Media Contacts:

Sushil Bhasin,  Hewitt Associates,  +91 9811423915
Kanika Khanna,  Hewitt Associates,  +91 9810934606

2009-07-16

Organisations Revising Salary Cycles, Focusing on Performance & Rewarding Top Talent

NEW DELHI – Hewitt Associates, a global human resources consulting and outsourcing company, today announced the results of its 'Mid-Year survey on Performance & Reward Trends' in India. The study reveals that organisations will drastically increase their focus on 'Performance', 'Talent retention' and 'Employee Motivation'.

Organisations across industries are also strongly differentiating rewards on the basis of performance. There is a stricter identification of top and bottom performers. In almost every sector, employees who were rated as 'far exceeds expectations', have received a salary increase that is almost two times higher than that provided to employees who only 'met expectations'.

Key Highlights of the Survey:

1. Salary revision cycle—Approximately 30 % of the organizations have deferred their salary revision cycle. They have been deferred from the month of April to July or October.
2. Salary freeze and ralary reduction: 16% of the organizations surveyed have a salary freeze—These are mainly organizations in the Financial Services, IT and ITeS sector. Salary reductions are not very prevalent. Only 6 % of the organizations have reduced salaries.
3. Performance Management System—Increasing focus on differentiating rewards on the basis of performance. Stringent focus on performance and productivity, along with reduced budgets has led to the bell curve getting sharp. 69.2% of the employees got a rating of 'met expectations' or 'below'. While the percentage of employees being rated as 'far exceeds expectations' has gone down, the salary increases awarded to this category are almost two times higher than that provided to employees who meet expectations.
4. Challenge remains to retain and motivate its top performers—organizations are resorting to ring fencing of top talent with twice the salary increase to them as compared to ' meets expectations' performer. Quite a few organizations are considering a salary increase only for their top performers for the year 2009-2010.
5. Variable pay awards—15% change in the overall actual 'Variable' payout as compared to target. Changes have been made by 28% of the organizations like: realignment of performance goals to business reality, higher weightage to individual performance, reduction in target payout amount, and limit pool of eligible employees.
   
   
6. Highest & Lowest salary increases:
   
   Highest:
   Pharmaceutical sector- 11.1 %
   Manufacturing - 10.8%
   Telecom – 9.5%
   FMCG – 9.3%
   
   Lowest:
   IT- 2.9 %
   ITeS- 4.4 %
   Financial Services - 5.2 %
7. Lay offs—Only 5 % of the organizations are considering lay offs for 2009-2010.

Sandeep Chaudhary, leader of Hewitt's Performance and Rewards Consulting practice in India, commented: "We conducted a mid year dipstick research to study and analyze actual salary increase and other survival tactics undertaken by organisations. With only 5% of the organisations considering layoffs, minimal salary reduction at 6% and salary freeze at 16%, India Inc. looks cautiously optimistic." Sandeep Chaudhary further comments, "During these unprecedented times when organisations across the world considered options such as mass layoffs, salary cuts, salary freeze, etc, India Inc also considered the same cost cutting measures but with maturity. It reflects the response of a growth economy managing a short to medium term slowdown, while keeping an eye on long term growth."

Out of the responding organisations, sixty two percent (61.9%) have reported that their salary increase budget is different from the previous forecast. The initial forecast by organisations for their salary increase budget was around thirteen percent (12.9%). All employee levels have been impacted by the reduction in salary increase budgets. Top Executive and Senior Management have received slightly lower increases in comparison to the other employee groups. Though salary reduction is not very prevalent, only 6% of the organisations have reduced salaries.

Note to editors:

About Hewitt's India Hot Topic Survey for Salary Increase
The survey was conducted across 137 companies (foreign-owned, locally-owned, and joint-venture private sector organisations) and 9 primary industries during the period of May to June 2009. It was conducted with the intent to capture the potential changes and considerations in salaries with regards to 2009 salary increase budgets during the slowdown phase.

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt consults with companies to design and implement a wide range of human resources, retirement, investment management, health management, compensation, and talent management strategies. As a leading outsourcing provider, Hewitt administers health care, retirement, payroll, and other HR programs to millions of employees, their families, and retirees. With a history of exceptional client service since 1940, Hewitt has offices in 33 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit http://www.hewittassociates.com/Intl/AP/en-IN/Default.aspx.