COMPENSATION HANDBOOK 200809

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COMPENSATION HANDBOOK (2008-09)

• For All Employees
• Version 1.1
• Date of Release 17-Feb-09
• Prepared by Deva Barua
• Reviewed by Sandyp Bhattacharya

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CONTENTS

• Scope
• Compensation Philosophy
• Compensation Range
• Compensation Increase Grid
• Definition of Fresher
• Review Dates for New Hires
• New Tenure-based Assured Bonus Program (TAB)
• Variable Programs
• Promotion Philosophy
• Grade Levels
• Compensation Structure Programs

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Scope

• This document intends to provide guidelines for
  all regular employees of Bharti Telesoft
  (Including Jataayu) based in India.
• This document may not be completely relevant for
  associates working outside India though it will
  provide directional inputs on philosophy and
  process relevant for them, till such time
  separate set of guidelines are communicated.

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Compensation Philosophy

• Role-based fitment
• Compensation will reflect the role maturity and
  vice-versa. Start-up to the role should be
  typically at start-up of the range or within pay
  zone A. As people start meeting expectations,
  they are generally expected to be placed in Pay
  zone B while fully matured role holder should
  be around mid-range w.r.t compensation. (See Comp
  Range Slide)
• In case of critical roles, where special value is
  perceived, or in case the role holder possesses
  special skills which are relevant for the role,
  and command higher value not being addressed by
  the generic compensation range, fitments can be
  slightly ahead of the expected pay zones
• Compensation at hiring stage will be as per fresh
  fitment perspective, and past compensation may
  not have strong bearing on the compensation being
  offered, as it should be governed by role being
  performed. However this will not apply to IJP
  based role changes or middle of the year role
  changes. Employees will typically be expected to
  demonstrate their performance in their new role
  for a reasonable period (generally to be
  considered in the next cycle).
• Industry Benchmarking
• Roles will be benchmarked against market trends.
  This could be through multiple sources as per
  availability of such authentic information.
  Compensation surveys, Exit Interviews/Attrition
  related Feedback, Hiring trends, Consistent and
  wide spread feedback from managers/HODs and other
  industry news/information will form basis for the
  same. This will have an important role to play in
  preparation of the compensation budget, but
  finally companys capacity to pay will over-ride
  all other factors. Roles will be mapped to market
  data irrespective of the internal
  designations/grades.
• If the role carries a particular market worth,
  and an employee exceeds that value, compensation
  increases considerably slow down, as the employee
  exceeds the compensation vis-à-vis role such a
  person is doing. Such employees would be expected
  to show performance and potential to grow to next
  level. Lack of availability of higher positions
  will not be a reason to justify higher increases
  for such situations, as employee would still
  continue to do lower level job, while getting
  over paid for the role. This is not a viable
  situation from business perspective. However lack
  of opportunities for deserving candidates to grow
  is a serious engagement issue, and organization
  and business group need to be conscious about it
  to ensure quicker correction of such
  disengagement factors.

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Compensation Philosophy .contd.

• Competitive Positioning
• Generally all roles will be positioned around
  60th Percentile (P60) of the job market for roles
  up to middle management, where employment market
  is aggressive due to demand supply gaps. This
  means that a fully matured role holder will be
  placed around P60 of the industry standard. The
  exit barrier for an employee will be at a much
  higher level, considering the reasonable industry
  norm of hike expected by candidates looking for
  new opportunities. For higher level roles, the
  similar market positioning will be at P50, in
  line with market situation needs. This also takes
  into consideration that at senior levels, other
  factors have significantly higher weight in the
  engagement of an employee. Bharti Telesoft will
  try to arrive at a competitive positioning within
  the framework of the budget, and maximize the
  compensation leverage.
• Pay for Role
• Based on industry benchmarking, different grades
  in the same function or job family will be paid
  differently in line with market trends.
  Similarly, employees working at the same grade in
  the company but working in different
  functions/job families, but with similar maturity
  may be paid differently if the industry trends
  are different. This means that the compensation
  ranges will differ for grades and functions.
• Pay for Performance
• Employees will be paid as per performance level
  and role maturity. Employees who possess higher
  role maturity (which is reflected in their higher
  salary compared to their peers in similar
  role/level) are expected to perform better/higher
  than the peers with lower maturity (reflected in
  lesser salaries). Thus if two employees get same
  performance rating, salary increase for an
  individual with lower role maturity will increase
  faster than the one who carries a higher existing
  salary/higher role maturity, but performs at the
  same level. Higher rewards for higher performance
  will also be adequately reflected in appropriate
  compensation programs like incentive schemes.
• Promote for Potential
• Higher performance is essential for getting
  considered for promotions but not sufficient.
  Employees necessarily will have to have
  reasonably high potential for next level role and
  further grades to be considered for vertical
  growth. Mere tenure or current performance will
  not be the key factors. Higher potential amongst
  comparable candidates will be key to growth.

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Compensation Range

• A Compensation Range will have start and end
  point and 4 pay zones, generally equidistant,
  but not necessarily so. This will reflect the
  Total Compensation (TC), including variable pay,
  unless stated otherwise).
• Pay zones reflect the role maturity of the
  employee.
• Ranges are designed to overlap for adjacent
  grades.
• Different roles/jobs at the same grade will have
  different salary range.

Pay-zone This is Pay-zone A. Distance between
Start point of range and Pay zone B start point.
Back
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Compensation Increase Grid (CIG)

• Each grade and function will have a CIG
  applicable to them, which might be same or
  different depending on companys strategy and
  ability to pay, when compared to market
  positioning.
• Employees will be mapped to the applicable
  compensation range for the fiscal, which decides
  the pay zone applicable for the employee. Based
  on applicable pay zone and appraisal rating for
  the employee, respective CIG cell will be
  defined.
• Each Cell will reflect a percentage range
  usually 3-4 points range. Manager will choose the
  for the employee based on critical judgment.
• Since for June 2008 reviews, pro-rated values
  were applied, pro-rated figures were
  calculated. From next fiscal only annual reviews
  will be applicable, at full value(no pro-ration).
• If the manager feels that compensation finally
  arrived at, is short or higher than required
  fitment, he/she can recommend an additional
  increase as per adjustment guidelines on top of
  merit increase.
• In case an employee gets promoted, a promotion
  increase will also be applicable. All promotion
  increase will apply on 31st May salary, at the
  annual review stage beginning of the cycle, even
  though promotion may occur at any quarter point
  defined for the year. This is important to ensure
  some amount of equity between those promoted in
  June end and their peers getting promoted in
  December.
• Please note At the end of this exercise,
  HOD/Managers will also have to meet budgeted nos.
  within tolerance limits Grade wise Compensation
  average Overall Pyramid compliance Overall
  Weighted Compensation.

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Definition of Fresher

• Fresher means any employee hired from campus /off
  campus drive. Normally a fresher would undergo a
  technical/functional training for a duration as
  may be deemed suitable by the Company from time
  to time. Their first performance evaluation would
  be after 9 months followed by a mandatory
  compensation review, provided the employee meets
  all other eligibility conditions Subsequent to
  this review, the employee would be governed by
  the same guidelines as are applicable to any
  other lateral hire.
• Employees who are hired as a regular employee,
  i.e., anybody who has undergone 6 months On the
  job training, would not be considered as a
  fresher. Their fitment (level salary) would be
  governed by their role maturity and other
  guidelines, as are applicable for lateral hiring
  fitment. Such employee would be eligible for
  their first performance review after 6 months,
  which may or may not be followed by a
  compensation review.

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Comp Review Dates for New Hires
Compensation review is subject to the employee
meeting the performance and other eligibility
conditions
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New Tenure-based Assured Bonus (TAB) for A4 to
A8, India based employees

• Program
• Applicable for A4 to A8 India based employees at
  Jataayu and BTSL.
• Total 12 of Revised TC will be payable to the
  employee, for being on the rolls of the company
  on designated dates, and meet minimum individual
  performance levels.
• Break-up of 12 TC 7 of CTC payable if employee
  is on rolls as on Dec 31st 2008, 5 of CTC
  payable if employee continues to be on rolls as
  on May 31st ,2009 and not serving the notice
  period on these dates.
• Next years compensation increases will also
  consider TAB as a component for increase
• For both the installments during the year, amount
  payable will be prorated for number of days
  worked during the period. Leave without pay
  would be deducted for number of days not worked.
• Employees recorded as absconding as on the
  payable date will be not be paid this bonus.
• Employees serving notice period (already
  resigned) as on due date will not be paid this
  bonus.
• As on due date, employees last appraisal rating
  for the year should be in the top 3 ratings on
  the 4 point rating scale. In case an employee is
  rated 1 (Bottom Performer), but converted to
  rating 2 (Key Talent) through the Performance
  Improvement Plan (PIP) prior to due date,
  employee will be treated as Rated 2 (last
  appraisal rating).
• In case an employee from A8 gets promoted to A9
  prior to due date, subject to all other
  conditions being met, employee will be paid
  amount prorated for the number of days in the
  period, spent at A8 level. However the amount
  will be paid as per the due date schedule.
• In case of compensation changes, pro-rated amount
  will be worked out for the applicable periods.
• TAB amount will be paid as a monthly advance to
  negate cash flow impact, but recoverable if
  employee quits before due date. (EMI paid will be
  minus tax deductions, while recovery will be at
  full EMI value including tax deducted). Recovery
  will only be for the months for which advance has
  been paid out. For example, if an employee leaves
  on March 1, then advances will be counted for Jan
  and Feb only, as Dec 31, is the scheduled date of
  payout, as only two advance monthly payouts were
  given out.

Objective is to ensure that employees who stay
with the organization are not adversely affected
by the retention barrier, but get the benefit of
this component in the next appraisal cycle as
this component is taken as part of Total
Compensation (TC) while calculating increases.
However this is a reasonable barrier in terms of
prospective financial loss to an employee, if
he/she chooses to quit before the due date (as
per eligibility conditions). The money not paid
to the employees who dont meet eligibility
conditions, is used to maximize the compensation
budget, and gets incorporated into the budget
which gets utilized during the course of the year
when reviews are undertaken (i.e., the money
likely to get saved in such a manner, indirectly
benefits the employees who stay back)
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Variable Programs

• Performance Linked Incentive For all employees
  in Engineering, Technical, BD / Pre Sales and
  other Support roles. (Please check the
  Performance Linked Incentive Policy in the
  intranet.)
• Sales Incentive Plan For all employees in Sales
  and Key Account Management role.
• Direct Sales - Based on Direct Indirect Quota
  
• 60 Base 40 Variable
• Key Account Management (KAM) Direct Quota
  Quantified Targets
• 70 Base 30 Variable
• Variable Break-up Measurable targets to
  significantly focus Qualitative Measures
  (Typically Measurable
• targets to be around 80 of variable Pay)
• Talent Acquisition A Plan is being contemplated

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Promotion Philosophy

• Build a performance driven culture where growth
  opportunities are provided for those who are top
  performers display high potential.
• Encourage growth for internal talent vis-a-vis
  hiring from the external market.
• Promotions will be based on availability of
  positions, apart from the performance and
  potential of the employee. For Engineering groups
  availability of positions will normally be driven
  through the pyramid.
• Employees with an overall higher performance
  rating will move faster. This is to ensure that
  the best talent gets the best ( faster)
  opportunities for growth.
• An employee, being considered for the next level
  role, must meet the following criteria
• Consistently meets the expectations of the
  current role
• Demonstrates potential for the next level role
  the employee may not demonstrate capability to
  handle the new role completely, but it is
  important to evaluate the readiness to handle the
  next role.
• Has spent a reasonable period of time in the
  current role intent here is not to build a
  time-based promotion culture. It takes time to
  expand capability develop new skills. As the
  role becomes higher, such average tenure would
  also proportionally increase.

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Grade Levels
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Compensation Structure and Programs
The new structure shall be applicable from the
next review date of the employees. However, for
employees being reviewed on 01-Jun-08, Basic
component of pay has been kept as INR 10100,
Current Basic or 30 of Total, whichever is
higher, in order to comply with statutory
regulations. As an exception for this year,
employees reviewed as on June 1, 2008 who have
TAB component as part of their compensation
structure, will have a total of 8 under the TAB
component instead of 12 of TC till next review
cycle. This is only a one-time exception for
fiscal yr 08-09. Next year TAB will be 12 of TC
for all employees in the applicable grades.
Basic Maximum (Current Basic, 30 of TC, 10100)
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