Financial institutions have highest variable pay-out of 25.5%: Report

Projected compensation increases for CXOs who get the highest percentage of variable pay are lower in 2023 compared to 2022


While executives or CXOs generally receive the highest percentage of variable pay, their projected pay hikes in 2023 are lower than last year. In 2022, according to the Future of Pay report, variable pay-outs reflected the recovery that happened across sectors with many companies being able to revise and improve their pay-out plans.

Clearly, that means, business performance is witnessing improvement. That also means that organisations will be in a better position to reward their employees for their contributions to the success of the business in 2023.

Financial institutions have the highest overall variable pay-out percentage of 25.5 per cent. This indicates that there will be a higher emphasis on performance-based incentives.

While the overall variable pay-out percentage is 13.7 per cent in the communications sector, this is relatively low compared to other sectors.

Average variable pay-out as a percentage of total compensation was 15.6 per cent in 2022.

Variable pay 2022 (actuals) for CXOs was 25.20 per cent, while for function heads it was 21.3 per cent, and for people managers 16.70 per cent. For individual contributors it was 10.80 per cent.

According to the report, instead of disproportionate salary increments, companies are more into promoting healthy ways of working with a focus on their employees’ well-being, controlling costs, and establishing positivity in the work environment. This can ensure better engagement, productivity and employee loyalty in the long run.

Many employers are expecting the workforce to return to office as the markets open, while some organisations still choose to operate in a hybrid/flexible work model

About 42 per cent organisations will be following full-time work from home, while 26 per cent will go the hybrid way with few days of work from home and few days of working in-office. Flexible options are being embraced by 21 per cent while 11 per cent are working 100 per cent remotely.

However, organisations are offering the same pay to employees working from their offices and those working remotely.

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