'Despite talk of a slowing economy, improved sentiments of late have warmed India Inc to the prospects of another year of double digit salary hikes. Indian companies plan to dole out an average of 11.9% salary hike this year, compared to 12.6% last year, according to a survey conducted by human-resource consulting firm Aon Hewitt.'
The important trends -
Highest in Asia-Pacific
The salary increments in India will remain the highest in the Asia-Pacific region. While salaries in China are expected to go up by 9.5%, in Philippines employees will get a 7% hike. Globally, India ranks among the top five countries with maximum salary hikes.
Surplus Cash to Reward Employees
With the rupee appreciating considerably over the past one month and consumer spending on better lifestyle on the upside, the survey shows that companies are concentrating on allocating the surplus cash to reward employees, who contribute significantly to their organisations' growth.
Steeper hike for Talents
Even as the average salary hike is expected to be in the 12% range, the survey pointed out that the hikes given to critical talents will be 2%-3% more than the overall increments in an organization, a trend which has been witnessed across organizations in the last three years. The trend continues for 2012, with a projected increase of 15.1% for this employee group. Moreover, the salary increase for employees rated as 'far exceeding expectations' is almost two times the salary increase compared to those 'meeting expectations'.
Better for some Industries
While the IT industry may see muted growth this year, growth across industries like FMCG, real estate, finance and others will be relatively better leading to good salary hikes. "For IT industry, hike in salary will be around 7%-10%, slightly lower than last year. Other industries, however, will see increase in the range of 8%-12%." As far as sectors go, this year's salary increase will be the highest for the Indian pharmaceutical industry, with a projection of 13.3% hike. The engineering design/services ranked the second highest on the salary hike table with a projected increase of 13%, which is 1.1% higher than the India average. The lowest hikes are expected to come in for the telecom and financial services sectors with an11% and 10% increase respectively.
More Variable Pay
Another big trend across India Inc has been the increasing focus on variable pay as part of total compensation. Top and senior management see 23% of their total compensation as variable (up from 16% in 2001) and even the lowest-rung entry staff get approximately 13% of their total compensation (up from 10% in 2001) as variable pay.
Inflation fueling Attrition
High attrition rates are expected to plague companies owing to high inflation rates. Overall attrition rate is projected to be at 19.8%, with financial sector to top the charts at 29.3%.Companies are adopting different strategies to boost growth and rationalizing manpower is an option they may look at.
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