Corporate employees are a happier lot this summer. Increments are being announced, unlike last year when companies had to defer pay hikes and even cut salaries in many cases.
With the economy bouncing back and stronger signs of global recovery, more opportunities are available for employees who sat tight in their jobs through the whole of the global meltdown. With fear of attrition looming on their heads, companies are offering good increments to their employees.
With the economy bouncing back and stronger signs of global recovery, more opportunities are available for employees who sat tight in their jobs through the whole of the global meltdown. With fear of attrition looming on their heads, companies are offering good increments to their employees.
The average increments this year have been in the range of 15-20%, with sectors like IT and ITes, auto and auto components, leading the pack. In the IT space, the increments have been in the rage of 25-30% while ITes was lower at around 15-20%, according to TeamLease Services.
Sectors like BFSI, retail and telecom were lower at around 12-18%. “Telecom which was the most happening sector in terms of hiring last year is right now going slow. This is because most new operators are done with their hiring,” says James Agrawal, consulting director and head of executive search firm BTI Consultants.
Sectors like BFSI, retail and telecom were lower at around 12-18%. “Telecom which was the most happening sector in terms of hiring last year is right now going slow. This is because most new operators are done with their hiring,” says James Agrawal, consulting director and head of executive search firm BTI Consultants.
Similar is the fate of retail, which hasn’t performed as well as companies had expected. “Most retail firms have slowed down their expansion plans,” Surabhi Mathur-Gandhi, general manager-staffing at TeamLease Services. In 2006-2007, the telecom sector saw increments in the 20% level while retail was even higher at 25-35%.
Across sectors though, people with very niche skills, who are critical for the companies have been given a handsome increment in the 40-70% range. These would include high-skill functions such as clinical research, R&D who constitute about 2-4% of the overall workforce.
Similarly, mid-level management which was most impacted last year has also seen very high increments in the 40-60% range. “Companies now have growth and expansion plans and these mid-level executives are critical for executing these plans,” says Mathur-Gandhi.
Pre recession companies across sectors offered goodies like golden handcuffs and other long terms benefits. Now, after the recession, they are being more realistic and are being more cautious when offering long term benefits to employees, says Agrawal. During the boom period, companies were offering ESOPs, cash benefits, housing and vehicles linked with extended period of work to its employees.
While stock options are still being used as a retention tool, goodies like joining bonus as well as performance or annualised bonuses have been reduced drastically. “Joining bonuses are being done away with for now as talent is readily available. Companies are closely monitoring their cost to hire and are willing to wait rather than be in a hurry and pay more for a hire,” says Mathur-Gandhi.
Performance incentives though are back again but have been reduced from the level of about 25-30% of a persons CTC to about 15-20% today.
Interestingly, Indian companies are more bullish about increments as they need to retain talent and compete against their MNC counterparts. “A lot of MNCs will be vary of giving double digit increments this year,” says Gangapriya Chakraverti, India business leader, Mercer information product solutions business. While Indian companies seem more bullish this year, Chakraverti cautions that even though they need to retain talent, no Indian company wants to go overboard with increments this time. “Of course, increments here would still be subject to how these companies perform,” he adds.
Mathur-Gandhi of TeamLease Services points out that increments at MNCs this year would still be muted because parent companies back home are still in the rationalisation mode. To retain talent and also attract more talent from larger MNCs, Indian companies are offering better compensation today. While smaller Indian companies have had problems in paying higher increments this year and are facing attrition, mid-sized and large Indian companies have been able to retain as well as attract new talent, she says.
Source ET
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