Wipro changes pay structure to stem attrition

Bangalore-based information technology (IT) major Wipro is walking the extra mile to bring down attrition. Recently, it changed the quarterly variable pay structure for its middle and senior level executives.

The company has revised its performance-based compensation package plan for groups C1, C2 and D1 (middle level engineers) with effect from the second quarter. Employees in the C and D category are the middle and senior level executives.

Variable pay at Wipro is linked to two components — account level revenue and profit before income-tax (PBIT) or margins of a business unit. Each of this is divided equally at 50 per cent.

Attrition at the company for the quarter ended June was 22.3 per cent. One of the highest for the company compared to its peers.

According to the revised quarterly performance-linked compensation programme (QPLC) for the C1, C2 and D1 bands, the cap linked with the gross margin and PBIT has been slashed to 30 per cent and the revenue linkage has been changed to 70 per cent.

Before the new revision, the quarterly compensation of employees in C1, C2 and D1 levels handling CEM account (the company's top 66 identified accounts handled by client engagement managers) got 50 per cent of the weightage, which was linked to the account level revenue and 50 per cent to the gross margin of the account. For non-CEM employees, the same was 50 per cent linkage to revenues of business units (BU) or verticals and 50 per cent PBIT achievement of BU or verticals.

An email from Business Standard seeking details of the QPLC did not elicit any response. “Many of us were unhappy with this and had informed our team heads and the management,” said an employee on condition of anonymity. Sources in the company said, variable pay based on the new norms of 50:50 ratio meant lesser take away.

“Meeting the guidance on revenue was still possible. In case where the business unit could not achieve guidance, they were still near-about the desired numbers. Hence the impact was not much. But achieving the margin guidance was difficult. For many this meant a severe cut back in the quarterly package,” explained another employee. The variable pay for the employees for the April-June period in July was lesser in some verticals.

The new QPLC was initiated in April 2011 for better customer mining and growth of top accounts. According to the company sources, the plan aimed at rewarding individual behaviour and sharing the organisation's success with employees.

This was the first time the company had linked new criteria like vertical revenue and PBIT to the quarterly performance compensation of employees. Earlier, the variable pays of most employees were linked to individual billability, which was correlated to overall performance of the company.

The company had also introduced customer satisfaction, attrition parameters in the compensation package for the D2 and E bands. Almost 20 per cent of the variable pay is linked to attrition.

Project managers of large projects, group heads and general managers come under the D2 band, while people in the rank of vice-president and above belong to the highest band, E.