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E-com­merce com­pa­nies are now more con­scious than ever about em­ployee ben­e­fits

Il­lus­tra­tions By K. T.T.P. by Rad­hika Raj

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among B-school grad­u­ates the ro­mance of work­ing in e-com­merce com­pa­nies. In early 2014, e-com­merce com­pa­nies got Day 1 slots on lead­ing B-school cam­puses. Be­ing part of an e-com­merce com­pany’s growth story was the ob­vi­ous choice of job seek­ers and tra­di­tional favourites such as Unilever, Nes­tle and pri­vate banks were out. The rea­son was the wealth-cre­ation propo­si­tion – in the form of ESOPs – that even the small­est of e-com­merce star­tups of­fered to en­try-level can­di­dates. The fad ebbed by mid-2016 when many e-com­merce com­pa­nies were cash strapped as in­vestors re­fused to fund them any longer. Su­nil Goel, MD of ex­ec­u­tive hir­ing firm, Glob­alHunt, says e-com­merce salaries dipped in 2016/17 when many en­ter­prises shut shop. “Most com­pa­nies who strug­gled had founder CEOs. Some took pay cuts to fo­cus on re­viv­ing the busi­ness.” That’s when there was a re­verse trend from e-com­merce back to tra­di­tional com­pa­nies, says Ut­pal Das, Client Di­rec­tor at ex­ec­u­tive search firm EMAPart­ners.

Salary Struc­ture

Nearly 30 per cent of CEO com­pen­sa­tion is fixed pay, while the rest is bonuses and eq­uity re­wards. Typ­i­cally, CEO com­pen­sa­tion is de­ter­mined by 3 Ps — pay for po­si­tion, pay for per­son and pay for per­for­mance. “While there ex­ists a well-de­fined pay for po­si­tion in es­tab­lished in­dus­tries, in e-com­merce, given the in­dus­try dy­nam­ics, pay for per­son and pay for per­for­mance fac­tors are seen as more rel­e­vant,” says De­bas­mita Das, Prin­ci­pal In­dia Hitech In­dus­try Lead at global con­sult­ing firm Mercer.

For a hired CEO, the com­pen­sa­tion will be a mix of fixed in­come, per­for­mance-ori­ented bonus and ESOPs, says Am­ba­reesh Murty, Founder and CEO, Pep­per­fry. “How­ever, for founder CEOs, while s/he has fixed in­come and per­for­mance-ori­ented in­cen­tives, the per­cent­age of own­er­ship is high and de­ter­mines wealth cre­ation,” says Murthy, who was coun­try man­ager at Ebay be­fore set­ting up Pep­per­fry.

Deepti Varma, Di­rec­tor HR, Ama­zon, says Ama­zon’s com­pen­sa­tion phi­los­o­phy and strat­egy are built on the foun­da­tion of lead­er­ship prin­ci­ples, one of which is Own­er­ship. “Lead­ers are own­ers. They think long-term. We re­in­force this com­mit­ment to own­er­ship through the struc­ture of our com­pen­sa­tion pro­gramme. Our goal is to at­tract, mo­ti­vate and re­tain the high cal­iber em­ploy­ees.”

An­other trend is the larger share of long-term in­cen­tives (LTIs). “The pay mix will have more vari­abil­ity with LTIs hav­ing a larger share in to­tal com­pen­sa­tion,” says Das of Mercer. “The per­sonal com­pe­tence of the CEO de­ter­mines base com­pen­sa­tion. This in­cludes tak­ing an idea off the ground, get­ting fund­ing, scal­ing up and run­ning a prof­itable busi­ness.” An ag­gres­sive LTI serves the dual pur­pose of re­ward­ing for per­for­mance and driv­ing wealth cre­ation, says Das.

Ac­cord­ing to Anu­radha Parthasarathy, founder of Cal­i­for­nia-based ex­ec­u­tive hir­ing firm AnuPartha, equities are help­ing com­pa­nies hold on to CEOs. “Ear­lier, even big re­tail chains could not hold their top guys,” she says.

For a start-up in which the ma­jor­ity of work is done by co-founders them­selves, sweat eq­uity sounds prag­matic. The ‘own­er­ship for play’ model is said to be work­ing well in the early stages. “Equities are one of the big­gest hope of e-com­merce CEOs,” says Ashish Goel, Founder-CEO of Ur­ban Lad­der. Says Vish­wav­i­jay Singh, Co-Founder and CEO of Ahmedabad-based e-com­merce com­pany Saleb­ “Flip­kart has proved that if you are in the right com­pany in the e-com­merce space, it is a very good way of cre­at­ing wealth in fu­ture.” The com­pany re­cently filed for an IPO with BSE's SME plat­form.

Cau­tious Hir­ing

How­ever, sto­ries such as that of Iyyapa are far and few to­day. E-com­merce com­pa­nies are not giv­ing blan­ket ESOPs to all staff mem­bers. Nei­ther are fixed salaries of em­ploy­ees, in­clud­ing CEOs, unimag­in­ably high. The salary of a CEO of an e-com­merce com­pany, says N. Shivaku­mar, Busi­ness Head, TeamLease Ser­vices, can be any­where be­tween ` 1.5 crore and ` 3 crore (ex­clud­ing


ESOPs and other vari­ables) even for a mid-sized com­pany. This is by no means small, but e-com­merce CEO salaries dur­ing the boom were in the re­gion of ` 6-7 crore. HR ex­perts say are still dol­ing out stock op­tions to CEOs and se­nior man­age­ment on the ba­sis of the val­u­a­tion of the com­pany.

How­ever, when it comes to mid-man­age­ment, ecom­merce com­pa­nies are far more cau­tious than be­fore. To­day, they of­fer ESOPs to only those who are in crit­i­cal func­tions such as an­a­lyt­ics or tech­nol­ogy. HR, le­gal and fi­nance, too, com­mand a premium. T. Murlid­ha­ran, Chair­man, TMI Group, ex­pects fur­ther con­sol­i­da­tion and ex­pects man­power de­mand to be re­stricted to the top one or two play­ers in each cat­e­gory. “The top play­ers will get funded and they will pay what­ever it takes to ac­quire or re­tain tal­ent at the top. So, the of­fer and de­mand would be com­pany spe­cific and at se­nior lev­els for crit­i­cal tal­ent es­ti­mates are that it could range from any­where be­tween ` 70 lakh and ` 2 crore.”

Murlid­ha­ran’s read­ing is that e-com­merce com­pa­nies will be con­ser­va­tive in of­fers for man­age­rial tal­ent. “The top play­ers in each cat­e­gory will see ag­gres­sive fund­ing. This will lead to ag­gres­sive po­si­tion­ing, lead­ing to a wipe-out of the bot­tom play­ers. The man­age­rial team from the bot­tom play­ers will be avail­able. So, fresh hir­ing will be re­stricted to top two or three play­ers.”

S. Raghu­nath, Pro­fes­sor, Cor­po­rate Strat­egy, In­dian In­sti­tute of Man­age­ment, Ban­ga­lore, says, “The growth in on­line fash­ion, food and gro­ceries will con­tinue and niche e-com­merce sites will sur­face in such cat­e­gories. There­fore, jobs linked to these sites will con­tinue to ex­pand and grow as brick and mor­tar busi­nesses seam­lessly be­gin to link with their on­line pres­ence.”

E-com­merce ma­jors may be back on the pri­or­ity list of B-school grad­u­ates seeking jobs but com­pa­nies have be­come far more choosy. Sid­dharth Arora, an alum­nus of In­dian School of Busi­ness (ISB), joined a lead­ing e-com­merce mar­ket place af­ter pass­ing out in 2014. He claims that al­most ev­ery third per­son from his batch was hired by an e-com­merce com­pany, but that isn’t the case any longer. “Com­pa­nies are more se­lec­tive to­day but even then the right peo­ple are still able to find the roles they are look­ing for.” Arora claims that while the en­try-level salary for a MBA con­tin­ues to be around ` 35 lakh, the num­ber of can­di­dates get­ting hired has cer­tainly been ra­tio­nalised.

“There was a peak of in­flated ex­pec­ta­tions in 2012/14, fol­lowed by a drop. How­ever, now I think we are as­cend­ing the slope of en­light­en­ment and will soon reach the plateau of pro­duc­tiv­ity in next cou­ple of years. The en­try of the big re­tail gi­ant like Wal­mart is ev­i­dence of the fact that the mar­ket has be­come more ma­ture,” says Ab­basali Gab­ula, Associate Di­rec­tor, Ex­ter­nal Re­la­tions at SPJIMR

A re­cent re­port by Morgan Stan­ley fore­casts that In­dia’s e-com­merce mar­ket will grow at a CAGR of 30 per cent to reach $200 bil­lion by 2026. But there is cer­tainly a lot more cau­tion be­ing ex­er­cised by e-com­merce com­pa­nies in terms of the kind of peo­ple they hire and also the kind of com­pen­sa­tion pack­ages they of­fer.


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