According to Suri, differential positioning of compensation packages is done on the basis of how critical that level/function is to the organisation, and is directed by the performance of the incumbent doing that job. ``Addressing the issue of attracting and losing key talent would call for identifying a comparator basket,'' he says.

The comparator basket is chosen on the basis of firms that are comparable in terms of industry size, operations, production lines,geographical spread, etc. It may also include firms that offer similar types of career progression. The basket could also comprise firms from various industries who are `best in class' for specific functions.

``When a company looks at attracting talent, it is the comparator basket that provides inputs on the talent that is available in the market for a specific job,'' says Suri.

Once the scope and `impact factors' of a given function/job is determined, the company scans the comparator basket for equivalent jobs. ``Never be driven by titles in the benchmarking of jobs in the comparator basket. Different companies use different titles for specific functions. It is the scope and impact factors that matter in the benchmarking process. Of course, qualification and experience of candidates are supporting factors in the selection of a comparable job,'' says Suri.

``After this, you look at the total cost to company (TCC) of jobs across levels/functions in the comparator basket. You will arrive at a `controlpoint' or a `market reference zone'. This is then linked to the pay target of the sponsor company. Differential positioning may be done across management levels, as well well functions. ``By studying the impact factors and interlinkages between various functions such as finance, HR, sales and marketing, operations, you can do the differential positioning,'' says Suri.The weightage of these functions are determined on the basis of the impact they have on the bottomline of the company.

Again, differential positioning may be done on the basis of performance at specific levels within an organisation.

Companies may use various ways of differential positioning. ``It could be on total cost to company (TCC), it could be on total fixed pay, total cash, benefits and perquisites,'' says Suri. TCC is used as a internal budgetary figure which is communicated to the employees in terms of cash, benefits and perquisites.

According to Suri, certain companies are working towards a ``one figure base'' salary for theiremployees. ``But this would not be advantageous in terms of taxes. Break-ups in terms of housing, medical and conveyance allowance accrue tax benefits,'' says he.

``The only way to compensate the employee in case of heavy tax deduction on the one figure base salary would be to gross up for tax,'' he adds.Salary increases are based on three factors: merit, market adjustment and inflation. While the fixed pay is pegged to three factors, the variable pay is pegged to performance. ``But, these days fixed pay increases are also linked to performance,'' he says.

``Market adjustment increases are based on what your peers in similar jobs in similar organisations are earning,'' he explains.

``Usually, the non-performers get a hike that is sufficient to offset inflation,'' says Suri.

``There is resentment on the differential positioning of compensation packages. But that depends on how you handle your employee expectations. Compensation communication holds the key to handling resentment. As employer-employeerelations become transactional, HR managers need to gauge the maturity of their workforce and communicate to them the policies and procedures that determine compensation packages,'' says he.

``It is compensation communication that will bridge the gap between TCC and employee appreciation of TCC,'' he says.

``Of course, it is essential that the HR managers themselves become strategic partners in business if they have to manage a successful compensation management practice,'' he concludes.