Total Rewards Quarterly

Genpact: Making Rewards Work

Q. Genpact has nearly 50,000 employees with operations in 13 countries. Given the diversity in these economies, how do you harmonize HR, and in particular rewards practices to ensure employees a fair, reasonable and consistent experience?

A. Our broad HR strategy for Genpact is a blend of standard global practices and region-specific practices. We set the macro level HR agenda and goals globally at the beginning of the year which is tied to our business imperatives and the operating plan. We have developed a set of HR practices (in a Common Minimum practice framework) that is implemented across regions/ businesses and reviewed with operational rigor. The focus is not only on output metrics like employee attrition and satisfaction, but more importantly on what drives these end results. For example, we have identified best practices like attrition forecasting, pre-hire orientation (to reduce early attrition), high impact touch points, etc. through internal analysis using various six sigma tools. These practices are owned by operations and facilitated by HR… this ensures commitment from the operating teams. We do this every time we set up a new site, irrespective of initial size/scale – this focus on driving HR metrics and reviews has helped build a harmonized HR ecosystem at Genpact. We also provide short-term rotational assignments to HR employees to facilitate best practices sharing and as a development opportunity for themselves. Genpact rewards practices are linked to our overall compensation philosophy and business agenda. Our local rewards policies in the geographies that we  operate in are in line with the law and practice of the  land. However, what remains constant across is the  philosophy – strong variable pay culture and broad  banding.So the total value proposition to employees  globally remains comparable, i.e. compensation, benefits,  learning and career development opportunities.

Q. Wage arbitrage, cost of operations amongst others, are the key considerations for the outsourcing business. How does this impact your affordability to pay market competitive salaries across the diverse set of countries that you have significant operations in?

A. There are two ways to approach this. Cost of operations is an important consideration... but it is not the only key issue for clients. The ability to go up the value chain, and deliver high quality solutions for the challenges clients face are really the key here. So we are tackling this through: Depth and breadth of expertise acquired over the last 13 years in the global business process and technology management industry We are building a new ‘Science of Process’, which is helping our clients realize significant business impact through process effectiveness We will continue to innovate with next-level business process management and invest in comprehensive technology-driven solutions, to enable smarter business outcomes for our clients Labor arbitrage does impact us by putting pressure on costs. However, the key is to invest in employee training, development and up-skilling programs. Employee compensation (cash) is only one aspect of our total value proposition as an employer of choice. We focus on building and developing talent through our 'Make & Build Programs' which are essentially developing domain expertise internally... this is not as easy to replicate in the market and therefore provides a sustainable employee value proposition.

Q. The most challenging and perhaps the most important issue for global organizations is managing pay for their top executives. Can you share with us your experience and key factors that have made your executive compensation program a success. It will also be interesting to understand how you have effectively leveraged long-term incentive plans as a part of the Total Rewards strategy for this population.

A. At Genpact’s executive level, equity compensation dominates the Total Rewards pie. Equity compensation plans provide a significant wealth creation opportunity but we also understand that they do not solve for immediate cash compensation. Therefore, our philosophy is to keep the cash compensation at or slightly above median. Equity compensation allows us to create a strong linkage with company performance and shareholder value, as well as, builds long-term retention. Our long-term incentive plan is based on a combination of stock options, restricted stock unit plans and performance share plans (full value awards) which help us create and drive a shared agenda for driving business growth. There is a huge involvement of the leadership and our board to ensure we select the right set of employees, put up challenging performance criteria and select the most appropriate grant type for various groups of employees.

Q. With a NYSE listed stock, how do you manage the expectations of your executives in India, who compare locally and would have anticipated a better return with a locally listed stock?

A. Employees who are covered through our equity plans recognize that the equity compensation is market-linked and each economy will go through its highs and lows... these are cyclical and considering that this is long-term incentive, we don’t change our compensation plans due to this.

Q. How did you manage the 2009 slowdown in terms of expectations on salary increases, bonuses and promotions, and how did your actions vary for different markets?

A. We have always driven a strong performance culture in the organization and that continued in the uncertain economic environment too. Since our performance did not meet expectations, bonuses were reduced for the Top 100 employees in the organization. However, the total compensation for the larger employee base was protected to a very large extent. Cost was an issue but we focused on driving cost efficiency and productivity during the slowdown. For instance, we restricted spends on travel and living, additional staff expenses, etc. but we did not impact staff compensation, specifically at the associate and manager levels. We did not approach this effort as a top down directive but went to the employees through an ‘Idea’ campaign on ways to become efficient and lean – this helped increase the buy in and focus our efforts on areas that had limited impact on employee welfare.

Q. What are the top three learnings that Indian organizations can take away from Genpact’s experience in order to successfully manage global compensation?

A. 1. Equity linkage to performance through performance share plans 2. Long-term view to the compensation strategy, especially at executive levels 3. A unique value proposition to employees which includes Total Rewards, opportunities for career progression and constant learning and development

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