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REVEALED: What salaries Indian employees expect

October 26, 2012 19:06 IST

In a survey, HR consulting firm Cerebrus Consultants sought the views of employees through an online survey hosted by rediff.com. Here are the key findings of this pioneering study.

For most employees, compensation is a subject very close to the heart and one that's constantly debated. The last few years have seen salaries in corporate India increasing dramatically -- they have more than doubled in the last decade.

Over the years, the structure of compensation has changed significantly, with greater emphasis on performance-linked pay. A market-led economy has resulted in employers wanting employees to take more 'pay at risk' and linking pay to financial performance in a stronger way.

The slowdown of the economy in the last year has resulted in employees in many sectors experiencing lower variable pay and lower fixed salary increases. Increases in most sectors were just about 10 per cent, with some sectors like IT and BPOs showing a single digit increase.

How has the experience of tasting the risks of market shaped employee views on their compensation?

With this objective in mind, Cerebrus Consultants sought the views of employees through an online survey hosted by last month. A total of 13,397 employees across the country and across industry sectors participated in the study. We bring you the key findings.

Respondents' profile

The 13,397 respondents were spread across India: 35 per cent each in South and West India and the balance in North and East. There was an equal mix of respondents from the five major metros and other locations. The respondent group also covered a good mix of age and experience, with over 15 per cent of the population having over 10 years of experience. The majority of the respondents had working experience between three and 10 years. About 10 per cent of the respondents earned over Rs 20 lakh per annum and a majority earned about Rs 6 to 12 lakh per annum.




Key findings of the study

Overall, employees showed a fairly low risk profile. Most employees wanted performance-linked pay to be reflected in increases in fixed salary rather than through performance bonus, which would not get carried forward to the next year. However, employees were clear that they would like performance differentiations -- however small -- to be made while fixing salaries.

Most employees responded in the negative to giving equal increases to all employees even in a year where salary budgets are much smaller. Only 20 per cent employees felt that a good way to manage salary budgets is to give hikes only to high performers.

In terms of salary increases, employees continue to expect increases of about 15 per cent. Interestingly however employees do not mind large variations in increases year to year if they are assured of a target increase over a five-year period that gives approximately the same increase over the period -- about 70 to 80 per cent.

While employees did not prefer performance bonus, many employees had become used to the concept. 73 per cent of employees wanted all levels to get performance bonus and did not prefer it to be restricted to senior levels.

However about half the employees felt that some functions like sales, business development should get a higher percentage of bonus/variable pay.



Overall most employees were comfortable with 10 to 15 per cent of their total compensation coming through bonus. Those with salaries over Rs 20 lakh were willing to consider higher amounts -- about a third felt 20 to 25 per cent was reasonable. However, overall only 10 per cent were willing to consider bonuses of 30 per cent of their compensation even amongst the higher paid employees.

Interestingly, the IT sector was the most conservative when it came to bonuses with over 75 per cent at all salary levels opting for 10 per cent. The financial services and manufacturing sectors had over a third opting for 20 per cent or more.



Differences in perception across different parts of India were visible. The North was willing for a higher level of performance pay followed by the West, South and East.
 
The basis of rewards was however a big question. About 28 per cent of employees felt that their current performance appraisal system was not a good basis for rewards. About 55 per cent of the employees wanted Performance bonuses to be based on a mix of company and individual performance with greater weightage for individual performance. Only 20 per cent wanted it to be linked to only their individual performance and a lower number to company performance. This does demonstrate that employees do strongly want to be recognized for individual performance.



Stock options continue to be viewed favourably with over 60 per cent of employees feeling that it is valuable and an important retention tool.

Perhaps the most interesting finding of the study was that work life balance emerged as the top factor in motivating and retaining employees of all age categories (40 per cent); followed by learning and growth. This is partly a reflection of the younger age profile in Corporate India -- the sample reflected an average of 30 years. However competitive pay and job security were tied at the third most important factor, with job security clearly being more important over age 35 years.