Indian executives were the least willing to take a pay cut for an ideal job, said a study by PricewaterhouseCoopers (PwC) and London School of Economics (LSE). The study— 'Making Executive Pay work- Psychology of Incentives', showed that around 50% of the executives in India choose a clearer pay package than a more ambiguous one of the same or potentially higher value.
The executives from across the world said that they would take a 28% pay cut for their ideal job. Indian executives said that they would take 24% pay cut, the lowest cut across the nations surveyed.
The study said that globally, complexity and ambiguity consistently destroyed the perceived value of incentive plans, though there were regional variations in attitudes to incentive pay. Though deferred cash was preferred by the majority of global respondents, Indian executives were in favour of deferred shares over cash.
Around 55% of Indian executives believed that their firm's long term incentive plan (LTIP) was effective, demonstrating that the recognition provided by participating in LTIPs seems to be more important to motivation than the financial incentive. Further, fairness in pay emerged as a fundamental issue, with it being valued the highest among Indian executives.
Padmaja Alaganandan, Executive Director–Consulting, PwC India said: "Only a limited number of executives will be motivated by highly leveraged and volatile pay packages, hence providing choice and flexibility in pay programmes is essential. Executives value deferred pay significantly below its economic or accounting value – a deferred bonus is typically discounted by around 50% over three years. However, it is the recognition that participation in Long Term Incentive programmes confers, as well as the fairness with respect to equity with peers that makes the difference."
The study is based on a survey of 1,106 senior executives across 43 countries. It had 83 participants from India.
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