Indian industry can at last afford to smile if the projections of the 14th Annual Salary Increase Survey by Hewitt Associates, a global human resource (HR) services firm, come true. The double-digit projection of salary increases, at 10.6%, is the highest in the Asia-Pacific region, way above China, Japan and Australia. Sandeep Chaudhary, leader of Hewitt’s performance and rewards consulting practice in India, talks about the recovery path and the compensation in store. Edited excerpts from an interview:
Upward trend: Organizations in India are looking at measured, realistic growth.
Is the 10.6% projection in salary hikes for 2010 on expected lines?
It is definitely according to our expectations. Even when we had finished Phase 1 of the survey, in September-October 2009, we had come down to a salary increase of roughly 9.5-9.6%. We were anticipating organizations would look at a little more by the time they got closer to the (new) financial year. Now we see that positive impact, with the trend actually touching 10.6%. It is a 60% recovery from what it was in 2009 (6.6%).
Why is India the big success story in the Asia-Pacific region?
Because our pace of recovery is the fastest in the region. If you look at the figures, India is way ahead of others in the region, including Australia (3.4%), China (6.7%) Hong Kong (2.9%) and Japan (2.1%). In all, organizations in India are positive and are looking at a measured, realistic growth, with a keen eye on cost consolidation and prudence.
If you work hard, you will be compensated adequately—that seems to be the message.
One definitive change in compensation philosophy reinforced in the survey is the performance and reward linkage, with top performers receiving twice as much salary compared to average performers. Right now, the junior-most to mid-level executives are looking at higher salaries. These are the most vulnerable employees, with only five-seven years of experience. Even the senior management, who have taken the brunt of the salary freeze or the salary cut in the past, with no or very little bonuses, are the ones who are going to play a very critical role in this revival. And therefore, we are looking at much better salary increases for them as well.
Would you say then that one should not simply be driven by the salary package while changing jobs?
It is always a relative question. Salary increases are just a percentage at which you grow. It does not define the quantum at which you are sitting. You really cannot pinpoint sectors and say that from a compensation standpoint, they are becoming far more attractive because the base line for different sectors is very different.
You will never get a salary which is the highest in the market. But I would suggest the junior- to middle-management level employees look for an employer and industry, or even a solution, which compensates you for your qualification and skills. You should concentrate and focus on an organization which has a long-term commitment to you, their own business and strategy. Don’t settle with a very transient player only because they are compensating you more than anybody else.
Typically, organizations which overplay the component of compensation are also the ones that make the most radical and desperate moves when times get tough. Try and look for a stable and committed employer, organizations that are buoyant in their approach to their business and even to you.
Are your figures in sync with the Union Budget?
It is very much in sync with the Budget. Although the fuel hike issue hijacked the other essential elements of the Budget, I think what the finance minister was basically talking of was inclusive, realistic, measured growth and walking a tightrope around fiscal consolidation and prudence. That’s exactly what organizations are saying. They are far more cautious in the way they would want to invest in growth, which is around salary increases, bonuses, etc., from the HR employee standpoint, yet have a very keen eye on their cost and bottom lines. They would want a good amount of their expenditures focused on the right elements and right now it seems salary increases and hikes are the elements that would ensure employee engagement.