Bengaluru-based MPL has introduced a new system aimed at rewarding team performance over individual achievements, changed its Esop (employee stock ownership plan) vesting period from yearly to monthly, and merged fixed and variable pay.
MPL is among many new-age companies that are tinkering with the remuneration structures, as they look to retain key talent despite layoffs amid a funding winter that has hit the technology world globally.
Earlier this year, business-to-business ecommerce company Udaan changed its Esop policy to quarterly vesting instead of waiting for a minimum of one year.
One-year lock-in for Esops has been a common practice among startups. Esops holders will take a hit if the valuation of their company falls in future funding rounds, which is something a lot of the richly valued Indian startups may potentially face going forward.
MPL, which entered the unicorn club in September last year at a valuation of $2.3 billion, said employees would receive their entire cost-to-company as a fixed component starting this month. Instead of rewarding top performers, if the team surpasses the net revenue goal, its members can earn up to 24% of the exceeded amount, MPL said. “This new approach makes the reward process completely transparent. More importantly, team performance will now take precedence over individual achievements,” cofounder and chief executive Sai Srinivas Kiran G told ET.
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Additionally, the policy of exercising vested options after 30 days of exit has been changed to 10 years from the vesting date, even post-exit. There will be immediate vesting of unvested options in the case of the death or disability of a participant.
Anshul Lodha, regional director at Page Group India, which works with top startups, said most of the larger firms are now focused on developing employee-friendly policies to retain top performers. “Given that the focus is now more on profitability, founders are being pushed to think of building a culture in a way that key employees remain loyal to the company in the current environment,” Lodha said.
Recruitment experts said rationalisation in hiring and pay hikes are now a common theme across startups post a year of breakneck funding induced by greater adoption of digital services in the pandemic.
Supreet Singh, cofounder and managing partner at Native, a human resource and recruitment firm, said other startups may follow MPL’s footsteps to encourage high-performing individuals to work as a team. “Unlike previous downturns, the Indian market now has mature startups and unicorns for whom culture will become a higher priority, he said.
“During growth cycles, you don’t have enough time and energy to work on culture … All you’re doing is driving growth and hiring … During a slower cycle, your hiring focus becomes lower and your focus is that my current team should have the best outcome and productivity and efficiency,” Singh said.
MPL is claimed to have more than 85 million users in India, accessing the platform in over 70 games. Its offerings include a mix of fantasy sports, real money games such as rummy, poker, and card games.
“Startups were able to attract a lot of employees on the past basis Esops and attractive valuation. If you’re the founder, you can’t attract an employee on the Esop card any longer,” said Lodha of the Page Group. “Now you have to come up with other policies which make an employee feel excited.”
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