Employees prefer in-hand salary to any other benefit

87% employees prefer a customised compensation structure; organisations need to take that into account while designing benefits

According to the TimesJobs.com’s latest Compensation and Benefit survey, rising inflation and increasing cost of living has led employees to re-evaluate their priorities on how they are compensated for their work. Our survey indicates that most employees, across generations, prefer a higher ‘in-hand’ pay out compared to other components of the salary.

Generation-wise preference

While everyone prefers to take home a higher component of the salary, importance of other benefits depend on what generation the worker belongs to. According to our survey, Baby Boomers, owing to their proximity to retirement, give more importance to post retirement benefits after the in-hand salary in their compensation and benefits package. Gen X, on the other hand, prefers other benefits such as flexible work arrangements and more work life balance. This generation is typically at a stage where they are supporting either ageing parents or growing children, or both. Finally, Gen Y gives almost equal preference to retirement, medical and other benefits.

Explaining this trend, Jappreet Sethi, an HR advisor and employee engagement expert said that Gen Y is more aware and understands that the world will be a different place by the time they retire. “Asking for retirement benefits and medical plans is about factoring in the realty that these are essentials and not, ‘good to have’.” While generations dictate the preference of the compensation and benefit structure, priorities also differ according to the level of the employees. ‘In-hand’ salary matters more to the junior level employees than the mid or senior level. Kishore Sambasivam, director-total rewards, SAP, attributes this trend to the fact that employees at junior levels are typically single and seek ownership. They do not want money locked up in a PF or superannuation benefit.Employees at this level want to plan their investment strategies which may have a higher risk and  return profile.

Factor-in their goals

Effective management starts by understanding who you are managing. This boils down to knowing the expectation the workers have from the organisation. As indicated by our survey, the future of compensation will be a customised compensation and benefit package to suit the needs of the employee. According to the survey, almost 90 per cent employees prefer a customised compensation package. Their priority of what is more important to them depends on the stage of their career and their age.

According to Sambasivam, employees prefer flexibility in their compensation structure. This is dependent on the changing demographic profile, priorities, preferences, risk orientation, individuality and ‘live-in-the-present’ mindset. Traditionally, companies focused on long-term orientation such as Provident Fund (PF), superannuation, company provided accommodation, Leave Travel Allowance (LTA), loans etc. Now, employees prefer more cash-in hand as it gives them the flexibility to spend as per their aspirations and lifestyle.

“Companies need to be cognizant of the same and modify their compensation structure and philosophies in line with the changing expectations of the workforce”, added Sambasivam.

Like employees, organisations also prioritise the components of compensation and benefits differently. This is based on whether they are wooing a new employee or retaining a current employee. As per the survey, 60 per cent organisations pay more attention to the CTC while hiring a  new employee. While retaining an employee, 61 per cent organisations prefer to give them a growth  path. Experts agreed that in the intensifying war for talent, compensation becomes a significant differentiator while wooing candidates. As opposed to hiring, organisations need to focus on other  things for retention. Attrition is usually driven by career and role aspects. Compensation cannot make up for an enticing role that a competitor might offer.

Our survey threw up some interesting results for benefits as well. IT showed that 53 per cent Gen X voted for health care insurance as a preferred benefit. Baby Boomers voted for flexible compensation (42%) and paid leave (40%). Surprisingly, Gen Y voted for disability insurance and retirement benefits as their preference.

Summing up, Raghavendra K, vice president and head human resource development, Infosys BPO, said that a healthy compensation and benefit structure should have a balance between financial and non-financial components and should be aligned with the strategic priorities of the organisation.

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