India Inc likely to give 10.6 per cent salary hike in 2015: Aon Hewitt

Mumbai: Employees in India are expected to get an average pay hike of 10.6 per cent this year - slight improvement over last year, as businesses adopt a ‘positive yet cautious’ path on salaries, said HR consultancy firm Aon Hewitt. Notwithstanding the fact that 7 out of 10 organisations in India expect an improvement in business outlook this year, this optimism is not getting reflected in salaries.  

According to Aon Hewitt's Annual Salary Increase Survey, corporate India is expected to offer its employees average salary rise of 10.6 per cent for 2015, a slight improvement over last year when it was 10.4 per cent.  "Companies across industries are continuing to take a cautious stance and are not going for aggressive pay   increases," said Anandorup Ghose, Rewards Consulting Practice Leader at Aon Hewitt India, adding that they are not willing   to increase their fixed costs. 

"Increasing the salaries mean increasing their fixed costs. I think people need to see more actual activity to be able to increase their fixed costs," Ghose added.   Meanwhile, key talent across the board top performers are   expected to get 1.6 times the salary increase awarded to average performers. Moreover, in order to contain the attrition of key talent, organisations are increasingly developing separate retention plans and policies for their top talent, wherein   along with salary, programmes on leadership opportunities, overseas assignments are fast gaining prominence.  

Though attrition in 2014 continued to be broadly at par   with 2013 at 18.1 per cent, but key talent attrition in 2014 registered at 5.9 per cent as compared to 4.5 per cent in   2013, the report said. A sector-wise analysis shows that real estate and infrastructure is likely to get the highest projected salary rise in 2015 (12.2 per cent), followed by Life Sciences (12), Media (1.8) in the second and third place respectively.  

Among all leading APAC nations, India continues to lead the pack for Asia in salary increases and also tops the chart   for highest inflation-adjusted salary increases. "Though the projected salary increase number shows a subtle improvement over salary increases in the last three years, however it does not yet show a complete resurgence," Aon Hewitt added. There is a steady trend towards greater performance-based pay and it indicates a shift in overall pay philosophy across Indian companies. Top/Senior Management would see around a fourth of their  total compensation being variable and even the bottom of the   pyramid, at entry levels roles, more than 12 per cent of  compensation can be expected to be paid through performance-linked pay.