The improvement in business confidence that has set in among India Inc, following a stable government and moderating inflation, does not yet reflect in salary increases. companies across industries continue to take a cautious stance and are not going for aggressive pay increases as yet.
Aon Hewitt, a global human resource solutions provider, projects a 10.6% salary increase for India Inc in 2015, similar to its 2014 outlook, according to its 19th edition of ‘Annual Salary Increase Survey in India’.
While sectors such as life sciences, engineering services, chemicals and media are projecting a higher increase than the market average, in consistence with their lead in salary increase numbers since 2012, a change is expected in sectors like real estate and infrastructure.
According to the survey, real estate and infrastructure have benefited from the overall positive sentiment in the economy and, in fact, have moved up many places to lead the salary increase pack this year.
However, services industries like retail, financial institutions and hospitality represent the lower end of salary increase projections.
The survey highlights that almost 70% of the respondents believe there will be improvement in the business outlook. About half of all companies feel that positive business sentiment and increasing pay budgets in their competitive market are driving factors in their decision to increase salaries from earlier years. The study analysed data from more than 580 companies.
Anandorup Ghose, leader (rewards consulting practice), Aon Hewitt India, said: “The projected salary increase number shows a subtle improvement over salary increases in the last three years”.
In 2015, the study suggests that top performers across sectors are expected to get 1.6 times the increase awarded to average performers. This differentiation is even higher in service industries such as banking and other financial services (BFSI), ITeS and telecom. A similar trend is expected in other industries like FMCG/ FMCD and pharma.
Top/senior management will see approximately a fourth of their total compensation being variable and even the bottom of the pyramid, at entry levels roles, more than 12% of the compensation can be expected to be paid through performance-linked pay. The survey points out that there is a steady trend towards greater performance-based pay.
India Inc attrition rates in 2014 continued to be broadly on a par with 2013’s at 18.1%, but key talent attrition has witnessed a 31% jump. Key talent attrition in 2014 was 5.9% compared to 4.5% in 2013.
Increasingly, organisations are developing separate retention plans and policies for their top talent. While rewards continue to be a retention tool for ringfencing top talent, programmes on leadership opportunities, coaching and overseas assignments abound, the study observes.