The New Normal: India's Salary Increase Story
differentiation is consistently getting steeper yearon-
year. In 2014, this number was at 1.6 times the
salary increase awarded to average performers.
Investing in key talent has emerged as a major trend. Key
talent means '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%,
this is the highest differentiation India Inc. has observed.
Additionally, in the last five years, the percentage of
employees with top performance rating has dropped
by close to 30%, implying that organizations are
not hesitating to differentiate sharply on the basis
of performance and are allocating the share of the
total increase budget accordingly. India places 8.2%
of its overall population at top rated. This number
has significantly dropped in the last five years.
Mega Employers - The Bigger - The Smaller
The study also threw some interesting insights on
salary increase and organization size. While India Inc. is
largely projecting 10.3% for 2016 - organizations that
employ more than 15,000 people (mega employers)
are budgeting lower salary increase numbers as
compared to the India Inc. average. Companies with
more than 15,000 FTEs project a salary increase of 9.8%,
companies with more than 35,000 FTEs project a salary
increase of 9.3%, companies with more than 50,000
FTEs project a salary increase of 8.7%. In addition, on
analyzing the top 100 brands - the annual budget is
9.5%. It is apparent that firms are judiciously using the
brand power to manage compensation cost. For large
organizations - condensing the budgets by even small
values has a direct impact on the overall profitability.
Attrition Rate at its Lowest for Five Years
The attrition rate in India is dropping. At 16.3%, it is the
lowest that corporate India has observed since the 2008
financial crisis. While attrition was controlled at a broader
level, key talent attrition increased from 5.9% in 2014 to
7.3% in 2015. Increasingly, organizations are developing
separate retention plans and policies for their top talent.
While rewards continue as a retention tool to ring fence
top talent, programs on leadership opportunities and
coaching, overseas assignments, fast track programs
for high potentials are fast gaining popularity.
The Battle at Campuses
We can safely call India as the startup capital of
the world. Initiatives like 'Make in India', 'Startup
While smartly managing
wage bill is a key objective
of organizations, what really
dictates the salary increase
number is the availability
of employable talent
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