Wage hike predicted at 9.5% this year for average performers, more for top talent

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 industry. Skill sets pertaining to such specialised sectors are more in demand than day-to-day skills, Ghose explains.

Numbers of top performers have also declined over the years. About 39.5% employees were recognised as critical talent for companies in 2004-2009 versus 31.1% in 2014-2016.

Even recognition programmes have been differentiated. According to the study, 15% 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.

AS MORE SPECIALISED SECTORS EMERGE, CERTAIN SKILL SETS HAVE BECOME MORE IMPORTANT THAN TRADITIONAL ONES