The long and short of IT: Loyalty bonus

"If we think a ten-year tenure in a company is employee stickiness, then here's some news. In the current talent-short scenario, IT companies not only consider two-year-olds as loyalists but even reward them. The average stay period considered for loyalty bonus is falling drastically", says this article in Business Line.

Regards.

- Dilip.

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Source: Business Line, 14-07-2006

The long and short of IT: Loyalty bonus

Anjali Prayag

REWARDING TECHIES

Bangalore , July 13

If you think a ten-year tenure in a company is employee stickiness, then here's some news. In the current talent-short scenario, IT companies not only consider two-year-olds as loyalists but even reward them. The average stay period considered for loyalty bonus is falling drastically, say concerned HR managers.

At Scandent Solutions, for instance, techies working on some critical projects are eligible to earn loyalty bonuses on completion of one year in the organisation. Says Dr Pallab Bandhopadhyay, Chief People Officer of the company, "Though these techies are eligible for the bonus after a year, it gets credited after 15 months of service. This is to ensure that they stay for at least that period."

Retention bonus

Loyalty or retention bonuses are generally equivalent to one year's salary. So if competition wants to poach talent, then it has to make a competitive counter offer with a huge sign-on bonus, which may be a deterrent, he feels.

This changing concept of rewarding loyalty is seen in large Indian MNCs too. Sources at TCS told Business Line that the average loyalty age has reduced and the company is now rewarding employees who have completed 2.5 years compared to five years three years ago.

Mr Gautam Sinha, CEO, TVA Infotech, however feels that companies too are negotiating well. They stagger long-stay bonuses or loyalty bonuses over a three-year period, scheduling to release the largest chunk in the last instalment. Backloading loyalty bonuses this way has worked to their advantage, as employees tend to stay on for three years at least.

Says Mr C. Mahalingam, Senior Vice-President, Symphony Services, "Some companies are even opting for quarterly or half-yearly payouts and gradually increasing the stake over the months, thus making it difficult for competition to buy him out."