Inside this issue:
- Fix your salary structure before your next offer letter goes out.
- Run compensation planning without missing a step
- What your compensation policy should cover
- Puzzle
Hey HR folks,
Two candidates. Same ₹12 LPA offer. One takes home ₹4,000 more every month. Same CTC, different structure.
Salary structure decides how much your employees actually earn, how much tax they pay, and whether your offer letter wins or loses. Most HR teams focus on the number. The structure is where the real work happens.
In this issue of Keka Samachar, we’re getting into all of it.
Stop Guessing How to Split the CTC
Every salary in India is made up of the same core components. Here’s a quick way to think about it:
- CTC = Gross Salary + Gratuity + PF
- Gross Salary = Basic + HRA + Other Allowances
- Take-Home = Gross Salary − TDS − PF − Professional Tax
Where most companies go wrong: loading too much into Special Allowance because it’s fully taxable. Structuring HRA, LTA, and reimbursements correctly can put thousands of rupees back in your employees’ pockets every month, without changing the CTC at all.
Your 5-Step Compensation Planning Checklist
Before your next review cycle, run through these:
- Assess your company’s current financial position and set a compensation budget.
- Review existing salary structures across roles and levels.
- Benchmark against the market – are you still competitive?
- Draft revised salary ranges and get management sign-off.
- Plan how you’ll communicate changes to employees before they go live.
Most teams skip step 5. That’s usually where trust breaks down.
What Your Compensation Policy Should Actually Cover
A compensation policy is only useful if people know what’s in it. At minimum, yours should define:
- Annual Guaranteed Pay (basic, allowances, statutory contributions)
- Variable Pay (how performance ratings link to bonus payouts)
- Long-Term Pay (ESOPs or deferred cash, if applicable)
- Non-Cash Benefits (insurance, car, club memberships by grade)
- Payroll practices (disbursement dates, deductions, salary revision cycle)
If any of these are missing or vague, that’s where disputes start.
Quick Puzzle ????
A little teaser for next edition:
“I happen before the job is posted. Get me right and you hire faster, with the right people, every time. Ignore me and you’re always playing catch-up. What am I?”
Until next time!
