Flipkart Tweaks Increment Policy, To Give Pay Hikes In Two Tranches

Ecommerce major Flipkart has tweaked its increment policy for employees and will dole out merit-linked payouts in two tranches to eligible employees this year instead of the usual pay hikes. 

“At Flipkart, we have always prioritised what’s right for both our employees and the organisation at large, and this compensation review cycle is in line with this intention. We are providing compensation increases to employees getting promoted, merit-linked payments and bonus payouts. Additionally, our stock option allocation exercise will continue as is, for those who are eligible,” Flipkart told Inc42 in a statement.

Mint was the first to report the development.

The one-time change will reportedly be rolled out to employees in the mid-management (Grade 12) tier and below. Under this, the eligible employees will get two lump sum amounts (in April and October this year) equivalent to the total annual salary hike that they would have otherwise received.

A Flipkart executive told The Economic Times that the move will have a bearing on about 19,000 to 20,000 employees of the company. 

Meanwhile, the ecommerce major will also dish out a 100% bonus to its entire workforce this year and the promoted employees will receive increments as usual, across grades. For the remaining grades, the company has enabled a “wider spread of ESOP allocation to drive wealth creation”.

In a letter sent to employees detailing the new compensation structure, CEO Kalyan Krishnamurthy reportedly said, “The company multiplier for the bonus payout is typically arrived at by measuring the company’s performance against key business parameters, which are GMV, contribution margin,… We have decided to keep the 2023 company multiplier at 100% for all employees (including VPs and SVPs).

Notably, the company had frozen the hikes of a third of its employees, including senior staff, last year amid macroeconomic headwinds and adverse market conditions. It also reportedly began culling its workforce by 5-7%, or 1,000 employees, earlier this year as part of a performance review exercise. The reduction is expected to be completed by April 2024. 

The new policy comes as much has happened at the ecommerce major in the past one year or so. In late 2022, Flipkart hived off digital payments major PhonePe as a separate entity and followed it up with cash payouts worth $700 Mn to its employees as part of the demerger.

The company has also been looking to enter the quick commerce space and has been rapidly foraying into new segments.

Despite a fund injection of $600 Mn from its parent Walmart in December 2023, the ecommerce  major continues to post heavy losses. Flipkart Internet, the B2C arm, clocked net loss to the tune of INR 4,026.5 Cr in FY23, down 9% from INR 4,419.5 Cr in FY22. The customer-facing arm’s operating revenue zoomed 42% year-on-year (YoY) to INR 14,845.8 Cr in FY23. 

Earlier this month, it was reported that Flipkart’s valuation declined by $5 Bn to $35 Bn at the end of January 2024 compared to January 2022 on account of the demerger of PhonePe into a separate entity. 

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