Best Fast Dropshipping Service & Business India

India’s largest ecommerce company Flipkart has made a one-time change to its increment policy this year, giving merit-linked payouts to all eligible employees in Grade 12 (mid-management) and below, instead of the usual pay hikes.

In effect, employees will get two lump sum payments in April and October this year, equivalent in value to the salary increase that would have otherwise been paid out throughout the year. About 19,000-20,000 employees would benefit from this, a Flipkart executive told ET.

The company will also roll out 100% bonuses to all its employees this year. Employees who are promoted will receive increments as usual, across grades. For the rest of the grades, the company has enabled wider spread of ESOP allocation to drive wealth creation.

The details of the new compensation structure have been sent out by Flipkart CEO Kalyan Krishnamurthy to employees in a letter. ET has seen a copy of the letter.

“The company multiplier for the bonus payout is typically arrived at by measuring the company’s performance against key business parameters, which are GMV, contribution margin, net promoter score, EBITDA and people metrics (attrition and inclusion and diversity)… We have decided to keep the 2023 company multiplier at 100% for all employees (including VPs and SVPs),” the letter said.

“At Flipkart, we have always prioritised what’s right for both our employees and the organisation at large, and this compensation review cycle is in line with this intention. We are providing compensation increases to employees getting promoted, merit-linked payments and bonus payouts. Additionally, our stock option allocation exercise will continue as is, for those who are eligible,” said a statement from the ecommerce major.

“This (merit-linked payouts) appears to be a case of lump sum payouts and not fixed increases in pay. This enables companies to manage fixed cost increases by ensuring salary on which retirals etc are based does not increase but the employee also does not lose because this lump sum amount ensures cash flow remains consistent,” said a consultant on the condition of anonymity.

Last year, Flipkart had frozen hikes of 30% staff including senior leadership among tough macroeconomic conditions. In January 2023, ET had reported that Flipkart has begun a workforce reduction exercise that could see its total team size decrease by 5-7% and be completed by March-April as part of performance reviews. An estimated 1,000 employees would be impacted by this.

  • Published On Mar 21, 2024 at 05:58 PM IST

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Best Fast Dropshipping Service & Business India

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