Increments and attrition to witness lower trends this year, says Deloitte report
4 min read 30 Mar 2023, 10:04 AM ISTThe study found that in 2023 increments are expected to be lower across almost all sectors, compared to 2022 actual increments
PremiumAverage increments are likely to drop to 9.1 per cent this year in almost all sectors following inflation, higher interest rates and a slowdown in the economy, according to a study. The average increment in 2022 was 9.4 per cent, Deloitte India Talent Outlook 2023 stated on Wednesday. The primary audience for this survey was CHROs of leading organisations. Almost 300 organisations participated—across seven sectors and 25 sub-sectors. Here are the key findings.
Survey findings indicate that the average India increment in 2023 is expected to go down to 9.1 percent from 9.4 percent in 2022. One in every three organisations is planning to give double-digit average increments. The study finds that 2023 increments are expected to be lower across almost all sectors, compared to 2022 actual increments. While the Life Sciences sector is expected to witness the highest increments in 2023, the IT sector will likely witness a major drop in increments as compared to 2022. Additionally, attrition in India reached 19.7 percent in 2022, up from 19.4 percent in 2021.
Anandorup Ghose, Partner, Deloitte Touche Tohmatsu India LLP (Deloitte India), said, “The significant attrition levels across industries in late 2021 continued until early 2022. We saw Indian organisations budgeting the highest increment in 2022 over the last four years. What they also did was hire aggressively. This led to employee costs rising faster than revenue growth over the last 3–4 years in almost every other company. Stubborn inflation, higher interest rates, and a slowing economy are likely to make organisations more cautious this year. We expect increments and attrition to witness lower trends in 2023".
Learning and development trends
As the uncertainty of the future of work continues, it becomes crucial for organisations to deploy a common skills framework to identify gaps in their existing talent capability and fuel a wide range of talent-related decision-making. While almost three in every four organisations recognise the value of a common skills framework primarily for learning and development and career progression, approximately 42 percent of organisations do not revise their framework regularly to contextualise it to changing business requirements.
Additionally, our survey found only 19 percent of organisations —mostly in the IT, ITeS, and Consumer sectors —who confirmed that their employees have visibility of skills beyond their current role. This indicates a major gap in the awareness of skill requirements and associated learning. This aspect is further pronounced by the fact that more than 80 percent of organisations reported that leadership teams have no structured data or reporting mechanisms to understand the current skill capital.
Today, an increasing number of organisations are utilising learning and development opportunities as a channel to build an improved employer brand. To this effect, 27 percent of organisations have gone beyond their permanent workforce and invested in skills-based training for gig workers while 13 percent reported planning to do so. Integrating non-traditional workers into the workforce will provide organisations with expanded access to crucial skills to survive in a rapidly changing marketplace.
Diversity and sustainability trends
As female participation rates across white-collar jobs gradually increased to 25.3 percent in 2022 from 24.1 percent in 2021, workplaces today are making conscious efforts to include lesser-represented groups such as talent from the LGBTQ+ demographic and neurodiverse talent. This is a relatively new development for the Indian job market. Incorporating expansive diversity, equity, and inclusion policies to foster a safer, more inclusive culture has greatly improved employer brand value—especially amongst Millennial and Gen Z talent.
Sustainability initiatives are also gearing up efforts. Nearly 66 percent of our respondents reportedly have an ESG framework that extends beyond a CSR policy and 21 percent reported being in the planning phase of designing one. The scope of HR in helping organisations improve their ESG performance has been gradually expanding. We observe an emerging interest in establishing a “green-collar" workforce to align an organisation’s operations with international ESG regulatory standards. HR is also focusing on diversifying Boards, and bridging the gender pay gap in executive compensation.
HR tech trends
Technology has come to the forefront for businesses in a post-COVID-19 operational context—with hybrid working models becoming more crucial while hiring talent and for employee retention. Currently, 3.8 percent of the total employee cost is budgeted for HR technology enhancements in most organisations. The Manufacturing and IT sectors emerged as the biggest investors in HR Tech in 2022, with the lion’s share of the tech portfolio being dedicated to cloud-based applications and data analytics tools for enhancing talent management processes. Forty-seven percent of organisations are investing in responsible AI for reimagining their talent acquisition process and nearly 40 percent are focused on integrating machine learning to predict employee turnover. However, the adoption of new technology continues to be an ongoing challenge. With 27 percent of organisations reporting major challenges in the integration of new technologies with their existing tech platforms, there is a clear scope for service providers to plan for ecosystem compatibility from an integration as well as a long-term change management and adoption standpoint.
