India Inc. Prepares for a Long Innings
Roopank Chaudhary
Associate Partner, McLagan,
An Aon Company
Sagorika Roy
Manager, McLagan,
An Aon Company
Team India's terrific performance in the recently concluded cricket world cup down under had a few consistent themes the bowling was brilliant, the fielding much improved, and the planning and execution came good on most occasions. And whenever India batted, they started cautiously but steadily, and built a solid foundation in the first 15 overs till they became sure of the conditions and of the competition. It was a case of going back to the basics as the stakes grew higher. This was a hallmark of most of India's matches; the only exception was the heartbreaking semi-final where they went all out initially and eventually got all out too soon. Fair to say that an innings well begun was pretty much the job half done and a match mostly won! India Inc. seems to have taken a few leaves out of this world cup script when it comes to pacing their own innings which started this year around the same time as the mega event kicked off. They seem to have resisted the temptations offered by a good batting pitch, conducive match conditions and not flirted too much with danger by playing loose shots or committing themselves too early. After all, there is a stable government at the center, the rupee has been stable, GDP growth rate is expected to improve, inflation is controlled and there is general euphoria in the markets. And in the past, these signs would have triggered off a frenzy of activity around salary increments and people movement. However, not this time around. Amidst all the positive signs that we are witnessing, the 19th Annual Salary Increase Survey (SIS) reveals that India Inc. is projecting an average salary increase of 10.6% for 2015, marginally above the actual payouts of 2014, which was 10.4%. Some might call this skepticism and being overtly defensive. Rather, India Inc. has chosen to be optimistic yet cautious. It's not a sign of cynicism,
rather a sign of maturity. Team India learnt from its earlier debacles in Australia to apply themselves and behave more responsibly when the all-important world cup commenced. India Inc. also seems to have learnt from the lessons of 2008 and 2011 when rampant increments and knee jerk reactions around talent didn't really measure up well in the long run once the positivity petered out. The survey highlighted that almost 70% of the respondents believe that there will be an improvement in the business outlook. Naturally, with changing sentiments, employee expectations have also gone up manifold. However, organizations are managing these higher expectations carefully and are not getting swayed by sentiments alone. Although almost 83% of the respondents have increased the compensation budget, the focus on performance differentiation is far higher with a larger proportion of budgets being allocated to high performers. Data this year shows that across the Board, top performers are expected to get 1.6 times the salary increase awarded to average performers
The Sector Story
Let's start with the salary increase projections for 2015. There are a few surprises this year. The overall positive sentiment in the economy has impacted the real estate and infrastructure sector significantly. For the first time in four years they are leading the charts. Other sectors such as life sciences, engineering services, chemicals and media have consistently given higher than India average salary increase numbers since 2012 and continue to do so in 2015. The IT and business process management sector has also done well since 2014. On the other hand, services industries like retail, financial institutions and hospitality represent the lower end of the salary increase projections.
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