COGNIZANT TO MAKE MAJOR CHANGES TO ITS EXISTING SALARY STRUCTURE!

IT major Cognizant is expected to raise the variable pay proportion of its senior executives across technical, sales and consulting profiles from a mere 10% to 30-40% with effect from next year.

The matter might be discussed at the company's annual strategy meet in December in the US. Most of the other IT companies have 30% to 50% as variable pay for senior executives.

According to a report by TOI, the new compensation structure will be linked to business units, the roadmap for growth in each of the service lines, and revenue and margin targets.

“Well I’ve heard him (Cognizant CEO Brian Humphries) say he'd like everyone in his salesforce to drive a Ferrari, but to do so they should sell five Ferraris first. The new CEO has been saying he needs more competitive incentives so I think this will be consistent with that strategy attracting more senior, market-savvy salespeople," said James E Friedman, senior fintech research analyst in the Susquehanna International Group.

When the new compensation structure for the sales force was announced, Humphries said the idea was to push them to sell newer digital solutions.

"Normally, I imagine companies that you speak to tend to have a sales force that is somewhat leveraged. And when I say leverage, if you're earning $100,000 a year, perhaps $50,000 is fixed and $50,000 is variable or 60-40, sometimes 70-30. But typically, it's in that range unless you're a niche system consultant or solutions architect, which is more technical versus a seller. I would say Cognizant has historically operated with 85-15 or 90-10 type plans, so very little leverage... You're not going to get the best breed of sales people in the world to come to your company if you have a 90% fixed on target earnings. There's too little beta," Humphries had said.