New Delhi, Nov. 6 -- Caught between talent wars and cost pressures, Indian companies are reworking variable pay to draw sharper distinctions between high performers, steady contributors, and underachievers-and tie salaries to business performance more closely.

Even firms that previously lacked this component-particularly those from the manufacturing sector-are now introducing company performance-linked payouts in the cost-to-company (CTC) structure to reward and retain top talent.

"Organizations now prefer a 'we earn; you earn' mentality. When the volatility of business outcomes is high, the volatility of compensation is also high. This helps firms avoid an overload of fixed compensation costs in their profit and loss," said Pawan Dinka...