Attrition levels in India at five-year low, says Aon Hewitt survey

Services sector saw an attrition rate of 19.3%, compared to 12.2% in manufacturing

Attrition levels are at a five-year low, said the annual salary increase survey by Aon Hewitt. The survey said that at 16.3 per cent, it is the lowest that corporate India has observed since the 2009 financial crisis. While attrition was controlled at a broader level, key talent attrition increased from 5.9 per cent in 2014 to 7.3 per cent in 2015.

Anandorup Ghose, Partner at Aon Hewitt India said that higher attrition is linked to higher economic activity. "At an average pay increase budget of 10.3 per cent across India, HR managers will be pushed to ensure they are being more innovative and thoughtful in how they reward their top performers while ensuring they are able to retain and motivate the rest of the organization as well In the services space," he said.

The survey said that in the services space, 19.3 per cent was the overall attrition. Of this 5.4 per cent was attributed by involuntary attrition. In manufacturing, 12.2 per cent was the overall attrition, of which 3.4 per cent attributed by involuntary attrition

Increasingly organisations are developing separate retention plans and policies for their top talent, the survey said. While Rewards continues as a retention tool to ring-fence top talent, it said that programmes around leadership opportunities and coaching, overseas assignments, fast track programmes for hi -potentials are fast gaining prominence

Top 5 with respect to salary hikes
E-commerce/start-ups	15.6%
Life sciences	11.6%
Media (electronic/print)	11.2%
Hi-Tech	10.8%
Consumer Products	10.8%
Source: Aon Hewitt Salary Increase Survey

Companies across industries are continuing to take a cautious stance and are not going for aggressive pay increases. In many cases the industries have taken a marginal dip in their overall budgets as compared to 2015 actual spends. Sectors such as Life Sciences, Media, and Consumer Products are projecting a higher increase than the market average. These industries have also consistently led the salary increase numbers since 2012. The 'Early stage companies/Start Ups' stand out despite being in the pre-profit stage for over three years and continue to have an aggressive stand on pay. At 15.6 per cent salary increase projected for 2016, they feature as number one, with the closest second being Life Sciences at 11.6 per cent, and media (electronic/print) at 11.2 per cent.

Over the last few years, while employee expectations have gone up, Aon Hewitt's data shows that companies are managing these higher expectations carefully and are not getting swayed by it. The focus on performance differentiation is far higher with a larger proportion of budgets being allocated to higher performers.

Additionally, in the last five years, the percentage of employees with top performance rating has dropped by close to 30 per cent, implying that organisations are not hesitating to differentiate sharply on the basis of performance and are allocating the share of the total increase budget accordingly.