Hewitt Associates forecasts a very gradual decrease in salary increases
and a stabilization of increases to a range
of 9-10% by 2012
Employees in India will received an average salary increase of 15.2% in 2008,
making this the fifth consecutive year that salaries have demonstrated
double-digit growth in te country, says the 12th annual Salary Increase
survey conducted by Hewitt Associates, a global human resources
services firm. Last year, Indian employees got an annual hike of 15.1%
in 2007 on top of the 14.4% jump in 2006, the study shows."The
struggle for talent and sustainability is large and rapidly growing in
India. Employees are increasingly looking for great career
opportunities and are actively being pursued by other
organizations offering extremely attractive opportunities and packages. Hence,
organizations are using compensation as a strategic lever in
attracting, retaining and motivating talent," says Sandeep Chaudhary,
leader of Hewitt''''s Rewards Consulting practice in India.While
salary increases are largely dictated by talent demand and supply,
of 9-10% by 2012. Factors
influencing stabilization include: by reducing the talent skill gap;
changing the talent model; making training vital; and re-engineering
talent.In the late 1990s, senior and top management enjoyed the
highest salary increases across all surveyed employee groups. However,
since the year 2000, staff members at the junior
manager/professional/supervisor levels have received the highest
increase, says the Hewitt Associates survey.Increasingly,
middle management salary increases have also started creeping up. This
is largely as a result of a shortage of managerial and technical talent
in India, the survey adds.Hewitt Associates'''' research indicates
that India faces a shortage of leadership talent at 26%. However, the
country also faces a higher shortage of specialist and technical skills.Though
the fundamentals of the Indian economy are strong, the recent stock
market fall and the strengthening rupee herald uncertainty. For India,
the immediate implications of an economic slowdown in the US is not
worrying, but this is getting organizations to look at "productivity"
as a single most important determinant of long-run prospects.The
two fastest growing cost components in India are real estate and
talent, and information technology and outsourcing companies, which
have more than 75% of production regulated by the US economy, are
concerned about how to manage these elements."Salary increases
in the technology and outsourcing sectors have stabilized since 2004.
Even though they are still amongst the highest in Asia Pacific, they
have been stabilizing between 13 to 14%, which is not a variation of
concern. This is primarily because the salary levels in these two
industries are already fairly competitive. Also, with the developing
nature of talent within the industry, there is less reliance on the
mature or parent industry," says Chaudhary.The study also
reveals that an increasing number of organizations are plagued by
attrition and retention issues. Attrition rate have reached an all time
high in India with the Insurance industry reporting the highest
attrition rates at 35.2%. This is followed by IT enabled services at
28.9% and Hospitality/Restaurants industry at 27.1%. "External equity
of compensation,'''' ''''role stagnation'''' and ''''limited career opportunities''''
are the most cited reasons for attrition."In order to retain
employees, organizations must architect a compelling employer value
proposition. They have to reduce their current reliance on Total Cash
and move to a Total Rewards experience, where the focus is on
relational rewards," says Chaudhary.Currently, organizations
are trying to retain talent by keeping a closer eye on market
movements. A big part of this invol