Start-ups to offer record salary increase in 2016, says survey

Overall, it has projected a 10.3% salary rise for India Inc in 2016 compared to 10.6% in 2015

Even though there is a fear of consolidation in the start-up ecosystem, the salary increase in this sector has been projected to be the highest among all sectors for 2016. Aon Hewitt, the global talent, retirement and health solutions' business of Aon plc, has projected a 15.6 per cent pay hike for early-stage companies and start-ups. According to Aon Hewitt’s survey, companies in this category stand out despite being in the pre-profit stage for three years and continue to have an aggressive stand on pay.

At 15.6 per cent, the salary increase projected for 2016, they feature as number one, with the closest second being Life Sciences at 11.6 per cent. The other sectors, which are likely to witness higher increase are media (11.2 per cent), hi-tech (10.8 per cent), consumer products (10.8 per cent), etc. The automotive, retail and chemicals sectors are likely to witness an increase of 10.7 per cent.

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Overall, it has projected a 10.3 per cent salary rise for India Inc in 2016 compared to 10.6 per cent in 2015. The study, the largest of its kind in India, analysed data across 700 companies.

Anandorup Ghose, partner at Aon Hewitt India, said: “With this year’s numbers, we are seeing a confirmation of our view that Indian companies are taking very clear steps to arrest the steady increase in compensation budgets. The lower inflation rates in the economy has also helped companies in deciding on the reduced salary increases without creating too much of a disruption in the lives of employees.”

Increasing Focus on Talent and Merit

While employees’ expectations have gone up over the past few year, Aon Hewitt’s data show companies are managing those carefully. The focus on performance differentiation is much higher with a larger proportion of budgets being allocated to higher performers.

Investing in key talent has emerged as a major trend. Key talent would mean high potential and hot skills apart from high performers. The payout gap between an average performer and key skills is growing year-on-year. At 63 per cent, this is the highest differentiation that India Inc has observed.

Attrition rate at its lowest

The attrition rate in India is dropping. At 16.3 per cent, it is the lowest that corporate India has observed since the 2009 financial crisis. While attrition was controlled at a broader level, key talent attrition increased from 5.9 per cent in 2014 to 7.3 per cent in 2015. Increasingly, organisations are developing separate retention plans and policies for their top talent.

While rewards continue as a retention tool to retain top talent, programmes around leadership opportunities and coaching, overseas assignments, are fast catching up.