 "Indian employers to continue with 10% hikes: Aon Hewitt")
Global human resource firm Aon Hewitt said that Indian firms have projected a 10% salary increase in 2014. Aon Hewitt’s Annual Salary Increase Survey in India of 565 firms showed that this was the lowest projection the country has seen in a decade (barring FY2009 when markets became extremely cautious post the global financial crisis).
Anandorup Ghose, Rewards Consulting Practice Leader at Aon Hewitt India said, “This period reflects the easing off of the unsustainable turbo-charged pre-crisis economic growth. Even though growth appears to be strengthening in both advanced and developing economies, it is expected to be muted and slower paced than in the pre-2008 era. This sentiment is reflected in India’s slightly higher salary increase projections for 2014.”
Sectors largely reliant on the domestic economy such as Pharmaceuticals, Chemicals, Engineering Services and Consumer Goods, are projecting the highest salary increases, typically above 10% for 2013-14. In these industries, compensation costs represent a smaller per centage of the total cost structure. However, the cautious streak is evident as projections for 2014 have reduced by an average of 30 basis points from the actual increases provided in 2013 by these industries.
Service industries like Retail, Financial Services, and Hospitality bring up the rear in salary increase projections, with these businesses impacted by the slowing down of the economy and consumer spending. In these industries, Aon Hewitt said that compensation costs are a significant portion of their total cost structure, thus managing salary costs has become an important element in their cost management strategy.
The survey said that top performers are projected to receive an average 15.3% increase in 2014, almost 1.5 times the average increment provided to employees meeting expectations. This gap has been widening over the last decade. Additionally, in just the last five years, the percentage of employees in the top performance rating has dropped by 30%, implying that organisations are not hesitating to differentiate sharply on the basis of performance and then allocate a disproportionate share of the total increase budget to top performers, thus encouraging a high performance culture.
Slow economic growth and limited opportunities in the market impacted attrition in 2013. It fell to 18.5%, almost 1% lower than previous years, with a reduction of almost 3% at the entry level. With a growing recognition that motivated, high-performing talent is a sustainable competitive advantage; organizations are reshaping their strategies to safeguard their key talent. This is reflected in the lower average attrition for critical talent of 4.5%, down from 5.7% a year ago.
The Pharmaceutical Industry, with a projected revenue CAGR of 12% and backed by higher disposable income, the increased penetration of health insurance, focused medical infrastructure improvements, and increased consolidation within the sector, has projected the highest salary increase for 2014 at 12%.
The Automotive Sector in India continued to slow down in 2013 in terms of growth, in view of increasing fuel prices, rising interest rates, and the economic slowdowns impacting consumer spending. The industry projected a modest salary increase of 9.5% in 2014, down from 2013’s projection of 11%. Ghose added that wage inflation will continue to be a high pressure point for sectors where wage cost is a significant part of operating expenses and revenues. “This year will be a complex one for organizations, offering no clear signals as to how either inflation or business numbers will move in the next two quarters. It might be a good time to be conservative and focus on ensuring that key compensation and productivity metrics are actively tracked.” Aon Hewitt surveyed over 500 organizations representing 20 primary and 30 secondary industry sectors.
This is the most comprehensive research in the area of rewards and performance. The study measures actual and projected salary increases, and compensation practices for five specific job categories, namely top/senior management, middle management, junior manager/professional/ supervisor, staff and manual workforce. The data for the survey was collected over December 2013 - January 2014
Anandorup Ghose, Rewards Consulting Practice Leader at Aon Hewitt India said, “This period reflects the easing off of the unsustainable turbo-charged pre-crisis economic growth. Even though growth appears to be strengthening in both advanced and developing economies, it is expected to be muted and slower paced than in the pre-2008 era. This sentiment is reflected in India’s slightly higher salary increase projections for 2014.”
Sectors largely reliant on the domestic economy such as Pharmaceuticals, Chemicals, Engineering Services and Consumer Goods, are projecting the highest salary increases, typically above 10% for 2013-14. In these industries, compensation costs represent a smaller per centage of the total cost structure. However, the cautious streak is evident as projections for 2014 have reduced by an average of 30 basis points from the actual increases provided in 2013 by these industries.
Service industries like Retail, Financial Services, and Hospitality bring up the rear in salary increase projections, with these businesses impacted by the slowing down of the economy and consumer spending. In these industries, Aon Hewitt said that compensation costs are a significant portion of their total cost structure, thus managing salary costs has become an important element in their cost management strategy.
The survey said that top performers are projected to receive an average 15.3% increase in 2014, almost 1.5 times the average increment provided to employees meeting expectations. This gap has been widening over the last decade. Additionally, in just the last five years, the percentage of employees in the top performance rating has dropped by 30%, implying that organisations are not hesitating to differentiate sharply on the basis of performance and then allocate a disproportionate share of the total increase budget to top performers, thus encouraging a high performance culture.
Slow economic growth and limited opportunities in the market impacted attrition in 2013. It fell to 18.5%, almost 1% lower than previous years, with a reduction of almost 3% at the entry level. With a growing recognition that motivated, high-performing talent is a sustainable competitive advantage; organizations are reshaping their strategies to safeguard their key talent. This is reflected in the lower average attrition for critical talent of 4.5%, down from 5.7% a year ago.
The Pharmaceutical Industry, with a projected revenue CAGR of 12% and backed by higher disposable income, the increased penetration of health insurance, focused medical infrastructure improvements, and increased consolidation within the sector, has projected the highest salary increase for 2014 at 12%.
The Automotive Sector in India continued to slow down in 2013 in terms of growth, in view of increasing fuel prices, rising interest rates, and the economic slowdowns impacting consumer spending. The industry projected a modest salary increase of 9.5% in 2014, down from 2013’s projection of 11%. Ghose added that wage inflation will continue to be a high pressure point for sectors where wage cost is a significant part of operating expenses and revenues. “This year will be a complex one for organizations, offering no clear signals as to how either inflation or business numbers will move in the next two quarters. It might be a good time to be conservative and focus on ensuring that key compensation and productivity metrics are actively tracked.” Aon Hewitt surveyed over 500 organizations representing 20 primary and 30 secondary industry sectors.
This is the most comprehensive research in the area of rewards and performance. The study measures actual and projected salary increases, and compensation practices for five specific job categories, namely top/senior management, middle management, junior manager/professional/ supervisor, staff and manual workforce. The data for the survey was collected over December 2013 - January 2014