets and ratios to manage employee costs, articulating all the ground rules for PSEs to manage employee costs and establishing mechanisms to implement the same and ensure periodic review of norms. Dr. S.M. Dewan, Director General, SCOPE said that the practice of revising wages once in ten years is without a linkage to the affordability, business needs or pay practices prevailing in the market. "Present policy do not provide any opportunity to introduce performance linked schemes to reward talented and performing employees, which is very necessary to reduce the flow of talent from PSEs", he added. Dr Dewan said that the SCOPE study has found that there is a wide disparity between compensation given by private and public sector companies. This is particularly true in top and middle level officials. At the junior management levels, the salaries in the CPSEs are ahead of the salaries in the private sector across all industries. The rate of progression of salaries in the CPSEs is gradual and the ratio between the entry-level executives' salary and that of the CEO is about 1:4. SCOPE has, therefore, recommended that there is need for differential salary compensation linked to the employees' role and responsibility in its organisation, particularly for employees with technical expertise. Dr A.K. Balyan, Director (HR), ONGC and Chairman of SCOPE Pay Committee, was also present on the occasion. He said that PSEs are experiencing growing attrition amongst their executives over the last few years. Soaring salaries in the pivate sector in India have been attraction enough for executives to leave behind the benefits and lifestyle that PSEs offer them. He said that it is pertinent to note the fact that PSEs are the good source for key talent in sectors like power, oil and steel. The prevailing pay scales and the lack of adequate salary progression are cited as the common reasons why PSEs are unable to attract and retain talent in today's competitive environment.