1. High performers have the edge this appraisal season

High performers have the edge this appraisal season

Employees with critical skill talent to be favourably rewarded with about 1.5% higher hikes than average 10.8%; start-ups, pharma to see maximum increments

By: | New Delhi | Published: May 17, 2015 3:00 AM
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As companies start to differentiate more to retain employees with high potential and critical skill talent, even with their limited budget, performance-based rewards will play a much more crucial role this year, say HR experts.

HERE’S some good news for high-performers this appraisal season. As companies start to differentiate more to retain employees with high potential and critical skill talent, even with their limited budget, performance-based rewards will play a much more crucial role this year, say HR experts.

“We will also see a significant difference in distribution of merit and variable pay increases between high performers and average performers. Employee benefits are also emerging as an important driver of attraction and retention,” says Sambhav Rakyan, data services practice leader (Asia Pacific) of global professional services company  Towers Watson.

Towers Watson projects the average salary increase in India at 10.8%, but in case of employees with critical skill talent or high potential, the salary increase can go up to 12%. “For average performers, it would be around 9%,” explains Rakyan.

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Agrees Moorthy K Uppaluri, CEO of HR consulting firm Randstad India: “This year is expected to be better  in terms of pay hikes as compared to previous years. This especially holds true for the top performers, who would be favourably rewarded based on their individual performances. Since companies are now reinforcing their commitment to meritocracy, they are bringing out higher differentiation within the talent segment when it comes to rewards and increments. This year, the hike given to these top performers is expected to be around 1.5 times or higher than that of an average performer.”

Most companies are focusing on retaining their middle- and junior-level employees, as this segment is expected to be impacted the most by attrition due to the economic recovery and the sentiment of optimism surrounding it. “Also, this year, the salary increments are expected to be higher in the variable performance reward components rather than the base salaries, in line with last year,” Uppaluri of Randstad India adds.

Although the average salary hike is projected to be marginally higher than last year’s, the e-commerce sector will be the one to watch out for this year, with companies in this space expected to come up with the best pay hikes for their employees. “The average salary hike in this sector is likely to be in the range of 12-13%. Top performers are likely to receive more than double of this figure,” says Uppaluri of Randstad India.

As per Rakyan of Towers Watson, salaries and increments offered by start-ups are commensurate with the scale of opportunities that they are chasing. “In some start-ups like the knowledge-based industries, the subject experts add disproportionate value and thus they continue to get compensation accordingly. The shareholders of start-ups view this as an investment and don’t mind paying above the market median to attract and retain this talent,” he adds.

However, Sanjoe Jose, CEO and co-founder of Bengaluru-based Talview.com, an online recruitment firm, is of the view that start-ups will also see higher attrition activity as compared to others. “In funded start-ups, top performers are remunerated heavily and this leads to discontent among others. Also, there is lot of demand for experienced start-up employees because of the high activity in start-up funding in recent times. Hence, we expect to see higher attrition in 2015 than in previous years,” he explains.

Pharma and healthcare services witnessed the highest increase in 2014 and the trend seems to continue in 2015.

“The pharma sector in India will have among the highest salary increases at 11%. Expiry of patents and increasing demand and encouragement for genetics have continued to put pressure on firms to attract and retain talent, particularly for jobs such as in regulatory affairs, clinical strategy, project management and qualified researchers,” says Rakyan of Towers Watson.

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