Variable pay rising in manufacturing

New Delhi, March 22 | Updated: Mar 23 2006, 05:30am hrs
Those who think that variable pay packets or pay at risk is a trend that mainly affects sectors like banking, financial services and ITITeS, may be in for a big surprise to know that the appetite for pay at risk rose at a much faster or equally faster rate for the manufacturing sector.

According to HR consultancy firm Hewitt India, while only 11% of manufacturing companies had variable pay packets in 2001, in 2005 the figure rose to 16.2%. While the comparative rise for IT was 2.8%, financial services grew at 4.3%, and telecommunications witnessed a 3.8% increase in variable pay packets for rewarding employee performance.

Industry experts are of the view that the trend will continue, as the salary levels for senior level management in the manufacturing sector have already caught up with the salary levels in some of the more glamorous industries like IT, ITeS, banking, etc. Going ahead, one can expect the level of variable component in salaries for manufacturing will align itself with the rest of the industry.

Ma Fois managing director K Pandiarajan said that sectors like auto components and life sciences also come under manufacturing, but salaries from these are even more competitive than certain service industry sectors like hospitality and tourism for instance. One will see that services and manufacturing share mutual functions instead of boundaries going ahead. Take industrial design for instance. It is a service, yet it is complimentary to manufacturing, he said. Therefore, salaries from manufacturing can expect to follow the non-traditional patterns.

Other experts point out that we are coming to a stage where a marketing professional can move across industry categories. A professional from the manufacturing sector can easily cross over to the service industry as long as his skills are not restricted to a particular industry. As this broad basing of skill continues, one can expect the sector to get more competitive.

There should then be no reason that employers should also get more demanding and desire more performance-related pays, said Sharad Vishvanath, India business head, Consulting Analytics, Hewitt Associates.