By Prachi Verma, ET Bureau | Jul 28, 2016, 06.22 AM IST
NEW DELHI: Salaries at the CXO level seem to be deflating. From a peak of about Rs 4 crore annually for new hires at top level, compensation is now down to about Rs 2.5 crore and lower, according to executive search companies. Plus, a bigger proportion of this is linked to performance. Salary increases for new hires, meanwhile, have slumped to 8-20 per cent in the last few months from 50-60 per cent in the glory years.
Not just that, many who got swept up during the boom of 2014 and 2015 are getting back to lower-paying but stable jobs, headhunters said, at half their previous salaries in some instances.
The surge had been fueled by the ecommerce boom and companies such as InfosysBSE -0.49 % and Soft-Bank handing out hefty paychecks in a competitive market, said headhunters like Heidrick & Struggles, GlobalHunt, Hunt Partners, Head Hunters and Michael Page. GlobalHunt was involved in several CXO-level appointments in 2014 and 2015 at pay of Rs 2-4 crore, excluding stock options and other variables.
"This has changed now as the compensation for CXO level is down to around Rs 2 crore or Rs 2.5 crore for new hires," said GlobalHunt India MD Sunil Goel.
The earlier rise had also been bolstered by companies like Pidilite and Emami rebuilding their leadership teams.
"They are among those companies who paid a premium to acquire talent from leading FMCG (fast-moving consumer goods) firms like Coke and HUL (Hindustan Lever Ltd)," said a headhunter.
With ecommerce setting the pace, pay levels had climbed.
"This was also pressurising other industries to shore up their offers for CXO roles," said Michael Page India Director Ankit Agarwala.
But with ecommerce now in consolidation mode, pay regimes have become much more conservative. On average, raises are down to single digits in percentage terms. And rationalisation is taking place.
"We see a fair number of moves happening especially in cases where people shifted from old economy to ecommerce at senior levels," said Praful Nangia, partner at Hunt Partners (India).
Or as Goel said: "It is better to be with a job with a pay cut rather being jobless."
Kris Lakshmikanth, founder of Head Hunters India, recently placed CXOs who took a cut of 30-50 per cent as they moved from small companies to more established ones in sectors like infrastructure, IT and ecommerce.
As is the case during hiring booms, employers and employees haven't always found themselves a good fit. Headhunters estimate such mismatches at more than 30 per cent of leadership team in some cases.
Also, as the sheen has worn off, many startups have not been able to drum up investor enthusiasm for later funding rounds and have had to let go of some or all of their senior management staff, Agarwala said.
The ecommerce hiring boom was overdone, said experts.
"This is getting corrected," said Arun Das Mahapatra, chairman of Heidrick & Struggles (India). "Many at leadership positions at ecommerce companies are willing to get back to their old jobs at salary cuts... Now, the top talent is more concerned to secure a job even if it means a drastic cut."