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FEB. 11, 2007
 Cover Story
 BT Special
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Taxing Times
The phase-out of central sales tax is yet another move towards ushering in the national goods and services tax (GST). The compensation to the states, in lieu of CST phase-out, will include revenue proceeds from 33 services currently being taxed by the Centre as well as 44 new services of an intra-state nature that will be traded by the states. However, VAT is the way forward, though much needs to be done to iron out the anomalies in the current VAT regime.

India, Ahoy!
Indian investments overseas are growing and how. For instance, total Indian investment in Latin America and the Caribbean has topped $3 billion (Rs 13,500 crore) so far. The latest investment is by ONGC Videsh, which acquired an oilfield in Colombia for $425 million (Rs 1,912.5 crore). Earlier, ONGC bought an offshore oilfield in Brazil for $410 million (Rs 1,845 crore).
More Net Specials
Business Today,  January 28, 2007
The Widening Middle
FMCG companies, banks and BPOs are paying the highest middle manager salaries, reveals the second quarterly survey by BT-Omam Consultants.
Xerox's Chatteraj (middle) with his team: The MNC employer offers international exposure to its middle managers to keep them motivated
Hr heads of companies across India Inc. would like to have you believe that theirs is a 'tough' vocation. And lest this refrain be misconstrued as a sign of unwarranted chauvinism, they hasten to add two antonymous words to their statement: 'attrition' and 'retention'-words that, across organisational levels, rather perversely define the fallout of India's explosive growth. And if you thought fat pay packets were the beleaguered hr manager's best bet, think again.

The BT-Omam Salary Survey for Middle Management employees shows that in 2005-06, the head of a large department, say, in an MNC automotive major (typically designated as a Deputy General Manager and reporting to a functional head), would have, on an average, cost his employer a little under Rs 22 lakh per annum. "Intense competition has forced us to hike pay packets of middle management employees by 15-20 per cent," informs G. Ramesh, Senior VP (HR), Hyundai, "and for high performers with specific skill sets, the figure is as high as 40 per cent." But has that helped him keep his employees from leaving? Not quite. While the automotive sector saw attrition levels of 15 per cent, the figure for manufacturing as a whole was a high 22 per cent. Across most sectors, both Old and New Economy, a similar trend prevails.

To capture compensation trends in corporate India, Business Today collaborated with the Delhi-based research consultancy, Omam Consultants, to publish data on salaries across a range of industries (14) and companies. This survey covers middle managers and is the second of BT's annual salary sweeps for 2007. For the current survey, Omam compiled middle management salary data across 102 companies in 14 sectors. Since salary data is confidential, the names of the companies have not been revealed. However, the sectors have been mentioned in the survey, and these are: automotive, banking, chemicals/petrochemicals/fertilisers, core, consumer durables, engineering, FMCG, IT, ITEs-BPO, pharma, real estate, retail, telecom and textiles. The survey looks at compensation data from a number of angles, including inter- and intra-industry averages.

The Omam team that collated and analysed the data was led by Director Rajeeva Kumar, Executive Director Anil Koul, and Senior Manager Ashutosh Kumar.

And therein lies the crux of the issue. "When you hire someone, you invest in him both in terms of time and money, all of which is lost when he leaves," laments Chandan Chatteraj, Executive Director (HR), Xerox. But where are most people leaving from and where are they headed? For the most part, sectional heads of departments, typically technical and management graduates from premier colleges, who may have spent anywhere from 5-12 years in the manufacturing sector, are gravitating towards sunrise sectors like retail, IT, ITEs and banking, finance and insurance (BFSI). The movement being witnessed in the sunrise sectors, say hr heads, is internal. In fact, even within the manufacturing space, certain sectors like steel, which is witnessing unprecedented investment, international and Indian players alike are mopping up seasoned employees, especially from PSUs.

Apollo's Pasricha (extreme right) and colleagues: He says even lateral moves across industries are fetching handsome pay packages
But it's not just the lure of another job that's behind the churn. "Higher responsibilities with significantly higher compensation are on offer in emerging sectors, so people make a vertical shift across industries," reckons Pradeep Panda, President (HR), Ispat Industries. It's a perception corroborated by survey results, which point to a yawning gap between compensations across middle management levels. So while a manager, who heads a medium sized department, say in an FMCG major makes anywhere up to Rs 14.5 lakh p.a., his immediate boss will likely be raking in upwards of Rs 23 lakh p.a. Says Sukjit Pasricha, Chief HR, Apollo International: "Another interesting trend is that of people making a lateral shift from one industry to another, and in the process getting generous pay hikes." As the survey figures point out, after three-to-five years in the BFSI sector, a manager can easily hope to earn twice the money his counterpart does in, say, the textile industry.

On their part, companies seem to be doing all they can to retain experienced employees. The hundred or so companies across all the 14 sectors surveyed have incentivised remuneration; a substantial percentage of the money on offer is variable pay. While New Economy sectors such as IT, ITEs, telecom and BFSI have traditionally only had a 'basic' component in the range of 22-35 per cent, Old Economy companies too have joined the bandwagon with some in sectors like core and engineering marking 10 per cent of the payout as variable.

But factors other than money can also explain the churn. "For one, organic growth, especially in Old Economy sectors, can be rather slow," says Panda, "so if a high performer, whose growth has been stunted, does not shift in time, he can be fatigued."

Increasing numbers of people, especially in the age group of 25-35 years, now want to study, and companies are offering anything from tailor-made management programmes in association with top management institutes to even allowing people to take sabbaticals. "We offer people international exposure by way of short assignments and programmes in a bid to keep their motivational levels high," says Chatteraj of Xerox.

HR heads also say that once a middle management employee in, say, telecom or it reaches 40 years of age, it becomes difficult for him to rise any further. Some like Pasricha, however, feel that this would change with the manufacturing sector taking off. "Core industries, which lay a premium on experience, will absorb them," he says. But for that the job market will have to cool first.

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