India - No longer just a compensation strategy for sales staff, more companies in India are rewarding their non-sales employees with extra pay as a performance incentive.

The recently released Kelly Services India Salary Handbook 2008/09 found average salary increments in India this year to be lower than the last few years, ranging between 10% to 15%. A greater emphasis on pay for performance means the salary range for positions has also been broadened.

Companies are now using variable pay as the key differentiator to retain talent. "Performance-linked salary components are coming into play, and vanilla incentives covering a group or level of employees is giving way to more employee specific profit or productivity-linked incentives," said country general manager, Kelly Services India Rajiv Mehrotra.

He added that sign-on bonuses and anniversary increments are used to attract and retain talent, while keeping the overall salary cost low. "The trend towards pay for performance is a step in the direction to directly link the productivity and profitability of the organisation with the wage cost, wherein higher profitability leads to sharing of the profits with employees. This leads to a more motivated and productive workforce at the same cost," Mehrotra told Human Resources.