With annual appraisals around the corner, employees are eagerly waiting for their salaries to reflect their wishes. Many might have even planned a thing or two for the additional salary they will be getting. Annual appraisals are one of the most motivating factors for employees. A lot in their personal lives and the course of their professional lives depend on the appraisals they get from their employers. After all, money talks. And sometimes, it makes a lot of noise.
HR consultancy Aon has recently released its annual survey hike report, giving employees in India a sigh of relief considering the global economic slowdown. According to the report, India Inc is expected to roll out an average salary hike of 9.1% this year. The salary hike in India is also said to be the highest in the Asia Pacific region. However, due to the slowdown, there is a decline of 0.3% in salary hikes this year compared to that of 2019. According to Aon, this year’s hike is also the lowest in the decade.
As per the report, around 39% of the surveyed companies are expected to give as much as a 10% increase in pay. The results are based on responses from over 1,000 organizations spread across more than 20 industries.
“Despite economic challenges in 2019, organizations in India are taking a positive view. Pay increases in India continue to be the highest in the region,” said Tzeitel Fernandes, Partner (Rewards Solutions) at Aon.
A big reason for India’s higher salary increase, as compared to other growing economies, is the high inflation rate and the war for key talent and niche skills, Fernandes noted.
According to the survey, in 2019, companies in India gave an average pay increase of 9.3%, reflecting a slowdown in the economy compared to 2018. The slowdown in the economy is reflected in subdued salary increase projections in the country. However, even the companies who are projecting a decline in revenues in 2020 over last year are looking at offering an 8.1 percent salary increase showing how they want to offer market salary increase to keep talent engaged and reduce attrition.
As per Aon, 39% of firms are expected to raise the salary over 10% while 42% would go for an increase between 8-10%. In the manufacturing segment, pharmaceuticals are expected to give the highest salary hike followed by FMCG and chemicals, among others.
The report also addressed the troubles in the Automotive industry which reported the biggest drop from 10.1% in 2018 to 8.3% in 2020. This is identical to what the real estate industry that is offering(8.3%). The salary increase is also impacted in the transport sector, at 7.6%, due to the US-China and US-Iran trade wars and the outbreak of coronavirus. E-commerce and professional services businesses are expected to give a double-digit salary increase this year in the services sector.
One thing that has stayed constant since the past surveys is that the industry is still rewarding top performers. As per the report, the top 10 percentile of performers are getting a 12% hike while bottom-most get a 7% increase in pay. People who exceed expectations are getting a 14.6% hike whereas the moderate worker is getting 8.3%.
Attrition also rose to 16.1 percent in 2019 compared to 15.8 percent in 2018 despite a tough economic situation. This could also be an indicator that top performers are able to get alternative employment opportunities easily.
When it comes to the compensation structure, the quantum of variable pay or performance-based compensation is also on the rise. It rose to 16.1 percent in 2019 compared to 15.2 percent in 2018.
“We see a reduction in the differences between pay increases across industries, with 85% of the organizations projecting between 7-11%, a sign of maturing business ecosystems. However, the premium for high performance and new-age skills continues to rise,” said Navneet Rattan, Director (Organisation, Performance, and Rewards) at Aon India.
Talking about the business outlook, the survey reported that 92% of the companies which were surveyed expect their business to grow or at least stabilize in 2020, while 8% are still skeptical about their business fearing a decline in business.
HrNxt.com Newsdesk has researchers and writers with an excellent domain knowledge about the talent ecosystem, and the business environment. The team keeps a tab on the latest happenings in the ecosystem to bring most relevant news and insights for our readers. You can connect with our newsdesk at newsdesk@hrnxt.com.