‘FMCG firms ready to ramp up hiring activity’

With the economy slowly recovering, is hiring picking up?

The technology sector is doing well and the compensation criteria are very good. If I can compare last year versus this year, there’s definitely been an increase in terms of business performance, and that’s reflected in compensation as well. If we look at how the economy is behaving and how the market sentiment is, it is all on the positive side. Organizations are becoming innovative in terms of compensation—they are looking at variable as well as long-term benefits, and offering premiums for key skills.

You work with companies on reward and talent. Which sectors are seeing good recovery and increasing hiring?

While FMCG-retail is improving, the capital goods segment is performing well, especially those that have managed their inventory well during the pandemic. They are seeing good growth figures. Finance is doing better than last year and the new age finance sector – the entire ‘fintech’ segment is doing very well. The e-commerce and pharma sectors continue to perform well. Automobiles also saw some boom before the second wave of Covid-19, but they have been a bit subdued since then. With the recent price hike in the auto sector, it may not see much festive excitement.

In such a situation, there is a good recovery in FMCG and hiring is also increasing.

There is a good recovery in FMCH-Retail. If you look at college recruitment by these firms, you see that they certainly are. If the third wave doesn’t, or hasn’t hit us hard, you’ll see that these firms will do very well. Compensation and reward norms will return to 2019 levels, in the range of approximately 9% growth.

ESG is an emerging regulatory requirement. Is this a factor in employee compensation, especially at the CXO level?

ESG is becoming important for three reasons – investors are showing keen interest. One of their key parameters in evaluating a firm’s long-term stability is by looking at the ESG. Investors are driving this change across economies. Some investors are saying: Climate risk is an investment risk, and you should measure it and if you don’t do it our investment in your firm will be reduced. Companies that invest in sustainability are outperforming on a number of other parameters. The second is consumer awareness. Research shows that 80% of consumers are willing to pay more for a product that is made through a process that is climate neutral than for a climate negative one. So there is consumer pressure. Third is the attitude of the employees – the current population in the workplace is largely young, and is one of their main motivations for working with a firm (whether their employer is objective or not). Employees will stick more with an organization that is purposeful and aware, whereas other organizations are not. So there is pressure from a workforce perspective.

How is ESG doing in the Indian boardroom?

This year 220 companies have disclosed environment related activities in their balance sheets. If you look at ESG from a talent and investment perspective, we are in the same market as the rest of the world. On carbon neutrality, we are not on par with some global peers but making progress slowly.

So what about the ESG factor in compensation?

Some Indian firms have started to look at sustainability from a talent and leadership standpoint. You will see that some of the new norms are becoming part of the compensation structure for senior and top executive level executives, especially in terms of sustainability of talent. Very few firms have included the carbon neutrality factor of ESG in compensation. The good part of carbon neutrality in India has started in the form of talks at the board level. Globally, the trend is beginning not only of talent and leadership sustainability but also carbon neutrality.

So, a young workforce is driving firms to be purposeful?

Earlier the employees were largely driven out of necessity. The new generation is more aware, and has far more choices, their understanding of the environment is far better than before. They are driving this change as well, saying: ‘I want to do the right thing, and if a company isn’t doing it right, I wouldn’t like to be associated with it’. And remember that these young individuals are investors or part of investment teams, they are also consumers. While the environment is clear to all, for these people ‘social’ means employee well being, diversity, equality and inclusion and greater fairness in behaviour, etc. Look at some of the world’s biggest firms, with employees now worrying about their well-being, saying they are well protected against the pandemic at home and preferring not to go back to the office. Twenty years ago, it was seen as a (business) union issue, but now companies are discussing it favorably to develop solutions.