Bespoke reward strategy

In most sectors, only special skills will bring salary hikes

Following the assumption of power by Prime Minister Narendra Modi and the consequent boost to sentiment, very few companies are still talking about job cuts. In comparison, at this time last year many companies felt weighed down by economic uncertainty, and were actively considering issuing pink slips. But there is other good news for employees as well. Recruitment consultant TeamLease Services expects 10-14 per cent increase in hiring activity; and the Employment Outlook Survey of the Manpower Group indicates that Indian employers anticipate vigorous hiring for the January-March period. Additionally, India reported the most optimistic hiring plans among the 42 countries researched. Employees in fast-moving consumer goods, oil and gas, retail, transport and technology sectors can expect increments in excess of 20 per cent. But that optimism on the salary front doesn't spread to their counterparts in other Indian sectors; working professionals across sectors are going to see only a marginal rise compared with last year's pay hikes. A study released by global management consultancy Hay Group showed employees across job roles can expect an average wage hike of 11.3 per cent in 2015 against 10.9 per cent in 2014. Another global consultant, Mercer, forecast an average 11 per cent salary increase, again marginally up from the actual salary growth of 10.6 per cent in 2014. And Tower Watson says the technology sector would roll out increments of 10.7 per cent, up from 10.5 per cent in 2014. These are not numbers that will set the Ganges on fire.

The real theme this year will be a war for talent. New-age sectors like e-commerce and digital have companies flush with cash, which are going all-out in the recruitment market. For instance, Softbank-led realty portal Housing.com, a less-than-three-year-old start-up, is planning to hire around 500 executives for its technology team in the coming months. The e-commerce sector, with revenues of over $12 billion (about Rs 74,400 crore at the current exchange rate), is expected to hire a huge number of skilled people in the next six months. And, as Amer Haleem of the Hay Group says, companies are now abandoning a "one-size-fits-all approach". Instead, they are now focusing on "bespoke reward strategies". The Hay study also points to an overarching focus on performance, with the payouts widely influenced by both individual and company performance - and by the possession of specific skills, like design ability, for example.

The point is that while India Inc will step up hiring, salary hikes won't be that big - except for a chosen few who can offer skills that are in tune with the changing demand. For the rest, it will be business as usual. The third-quarter results have seen tepid growth with distinct signs of a lack of consumer confidence. That has to change before companies take a look at the broad increment levels.