As the appraisal season draws near, India Inc is busy reworking compensation packages to increase the variable component at a time when the future is tense.

Most companies see the next few quarters as a period of uncertainty and are trying to shift costs from fixed to variable.

The idea is to remain flexible and not get committed too early, especially with costs.

Pharmaceuticals major GlaxoSmithKline says salary is an issue and it has to be linked to the employee's productivity.

"We have streamlined it largely in terms of making it more market-focused and making it more cost-to-company based.

"We have restructured our variable pay, which focuses on financial measures, value drivers and individual contribution," says Ronald C Sequeira, executive director, GlaxoSmithKline.

On average, variable pay now forms 20-25 per cent of compensation. That could go up to as much as 50 per cent.