PRESENTATION:COMPENSATION MANAGEMENT

COMPANY:FLIPKART
PRESENTED BY:
17BBA1484,17BBA1493,17BBA1487,17BBA1481,17BBA1489,17BBA1495,17BBA1483
17BBA1490
 FLIPKART PVT LTD. IS AN E-COMMERCE COMPANY BASED IN BENGALURU, INDIA.
FOUNDED BY SACHIN BANSAL AND BINNY BANSAL IN 2007, THE COMPANY INITIALLY
FOCUSED ON BOOK SALES, BEFORE EXPANDING INTO OTHER PRODUCT CATEGORIES
SUCH AS CONSUMER ELECTRONICS, FASHION, AND LIFESTYLE PRODUCTS.
• FLIPKART HELD A 39.5% MARKET SHARE OF INDIA'S E-COMMERCE INDUSTRY.[7] FLIPKART IS
SIGNIFICANTLY DOMINANT IN THE SALE OF APPAREL (A POSITION THAT WAS BOLSTERED BY
ITS ACQUISITIONS OF MYNTRA AND JABONG.COM), AND WAS DESCRIBED AS BEING "NECK
AND NECK" WITH AMAZON IN THE SALE OF ELECTRONICS AND MOBILE PHONES.[8] FLIPKART
ALSO OWNS PHONEPE, A MOBILE PAYMENTS SERVICE BASED ON THE UNIFIED PAYMENTS
INTERFACE (UPI).
• FLIPKART IS ONE OF THE WELL KNOWN ONLINE SHOPPING STORES ACROSS INDIA. INDIA’S E-
COMMERCE SECTOR HAS RISEN UP BY LEAPS AND BOUNDS IN ALL THESE YEARS AND THE
SALARY PACKAGES HAVE ALSO GOTTEN THICK. FLIPKART’S ESTIMATED EARNING HAD TURNED
OUT TO BE US$ 1 BILLION IN 2014. FLIPKART BEING THE EMERGING E-COMMERCE WEBSITE
ACROSS THE NATION HAS BEEN GIVING ITS EMPLOYEES HEFTY PACKAGES AND GREAT
INCENTIVES.

• THERE ARE 33,000 OF THE EMPLOYEES WORKING WITH FLIPKART ALL OVER THE COUNTRY.
FLIPKART ENSURES THE BEST LEARNING AND GROWING AND HELPS MEETING THE
EXPECTATIONS OF EACH AND EVERY EMPLOYEE WORKING FOR THE COMPANY.
• IN AUGUST 2018, U.S.-BASED RETAIL CHAIN WALMART ACQUIRED A 77% CONTROLLING
STAKE IN FLIPKART FOR US$16 BILLION, VALUING IT AT $22 BILLION. ON 4 MAY 2018, IT WAS
REPORTED THAT THE US RETAIL CHAIN WALMART HAD WON A BIDDING WAR WITH AMAZON
TO ACQUIRE A MAJORITY STAKE IN FLIPKART FOR US$15 BILLION. ON 9 MAY 2018, WALMART
OFFICIALLY ANNOUNCED ITS INTENT TO ACQUIRE A 77% CONTROLLING STAKE IN FLIPKART
FOR US$16 BILLION, SUBJECT TO REGULATORY APPROVAL.
 BUSINESS STRUCTURE

• IN A REPORT DATED 25 NOVEMBER 2014, A LEADING MEDIA OUTLET REPORTED THAT FLIPKART
WERE OPERATING THROUGH A COMPLEX BUSINESS STRUCTURE WHICH INCLUDED NINE
FIRMS, SOME REGISTERED IN SINGAPORE AND SOME IN INDIA. IN 2012, FLIPKART CO-
FOUNDERS SOLD WS RETAIL TO A CONSORTIUM OF INVESTORS LED BY RAJEEV KUCHHAL.

• Flipkart reported a loss of ₹2.81 billion (US$39 million) for the FY 2012–
13. In July 2013, Flipkart raised $160 million from private equity investors.

• In October 2013, it was reported that Flipkart had raised an additional

US$160 million from new investors Dragoneer Investment Group,
 COMPENSATION PHILOSOPHY
• EMPLOYEE COSTS ARE ONE OF THE LARGEST AREAS OF EXPENSE FOR E-COMMERCE
COMPANIES, AFTER MARKETING AND DISCOUNTS. BY REPLACING CASH WITH STOCK,
FLIPKART IS CUTTING PART OF ITS SPENDING ON SALARIES.

• FLIPKART HAS MODIFIED ITS VARIABLE PAY STRUCTURE FOR MIDDLE AND SENIOR MANAGERS
TO CUT COSTS AND TIE THEIR PAY TO THE ONLINE MARKETPLACE’S PERFORMANCE AND
VALUATION, SAID TWO PEOPLE FAMILIAR WITH THE MATTER.
• FLIPKART HAS CUT THE CASH COMPONENT OF VARIABLE PAY BY UP TO 40%, DEPENDING ON
THE SENIORITY OF EXECUTIVES, AND REPLACED IT WITH STOCKS, THE TWO PEOPLE SAID ON
CONDITION OF ANONYMITY.

• FLIPKART’S CHIEF PEOPLE OFFICER AND STRATEGY HEAD NITIN SETH CONFIRMED THAT THE
COMPANY HAD MOVED TO A NEW VARIABLE PAYOUT STRUCTURE AND SAID THE NEW
PAYOUT SCHEME IS PART OF A BROADER STRATEGY TO “STRENGTHEN LONG-TERM INCENTIVES
FOR EMPLOYEES".
• AFTER I CAME IN, I DID A REVIEW OF OUR COMPENSATION PHILOSOPHY WITH BINNY
(BANSAL, CHIEF EXECUTIVE). THE EXPERIMENTATION THAT WE’VE DONE IS, OVERALL WE
FURTHER WANT TO STRENGTHEN THE LONG-TERM INCENTIVES AND THE LONG-TERM
ALIGNMENT OF OUR EMPLOYEES INTO FLIPKART BECAUSE THE TASK OF BUILDING FLIPKART IS
NOT A ONE-YEAR SPRINT. IT’S A MULTI-YEAR JOURNEY AND WE WANT TO LOCK IN OUR
EMPLOYEES LONG TERM INTO THAT," SAID SETH.

• THE VARIABLE COMPENSATION THAT WE PAY OUT— A PART OF THAT WE’VE SUBSTITUTED
WITH STOCK. THE PROPORTION (OF STOCKS) INCREASES THE MORE SENIOR YOU ARE. SO AT
A VERY JUNIOR LEVEL, THERE IS NONE, BUT AS WE GO UP, 40% OF YOUR BONUS COULD BE
PAID VIA STOCK," ADDED SETH.
• SETH SAID FLIPKART’S EMPLOYEES HAD GENERALLY REACTED POSITIVELY TO THE NEW INCENTIVE
STRUCTURE.

• “THE REACTION FROM EMPLOYEES HAS GENERALLY BEEN POSITIVE—ANYTHING TO DO WITH

COMPENSATION YOU WILL NEVER HAVE 100% POSITIVE REACTION. FOR A MAJORITY OF THE
COMPANY, ESPECIALLY WITH THE JUNIOR EMPLOYEES, IT DOESN’T IMPACT THEM BECAUSE THE
CASH FLOW ISSUE IS MORE CRITICAL FOR SOMEBODY WHO IS AN ASSOCIATE WORKING IN A
CALL CENTRE OR WORKING IN LOGISTICS OR AT A LOWER CASH LEVEL," SAID SETH.

• RISING SALARIES WERE ONE OF THE DEFINING FEATURES OF THE GO-GO YEARS OF 2014 AND
2015 IN THE NASCENT START-UP BUSINESS. LED BY FLIPKART, START-UPS PAID UNHEARD-OF
SALARIES TO ENGINEERS, MANAGEMENT GRADUATES AND EXPERIENCED PROFESSIONALS FROM
OTHER COMPANIES AND INDUSTRIES, AS INVESTORS POURED MORE THAN $9 BILLION INTO INDIAN
START-UPS SINCE THE BEGINNING OF 2014.
 HOW FLIPKART’S EMPLOYEE BENEFITS AND
POLICIES BRIDGE THE WORK-LIFE GAP

• ROGRESSIVE ORGANIZATIONS USUALLY HAVE ONE THING IN COMMON — THEY CREATE A

FLEXIBLE AND INCLUSIVE WORKPLACE THAT REFLECTS ITS CULTURE AND VALUES. NOT ONLY ARE
HAPPY EMPLOYEES MORE PRODUCTIVE, THEY ARE MORE LIKELY TO BE COMMITTED TO HELPING A
BUSINESS SUCCEED AND GO THE EXTRA MILE — SOMETHING THAT FLIPSTERS PRIDE THEMSELVES
ON.

• SUCCESS, HOWEVER, DOES NOT STOP AT JUST HAVING SOME OF THE BEST TALENT IN THE
COUNTRY. IT COMES FROM BEING IN AN ENVIRONMENT THAT NURTURES, INSPIRES AND INSTILLS
THE CONFIDENCE TO BRING OUT THE BEST IN INDIVIDUALS. AND THIS IS WHERE THE FLIPKART
EMPLOYEE BENEFITS HAVE MADE A DIFFERENCE — NOT SIMPLY AT THE WORKPLACE, BUT BEYOND.
 FLIPKART’S WOW AWARDS – MOTIVATION,
RECOGNITION, PRESTIGE AND A RALLYING FORCE FOR
FLIPSTERS

• WHAT DOES IT TAKE TO MOTIVATE EMPLOYEES TO TACKLE EVERYDAY CHALLENGES AT WORK?

WHAT KEEPS THEM DRIVEN TO ACHIEVE THEIR GOALS? MUCH LIKE THE OSCARS MOTIVATE
ACTORS TO DELIVER THEIR BEST PERFORMANCES, FLIPKART’S WOW AWARDS GO FAR IN
KEEPING FLIPSTERS AT THE TOP OF THEIR GAME. READ ON TO DISCOVER WHAT IT TAKES FOR
FLIPSTERS TO WIN THESE COVETED AWARDS.
• THE PRESTIGIOUS WOW AWARDS ENSURE THAT EVERY EMPLOYEE AT FLIPKART IS RECOGNIZED
FOR CONTRIBUTIONS BIG OR SMALL.
• THE EMPLOYEE RECOGNITION PROGRAM AT FLIPKART SEES TO IT THAT EVERY FLIPSTER IS
GIVEN CREDIT, MOTIVATION AND VISIBILITY TO UNDERSTAND HOW EVERY INDIVIDUAL
CONTRIBUTION TO THE ORGANIZATION COUNTS. AFTER ALL, IT IS THESE VERY PEOPLE WHO
WORK NIGHT AND DAY TO ALWAYS KEEP THE CUSTOMER FIRST.

• “APPRECIATING GOOD WORK WAS ALREADY AN INTEGRAL PART OF OUR CULTURE AT

FLIPKART, BUT A YEAR AND A HALF AGO WE PUT TOGETHER A COMPREHENSIVE FRAMEWORK
OF EMPLOYEE RECOGNITION, IN PARTNERSHIP WITH OUR BUSINESS LEADERS, EMPLOYEES,
AND THE HR TEAM,” SAYS ADITI TANDAN, DIRECTOR OF PERFORMANCE & REWARDS.
• THE WOW AWARD RECOGNIZES THAT YOU’RE WORKING IN THE RIGHT DIRECTION AND
THAT’S IMPORTANT. IT SHOWS US HOW THE WORK WE DO EVERY DAY FITS INTO THE LARGER
PICTURE AT FLIPKART. IT EMPOWERED US TO WORK TOWARDS ACHIEVING MORE THAN WE
HAD ALREADY.
 FLIPKART CONVERTS PART OF VARIABLE PAY TO
ESOPS FOR EXECUTIVES

• THE VARIABLE COMPENSATION THAT WE PAY OUT— A PART OF THAT WE’VE SUBSTITUTED
WITH STOCK. THE PROPORTION (OF STOCKS) INCREASES THE MORE SENIOR YOU ARE. SO AT
A VERY JUNIOR LEVEL, THERE IS NONE, BUT AS WE GO UP, 40% OF YOUR BONUS COULD BE
PAID VIA STOCK.

• FLIPKART CURRENTLY HAS OVER 50 SENIOR VICE-PRESIDENTS AND VICE-PRESIDENT-LEVEL

EXECUTIVES.
• THE STOCK OPTIONS ARE BEING HANDED OUT ON TOP OF THE ESOPS (EMPLOYEE STOCK
OWNERSHIP PLANS) THAT MANAGERS ARE ELIGIBLE FOR. FLIPKART’S COMPENSATION FOR
MANAGERS COMPRISES FIXED PAY, VARIABLE PAY (THAT IS DETERMINED BASED ON THE
PERFORMANCE OF THE INDIVIDUAL AND THE COMPANY IN A SPECIFIC PERIOD) AND STOCK
OPTIONS.

• “CONVERTING VARIABLE PAY TO LONG-TERM ESOPS BASICALLY MEANS LESS CASH IN HAND
IN THE NEAR TERM AND IS A SIGNAL FOR PEOPLE TO PULL UP THEIR SOCKS IF THEY WANT TO
EARN THEIR STOCK OPTIONS OVER A PERIOD OF TIME," SAID ONE OF THE PEOPLE CITED
ABOVE.
 BEST PRACTICES AT FLIPKART

• INITIALLY FLIPKART STARTED WITH SELLING BOOKS ONLINE AND HAS SINCE DIVERSIFIED INTO
A GENERIC E-COMMERCE SITE, SELLING CDS/DVDS OF MUSIC, MOVIES, GAMES AND
SOFTWARE, AS WELL MOBILE PHONES AND ELECTRONICS. ACCORDING TO THE CO-FOUNDER
SACHIN BANSAL, “WE STARTED WITH BOOKS BECAUSE THEY ARE A COMPARATIVELY EASY
CATEGORY PRODUCTS TO SELL ONLINE. THEY DO NOT REQUIRE HUGE INVENTORY
MAINTENANCE, ARE EASIER TO NEGOTIATE SUPPLIER TERMS AND PROFIT MARGINS ARE
HIGH.”
• BUILDING THE SUPPLIERS BASE- THE COMPANY HAS ESTABLISHED A NETWORK OF MORE
THAN 500 DISTRIBUTORS AND ONLY STOCKS FREQUENTLY ORDERED ITEMS. ITEMS LIKE THE
'LONG TAIL' ARE ALMOST ALWAYS SOURCED FROM SUPPLIERS IN REAL TIME AND AS AND
WHEN THE CUSTOMER PLACES AN ORDER.

• BUILDING INFRASTRUCTURE FOR OPERATIONS- THE COMPANY HAS 4 OFFICES IN 4 METROS

CITIES WITH MORE THAN 500 EMPLOYEES. WAREHOUSES OF THE COMPANY ARE LOCATED IN
7 CITIES INCLUDING THE METROS. COMPANY HAS TIE-UPS WITH MORE THAN 15 COURIER
COMPANIES LIKE BLUE DART, FIRST FLIGHT ETC. TO DELIVER THEIR PRODUCTS AND INDIAN POST
FOR AREAS WHERE COURIER DO NOT REACH.
• USE OF INFORMATION SYSTEM: THE COMPANY USE SALES TO PREDICT THE INVENTORY
LEVELS. THE WAREHOUSES ARE SPLIT INTO MULTIPLE AREAS — INVENTORY, PACKING,
SHIPPING AND SO ON. THE STOCKS ARE REPLENISHED EVERY 24-48 HOURS. IN THE BACK END,
FLIPKART STORES DETAILS OF ALL THE TRANSACTIONS THAT NEED TO BE CARRIED OUT. THEY
HAVE AN UNDERSTANDING WITH THEIR ASSOCIATES FOR ORDER TRACKING, RECONCILIATION
AND MIS (MANAGEMENT INFORMATION SYSTEMS) REPORTS. THE PRIVATE COURIER
COMPANIES IN TURN HAVE THEIR OWN WAYS OF TRACKING EVERY PACKAGE. THE CUSTOMER
IS ALSO UPDATED ABOUT THE STATUS OF HIS SHIPMENT VIA MESSAGE, EMAIL OR THROUGH
THE WEBSITE.
• FUTURE FOR E-COMMERCE: INDIA HAS 11 MILLION ONLINE CUSTOMERS NOW WHICH WILL
INCREASE TO 30 MILLION BY 2015 WHICH SHOWS THAT THE E-COMMERCE INDUSTRY WITH
THE INCREASED INTERNET PENETRATION WILL BE THE SERVICE SECTOR'S GROWTH ENGINE IN
INDIA. THE INDUSTRY'S SIZE IS EXPECTED TO INCREASE TO $11.8 B. AMONG THE CHALLENGES
FACED BY THE INDUSTRY IS ITS DEPENDENCY ON THE SERVICE PROVIDERS LIKE SUPPLIERS,
LOGISTICS SERVICE PROVIDERS, ETC. WHOSE SERVICE IN NOT UP TO THE EXPECTATION AND
ARE AFFECTING THE SERVICE OF THE ONLINE COMPANIES. TO SOLVE THIS ISSUE EFFORTS ARE
TO BE MADE TO EDUCATE THESE SERVICE PROVIDERS THE IMPORTANCE OF USING
TECHNOLOGY AND PROVIDE THEM INCENTIVES TO USE THESE TECHNOLOGY AND SHIFT THEIR
FOCUS ON TO THE CUSTOMERS.