Rajender Kumar Sharma is 55, and worried as hell. He has spent his life-33 years of it anyway-as a salesman, selling shoes for one of India's most enduring footwear brands. But his company, he hears, has been having trouble over the past decade or so. Now, as part of a modernisation drive, it wants to impose a system of near-total variable pay to replace the fixed compensation package that included a base salary and dearness allowance (DA). At least that's what the management has proposed to his employee union (one of the many that this firm has).

Sharma currently earns a fixed salary of Rs 2,200, and gets commissions of 2.5 per cent on non-footwear and 3 per cent on footwear sales. Now, most of the brand's popular products are low-priced, and so he'd have to be one lucky salesman to sell almost Rs 1 lakh worth of goods in a month to scrape together a variable component equivalent to his salary. His terror: if his fixed portion were to vanish, he'd be left starving. Even if the commission were to be trebled or quadrupled. Being better incentivised may not help him sell more. After all, this is no mysterious new concept he's selling, and he knows that in his company's case, a sale is more a result of customer predisposition to the brand than the result of his own power of conviction. The employee union has been sparring with the management on the issue, no doubt, but Sharma sees his future as bleak.

"If the company is doing badly," says a plaintive Sharma, "will they get rich by cutting my pidly salary?" The look in his eyes is impossible to forget. It's a plea. A plea for compassion-in a business environment getting colder and colder.

It's Here

Managers deal largely with numbers. And theories. And the two often combine to create trends. The current compensation trend points in the clear direction of variable pay. Over three-fourths of companies in India's organised sector are reckoned to use variable pay in some form or the other. The rationale, of course, is to incentivise performance. Moreover, says Atul Khosla, Associate Director, Watson Wyatt, it helps to "distinguish between high and low performers".

"Secondly," says Dhruv Prakash, consultant, Hewitt Associates, "the definition of performance is now sharper. Organisations want every individual to think of performance in the same way as the organisation." According to a survey by Hewitt, organisations across industry segments in India are projecting an increase in the variable component of their compensation packages in 2003. Senior management would have the largest variable components; their variable pay as a percentage of their total cost to company would rise to 18.6 per cent from the current estimate of 15 per cent.

"It is a positive change that is happening," says Khosla, evidently pleased with the way variable pay is playing out. The trend is apparent at the recruitment level too, adds Rahul Taneja, vice president, ConsIndia, a headhunter. Employers, he says, "are now looking at what they are committing to more closely."

Good performers don't have a problem with that, says Y.V. Verma, Vice President (HR), LG Electronics India Ltd. "It shows their belief in themselves," he says. "It is a mutual win-win situation for the employer and employee," sums up Varadarajan S., Vice President (hr), Wipro Spectramind.

If sales teams are thought to be best suited to variable pay, it's because it is an open-and-shut case of achieving numerical targets-which are measurable. It's all about numbers and more numbers. And the whole system's credibility hinges on an objective set of individual achievables, though many firms still like to ensure that some of the variable component is a function of overall corporate performance.

All clear, then-three cheers for variable pay?

And It's Hurting

The variable portion goes under the term 'incentives', typically, but when companies expect their employees to make their living on this part of the deal, one can't blame employees like Sharma for feeling victimised instead. It's a morale-killer, concedes Khosla, when companies increase the proportion of variable pay while managing to pay out a total that's roughly the same, or less. This is a simple case of wage-cutting masquerading as incentivisation. "Variable pay should be on top of what they are already getting," says Khosla.

There's a reason for that, and a darned good one too. A decent base salary spells security. An eight-letter word that matters a lot. Something that gets slotted right at the bottom of Maslow's hierarchy of needs, the stuff without which ordinarily stable people are driven to weird acts of desperation.

It's not as if the corporate advocates of variable pay don't know that. Even companies like LG, where the variable component (in the form of performance bonuses) can go up to 14 times the salary, have fixed salaries that are more than enough to put food on the table.

A refusal to assure employees even that much gives the whole employer-employee relationship a mercenary dimension. Cold and transactional, rather than warm and relationship oriented.

"It gives a very short term perspective for the employee," admits LG's Verma, "he doesn't think longer term."

In that business-like observation may lie many truths ignored by the ultra-rational school of compensation. It's not just Sharma. It's many other employees as well. Workers are often emotional beings. They are people. People who want to belong, and feel that they actually do belong-and with a somewhat broader relevance than the dry task of making the cash register jingle, or whatever. People who sacrifice a lot of intangibles for their jobs, and expect a safety net in return to save them when they stumble. People who might use salary as their overt bargaining point, but need something they can't articulate without embarrassment: compassion.

Salesman Sharma may not be an energetic salesman anymore. At 55, he's too old to rock and roll. And too young to, er, succumb to the harsh reality of Darwinian logic. But surely, three decades of selling shoes would've equipped him with some ground-level insights related to purchase behaviour. Surely, there's some talent he possesses that his company can deploy for something. Surely, even he has some thoughts on why the brand has been losing customers. Maybe, just maybe, he needs to be heard out.

It may not earn Sharma any money, but it might do something to assuage his hurt feelings. Thirty-three years is a lifetime.