Article: KPMG survey: 9.7% overall average increment in 2017-18

Compensation & Benefits

KPMG survey: 9.7% overall average increment in 2017-18

KPMG India's annual compensation trends survey 2017 -18 projects overall average increment of 9.7% and average variable pay across sectors of 15.4 %. E-commerce sector reports the highest increment in salary at 12.5% and the highest voluntary attrition rate of 20.4% To know more, read on.
KPMG survey: 9.7% overall average increment in 2017-18

Highlighting current and emerging compensation trends across organization in India, KPMG came up with its annual compensation trends survey 2017 – 18, which provides benchmarking data and several other key insights.  The survey collected data from 263 organizations across 19 sectors. 

One of the significant findings of the report showcase - 9.7% overall average increment in the year 2017 -18 with a decrease of 0.6% from 2016 -17. The report showcased maximum decrease in banking and financial sector. In the financial sector the increment decreased from 9.7% to 8.1% and energy sector portrayed minimum decrease from 9.3 % to 9.1%.  E-commerce sector reports the highest increment in salary at 12.5% and the highest voluntary attrition rate of 20.4%


Average projected variable pay across sectors -15.4% of, which is 0.4% higher than 2016-17.The average variable pay projection increased from 15.0 %in 2016 -17 to 15.4% in 2017 -18. The highest variable pay in CTC percent was reported by banking & financial sector and lowest by the energy sector.


Vishalli Dongrie, Partner and Head, People and Change Advisory Services, KPMG in India says, “With the new generation of employees looking for greater control, involvement in key decisions and a culture of feedback and regular conversations, organisations realize that they need to re-think the way they nurture and manage talent and performance. New HR initiatives are being implemented and organisations are testing waters to create an optimal performance management model.” 

Other highlights of the report project 13.4 % average annual voluntary attrition across sectors. E-commerce projected highest voluntary attrition of 20.4 % while the lowest i.e. 8% was projected by energy sector. Almost 77 per cent respondents identify high potential (HiPo) employees and offer them an average hike of 14.7%. Top three reasons for attrition as per survey include better pay, career opportunity and then other personal reasons such as marriage, health, relocation etc. 

Top three reasons reported for attrition 

  • 28.1% better pay elsewhere 
  • 23.4% better career opportunity
  • 19.6% personal reasons – marriage, health, children, relocation etc.   

Top three compensation levers for talent retention 

  • 19.7% - performance based variable pay 
  • 13.1% recognition and awards – cash/non cash 
  • 11.8% retention bonus

Top three compensation levers for attracting talent  

  •  26.3% - attractive benefits offerings
  • 19.4% Guaranteed incentives/ variable pay  
  • 16.6% referral benefits/ awards  

The top five reward challenges faced by the organisations are differentiating rewards for key talent (66.2 per cent), creating/improving performance and productivity linkage to rewards (65.4 per cent), maintaining market competitiveness of pay levels (64 per cent), addressing the diverse needs of your workforce (57 per cent) and enhancing the ability of managers to have effective pay conversations with their team (55.7 per cent)

Other key findings -54.0% organizations identified ‘re-inventing PMS’ as the most critical future HR trend. As per current report, most organizations conducted performance review annually; only few sales organizations hosted PMS twice in a year. Very few organizations have adopted continuous performance evaluation including continuous feedback mechanism.  

KPMG report also elucidates Future HR Trends:

Re-inventing PMS: The survey suggests that organisations today are looking at new approaches towards performance management. After lot of experimentation by varied organizations, so far an optimal model is not formed yet. The criticality percentage indicated by report was 54% and readiness percentage indicated was 46%. Stress is more on creating culture of feedback and having regular conversations between manager and employees, setting right expectations. 

Gamification: Years back; gamification in HR was applied only in few companies, who were willing to take the risk. Today, it is popular tool for various HR initiatives. Several companies have integrated game mechanics to drive user engagement and increase employee and customer retention. The criticality percentage indicated by report -24% and readiness percentage indicated was 21.5%.

Robotics and cognitive automation: Automation of processes in business is likely to impact ‘middle income routine jobs , which are likely to be replaced by cognitive platforms and smart algorithms. The criticality percentage - 37% and readiness percentage indicated was 30.0%.

 Digital HR: The transformation in HR services is being introduced through the use of digital platforms, mobile applications and integrated HR Systems. More and more organizations are evolving from traditional model to new age model. The criticality percentage - 48% and readiness percentage indicated was 33.0%.

Predictive people and talent analytics: To be more strategic, HR practitioners use predictive analysis in predicting talent for future , identifying potential Hr focus areas etc. Predictive analytics is emerging field in India. The criticality percentage – 41.5% and readiness percentage indicated was 27.0%.

Gig economy: Majority of workforce in gig economy are independent contractors – working for themselves. They have distinctive knowledge set , varied approach to work and different set of values. The criticality percentage – 24.5% and readiness percentage indicated was 20.0%.

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Topics: Compensation & Benefits

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