News: Salaries to rise 10.6%: Hewitt Associates Survey 2010

Compensation & Benefits

Salaries to rise 10.6%: Hewitt Associates Survey 2010

In conversation with Sandeep Chaudhary, Leader of Hewitt's Performance and Rewards Consulting Practice in India, People Matters explores the findings of the Hewitt Salary increase Survey for 2010

Sectors that have higher global dependency are showing more moderate single digit increases ranging from 8.5-8.9%


The key learning from companies in this downturn is to look at consolidation and to keep the lessons learnt from the immediate past


The 14th Annual Salary In-crease Survey conducted by Hewitt Associates pre-dicts an annual increase in salaries of around 10.6% - the highest in the APAC region. The key findings of the survey are:

Firstly, there is a focus on consolidation and prudence. Companies in India are looking positive for the coming year but maintaining a cost consciousness built from the last few months.

Secondly, the recovery is more visible in industries that have a higher linkage with domestic demand like Energy, Telecommunication, Pharmaceuticals, EPC (Engineering, Procurement and Construction) and Automotive, with increases ranging from 11.6-12.8%. Sectors that have higher global dependency are showing more moderate single digit increases ranging from 8.5-8.9%.

Thirdly, there is a generalized reinforcement on linking performance and reward with top performers receiving twice as much salary increase as compared to average performers across Industries.

Salary Increase Projections Up across employee levels:

As per Hewitt’s report, salaries will increase across all employee levels with Junior Manager/Supervisor/Professional level, expected to receive the highest increase at 10.9%.

India: Highest Salary Increases in APAC

In comparison with the rest of the Asian countries, India continues to be the one with highest average increases across industries. Salaries in India are expected to increase 3 times more than in China due to several reasons. Firstly, China has a higher base in terms of parity with the region, when India is still building this parity in real earning terms. Secondly, there is a large top management population of expatriates in China that are not covered in this survey. So that could misrepresent the data especially in the top executive level. Thirdly, the basic fundamentals of the economy are different when the focus is on services or manufacturing. In an economy governed by services, the nature of the business is more labor intensive which face the problems of attrition and talent war. Fourthly, the fluctuation of salaries in India is governed by competition and demand-supply forces; whereas in China, there is still a government influence on those decisions, as growth in China is state induced versus India, which is driven by the private sector.

Impact of projected salary increases across Industries

Increased privatization in the power sector, the Government’s unrelenting investment and stimulus into infrastructure and increased competition in telecommunications have earned these sectors the highest salary increases of 12.2-12.8%. These are closely followed by steady performers like pharmaceuticals at 12.1%. The automotive sector has sprung back with increased demand and sale over the last two quarters and is strongly positioned at 11.6% average salary increase for 2010.

Technology and Outsourcing sectors have had a big positive swing from 2009 but still stand among the lowest salary increases at 8.9-8.5%, followed by Shipping and Logistics at 7.6% ,which has continued with the same careful watch from 2009.

Among the biggest recoveries, Banking and Financial Services takes the stage with a positive recovery with salary increase projection for 2010 at 10.5%. This is also the sector that was adversely impacted by global recession and had minimal bonus coupled with salary freezes.

The Indian retail sector, which was hit by weak consumer sentiment, tight credit situation and unhealthy cost structures, has bounced back, investing in compensation with 11.1% projected salary increase for 2010.

Learning from the past and trends for the future

During 2007 and 2008, companies underwent thought a collection of excesses - excess of hiring, excess of providing too many components in their employment rewards including both pay and benefits, et al. However, in the end of 2008, demand started to go down and those commitments were made in the expectation of growth. So the impact on the 2009 salary revision was even stronger to correct all those excesses.

The key learning from companies in this downturn, when it comes to pay and benefits, has been to look at consolidation and to keep the lessons learnt from the immediate past. Performance appraisal and linkage of performance to pay, both in short and long terms, has emerged as a very strong trend. Goal setting takes a very important role again in the overall performance management process, providing both, a medium and long term horizon on expectations and achievement of individuals and how those can be aligned to the organization. Companies are looking at strengthening this performance management process and communication takes a primary role in this transformation. The trend shows that companies will continue to reward for performance and will work on creating a bouquet of incentives to cater to short, mid and long term engagement needs of the employees. Companies are looking at consolidation in this coming growth phase. They continue to look at growing but subject to corporate governance, as business results would continue to be important but the means to achieve them will take a decisive stage for decision making.

About Hewitt’s Salary Increase Survey

Hewitt surveyed 465 organizations across different ownerships in the 14th annual salary increase survey concluded on March 01, 2010. This being the most exhaustive study in the area of performance and rewards in India - Hewitt analyzed information across 20 primary industries and 27 sub-industries. The study measures actual and projected salary increases, variable pay and performance data across six employee categories, from top executive to manual workforce. The data for the survey was collected over December 2009 – February 2010.

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

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Topics: Compensation & Benefits, #Updates, #TotalRewards

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