The reversal in the fortunes for employees at digital marketplace platforms, service and product aggregators and real estate search startups coincides with enhanced focus on digital transaction processing: Intuitively, this guided shift in purchasing behaviour of a hitherto cash-dependent nation would have translated into more revenue for the established startups. However, lingering questions over their business models and visibility on profits have turned investors in these businesses more cautious, leading to prospects of muted pay increases, say consultants.
“Employees in marketplace startups may not see fat increases this year. But others in the fintech and machine-learning space are seeking talent on a warfooting. People in these companies will be rewarded and the pay increase may be in double digits,” said Jappreet Sethi, Co-Founder of YoStartups, which provides consultation services to startups.
In 2016, average increments at startups and earlystage companies were forecast at 15.6%, up from 14% in 2015. In 2017, however, barring companies built around the idea of transaction processing and financial technology, most startups will increase salaries at a far slower rate, especially after horizontal consolidations enhanced availability of quality talent amidst more fund flow. Top performers and critical resources, however, may get rich rewards.
“The days of raising additional rounds of funding merely based on a plan are over. People are now structuring employee remunerations around as much as 50% of total compensation as performancelinked pay, which is released to key employees only on the achievement of agreed results,” S Venkat of on-call CFO firm MyCFO told. To manage staff expectations and simultaneously hold down current fixed costs, investees are offering stock options to key employees, Venkat said.
Across companies such as furniture retailer PepperFry, top performers may get up to 25% increment and promotions while beauty website Nykaa will give out the same increments as last year — between 12 and 20%. PepperFry has also increased the bonus payout frequency to every quarter from two. “This way, top performers will be rewarded more frequently,” said Ashish Shah, founder of the company.
Additionally, startups this year will be more selective about their payouts as their ability to pay has shrunk. “Employees with average or less-than-average performance may only look forward to minimal increments that have been adjusted for inflation,” said Mervyn Raphael, managing director of global human resource management consulting company People Business.
At Ratan Tata-backed BlueStone, top performers will be identified for training and development. The company is taking succession planning seriously to groom the next level of leadership. It will look to nominate up to 35 top performers for technical and managerial skill development programmes. Online marketplace ShopClues is also taking the upskilling approach. The company will identify and reward strong performers, evaluating training solutions related to retraining and training.
“The training will be relevant to employees’ fields, and will be done keeping in mind future goals and requirements,” said Babu Vittal, HR head at ShopClues.
Fintech companies will look at hiring smarter to avoid poor appraisals. Anshul Rai, co-founder and CEO of fintech firm Happay, said that hiring better has given them the ability to give better appraisals.
“A few key employees who take ownership of our products will be rewarded better. We are also cautiously keeping away from hiring those employees who have extremely high expectations,” he said.
Nykaa, which bagged Rs 82 crore funding from Sunil Munjal and the Mariwala family, will be as aggressive as it was last year. All employees will get a 12% increase and some top performers can expect up to 20% increment, with a bonus of up to two months’ pay.
Source: The Economic Times