Wage hike predicted at 9.5% this year for average performers, more for top talent Workplaces veering towards the culture of more work, less pay
SALARY TRENDS Pay gap between top and average performers in India has widened by at least 1.8 times
This year is likely to see a wage hike of 9.5% in India, perhaps the lowest after the Lehman financial crisis of 2009. Exceptions, however, will be made for critical talent with rewards in double digits – of about 15%, says a forecast by risk management, insurance and human resources solutions provider Aon Hewitt.
The Salary Increase Survey in India analysed over 1,000 companies in India between December and January to find tighter budgets were forcing organisations to identify top talent and remunerate them accordingly.
That star performers are scarce is evident from the fall of 7.5% in this segment of the workforce, the lowest in 21 years of the Aon Hewitt survey in India. Consequently, the multiplier being offered to these employees in India is around 1.8 times, the highest differentiator across Asia.
“The trend of investing in key talent continues. Firms are carving out high potential and hot skills along with high performers as their key talent segment. Last year has shown organisations taking a strong view towards performance differentiation and not only have bell curves become sharper, the pay differentiation between top and average performers has also increased,” says Anandorup Ghose, partner at Aon Hewitt India. “An average performer is expected to receive an average salary hike of around 8% but critical talent is expected to get an increase of 15%. The greying of pay increases this year is actually for average performers. Critical talent is not getting any less this year,” he says.
Key skills refer to critical, individualised skills in technology, social media and digital analytics skills across sectors. As more specialised sectors emerge, certain skill sets have become more important than traditional ones. For instance, the renewable energy sector is attracting niche talent now instead of the conventional energy segment. Similarly, entertainment media is gaining ground versus media Services differentiation higher than manufacturing
AS MORE SPECIALISED SECTORS EMERGE, CERTAIN SKILL SETS HAVE BECOME MORE IMPORTANT THAN TRADITIONAL ONES Political changes and economic headwinds have had an impact on business performance. However, the trend this year reflects a gradual slowing of pay increases and higher emphasis on productivity and performance
of organisations have differentiated recognition programmes and the same number have been using differentiated benefits.
Attrition is at an all-time low of 16.4% – about 4% lower than last 10-year average. While attrition was contained at the broader level, key talent attrition increased from 7.3% in 2015 to 12.3% in 2016.
Engineering services and entertainment media sectors witnessed the maximum attrition of key talent at 8.2% and 11.8% respectively, says the report.
While organisations still depend on compensation as a important lever to drive employee value proposition – firms that are embracing advanced people practices are heavily depending on leadership and development and recognition programmes , benefits and work environment, the report says. Demonetisation, Brexit, the Trump presidency and fall in startup funding in India will impact salary hikes this year, with nothing more than 9.5% increment expected for ‘average’ employees.
Among sectors, consumer internet companies are expected to offer a 12.4% pay hike in 2017, the highest among all segments followed by life sciences at 11.3%, professional services at 10.9%, chemicals at 10.3% and entertainment media at 10.3%. The lowest hikes are expected for cement at 7.6% , financial institutions at 8.1% and transport at 8%.
“Political changes and economic headwinds have had an impact on business performance. However, the trend this year reflects a gradual slowing of pay increases and higher emphasis on productivity and performance,” says Anandorup Ghose, partner at Aon Hewitt India.
Compared to other countries, companies in India will still see the highest inflation-adjusted salary increases, Ghose says. Unlike last year when start-ups were hiring maximum talent and doling out increments, this year there is no industry that is leading others in attracting ANANDORUP GHOSE, partner at Aon Hewitt India talent. This could also be the reason why attrition too has gone down significantly.
The overall attrition numbers for India at 16.4% were the lowest in the emerging market segment.
The manufacturing sector continues to have a controlled attrition rate of 13.1% and the services sector at 19%. As far as levels of management are concerned, attrition at the top and senior management levels was at 10.5%, followed by middle management at 12.1%, going up to as high as 18.3 at the junior management level, says the 21st annual India Salary Increase Survey by Aon Hewitt.
— VANDANA RAMNANI