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Indians are way behind the <keyword id="6355055" type="COUNTRY" weightage="20" keywordseo="USA">USA</keyword>, when it comes to severance package doled out to the CXOs. Compared to 3-5% Indians getting the severance pay as a safeguard clause in their contracts, it’s almost 60-70% in the USA. The scenario came to light when the exit of <keyword id="6354512" type="CITY" weightage="20" keywordseo="Infosys">Infosys</keyword> CFO <keyword id="347003" type="PERSON" weightage="20" keywordseo="Rajiv-Bansal">Rajiv Bansal</keyword> happened. It has been reported that the departing Infosys CFO was gifted the “so-called golden parachutes”. 
 "Most executives in India do not have any severance clauses in their contracts,” <keyword id="1966307" type="PERSON" weightage="20" keywordseo="Anandorup-Ghose">Anandorup Ghose</keyword>, partner, talent and rewards, <keyword id="2247343" type="COMPANY" weightage="20" keywordseo="Aon-Hewitt-Consulting">Aon Hewitt Consulting</keyword> told The <keyword id="6474066" type="COMPANY" weightage="20" keywordseo="economic-times">Economic Times</keyword>. 
 
Except from the star CEOs, majority of who are in a position to dictate terms, most CXOs don’t have the luxury of getting severance packages, which act as an insurance. These are mostly equivalent to CXO’s fixed salary for anywhere between six months and two years. In some cases, according to The Economic Times, these include vested stock options. The global norm is one to three years of fixed salary and includes safeguards for the organisation. 
 “A mid-sized Indian company recently hired a senior executive at a US multinational as its CEO after agreeing to his demand for a severance package of nearly $1 million,” <keyword id="1052400" type="PERSON" weightage="20" keywordseo="Arun-Das-Mahapatra">Arun Das Mahapatra</keyword>, partner in charge of <keyword id="808338" type="ORGANIZATION" weightage="20" keywordseo="Heidrick-Struggles">Heidrick &amp; Struggles</keyword> in India told the ET. 
 In another ongoing mandate for a real estate firm, <keyword id="272875" type="PERSON" weightage="20" keywordseo="Mahapatra">Mahapatra</keyword> told the financial daiy, the candidate is likely to insist on a severance clause because of the risks associated with the job. As perceived risk rise, so does the severance package. Severance for top employees in the technology and ecommerce/startups sectors have started to match global standards, said <keyword id="2091714" type="PERSON" weightage="20" keywordseo="Sanchit-Vir-Gogia">Sanchit Vir Gogia</keyword>, CEO of Greyhound Research. 
 
(Image credit: Linkedin)

Indian CEOs are far behind the
US ones in Severance Pay Packages

New Delhi, Mar 4 () Companies operating in India are likely to give an average salary hike of 7.8 per cent to their employees for the financial year 2020-21, according to a survey by Deloitte India. The lower salary increment, as compared to the preceding year, is in line with the higher margin pressure on companies, economic headwinds, and the need to gradually slow white-collar pay growth in India to become more globally competitive, Deloitte India said. "Companies in India are likely to give an average salary increment of 7.8 percent to employees for 2020-21. This projected salary increment is 40 basis points lower than the actual salary increment of 8.2 per cent that employees received in 2019-20," the survey report, titled 'Workforce and Increment Trends Survey', said. Anandorup Ghose, partner at Deloitte India, said, "There has been a lot of debate on pay increases over the past few years and there is a need for greater responsibility in this process of salary budgeting as compensation cost ratios are increasingly becoming a sore point in boardrooms across the country." Ghose also said the talent market priorities are different from what they were five years ago, and companies' pay budgeting process and data needs to reflect that. The survey found that almost 50 per cent of the companies surveyed are projecting a salary increment of less than 8 per cent for 2020-21 and only 8 per cent companies are expecting to offer pay increases greater than 10 per cent. More than 30 per cent of the respondent companies, the report said, differentiate increments by levels of management. The projected salary increments for 2020-21 are expected to be the lowest in industries such as infrastructure and real estate, non-banking financial companies (NBFCs) and telecom, the report said. "To manage overall cost budgets, organisations focus on differentiation. Performance and potential differentiation remains the central theme according to the survey. Ninety per cent companies differentiate pay increases on the basis of past-year performance and 34 per cent companies focus on differentiating pay based on potential. "As the bell curve for companies has become sharper (with only 7 per cent employees achieving the highest rating), the differentiation in pay is almost 1.7 times the pay increase for average performers," the survey said. The survey also found that at an all-India level, voluntary attrition slightly reduced in the current financial year to about 15 per cent, involuntary attrition (layoffs, restructuring, etc) has increased to 20 per cent of the total attrition. Involuntary attrition increased the most in the automobile, insurance, and NBFC sectors. The survey findings also corroborated the increasing impact of automation on the workforce with companies showing reduced hiring levels, it added. The audience for the survey was HR professionals. About 300 organisations spread across 7 sectors and over 20 sub-sectors participated in the survey. The survey provides insights and market trends on salary increments, performance management trends, and information on emerging realities in the area of workforce composition and pay design, Deloitte India said. ABI HRS

Companies in India to give average 7.8 pc salary hike in FY21: Survey

<ul><li>According to <keyword id="6356108" type="COMPANY" weightage="20" keywordseo="deloitte-india">Deloitte India</keyword>’s 2020 Workforce and Increment Trends Survey, almost half of the companies in India are projected to extend less than 8% increments. </li><li>Only 8% companies are expected to offer over 10% hikes in 2020. </li><li>The average increment in India is expected to be nearly 7.8% this year — compared to 8.2% last year. </li><li>IT product and e-commerce employees have little to worry about as they are expected to offer double digit salary increases.</li></ul>This year, appraisal season might come and go without making a difference to your pay packet. According to Deloitte India’s 2020 Workforce and Increment Trends Survey, almost half of the companies in India are projected to extend less than 8% increments. Moreso, a mere 8% of companies could offer hikes over 10% in 2020. It means the average salary increment in India is expected to be nearly 7.8% this year — compared to 8.2% last year. As per the survey, senior management has more to worry about. These employees will receive two-thirds of the increment given to middle management employees. “The decrease in salary increment budget is in line with the higher margin pressure on companies, economic headwinds, and the need to gradually slow down white-collar pay growth in India to become more globally competitive,” the survey said. This figure drops even further when adjusted to the employee headcount of a company. As per the findings from Deloitte, IT sector aside, the pay hike slumps to 6.8% for all sectors, depending on the company size. This is especially applicable to the manufacturing sector, which has witnessed the sharpest downturn over the past few quarters. This is followed by infrastructure, real estate, shadow banks and telecom. IT and e-commerce employees have nothing to worry However, IT product and e-commerce employees have little to worry about as they are expected to offer double digit salary hikes. This is because automation and digital skills are high in demand in the job market. The salary hikes across the digital areas will vary from 14% to 18%, <keyword id="203878" type="PERSON" weightage="20" keywordseo="Ajay-Shah">Ajay Shah</keyword>, VP and head of recruitment at <keyword id="6381892" type="COMPANY" weightage="20" keywordseo="TeamLease-Services">TeamLease Services</keyword> told Business Insider. “Salary increments in India are likely to transition from a more classical rule-bound approach to one which is far more based on individual performance and skills. Roles that combine functional knowledge with technology are likely to command a significant premium, making pay decisions far more driven by skills that employees bring as opposed to simple annual corrections,” said Anandorup Ghose, partner at Deloitte India. Over the past years, there have been a lot of back and forth over the rationale behind pay hikes. “There is a need for greater responsibility in this process of salary budgeting as compensation cost ratios are increasingly becoming a sore point in boardrooms across the country. The talent market priorities are different from what they were five years ago, and our pay budgeting process and data needs to reflect that,” Ghose added. Most of the companies in India differentiate pay increases on the basis of past-year performance while a few focus on employee potential. See also: <a href="https://www.businessinsider.in/careers/news/dont-expect-more-than-10-salary-hike-this-year-unless-you-are-an-ai-expert/articleshow/74220754.cms">Don’t expect more than 10% salary hike this year unless you are an AI expert</a>

Merely 8% companies in India expected to offer more than 10% salary hikes, says Deloitte survey

Don’t keep high expectations from your <keyword id="6370334" type="UNKNOWN" weightage="20" keywordseo="appraisals">appraisals</keyword> this year as there has been a dip in<a href="http://www.businessinsider.in/searchresult.cms?query=salary+budgets&amp;sortorder=effectivedate"> salary budgets.</a> 
 
As per <a href="http://www.businessinsider.in/searchresult.cms?query=aon+hewitt&amp;sortorder=effectivedate">Aon Hewitt</a>’s annual Salary Increase Survey, exclusively shared with <a href="http://www.businessinsider.in/">Business Insider</a>, stated a drop in pay increases to an average of 9.5% across all industries. 
 The 21st edition of <keyword id="6462982" type="COMPANY" weightage="20" keywordseo="Aon-Hewitt">Aon Hewitt</keyword>’s annual Salary Increase Survey in India analysed data across more than one thousand companies. 
 
“While it’s a marginal decrease from the 2016 spend, it reflects maturity that India Inc. has displayed amidst global and Indian economic and political events. This includes, and is not limited to Brexit, recent changes in the US government and the much talked about <a href="http://www.businessinsider.in/searchresult.cms?query=demonetisation&amp;sortorder=effectivedate">demonetisation</a>,” stated the survey. 
 Anandorup Ghose, Partner at Aon Hewitt India, said, “Political changes and economic headwinds have had an impact on business performance. However, the trend this year reflects a gradual slowing of pay increases and higher emphasis on productivity and performance – quite literally a ‘graying’ of <keyword id="4205766" type="UNKNOWN" weightage="20" keywordseo="salary-budgets">salary budgets</keyword> for India.” 
 
Even though sectors such as Life Sciences, Professional Services, Chemicals, Entertainment Media, Automotive and Consumer Products will project a double-digit salary increase for 2017, they will still be lower than that of 2016. 
 
With tighter budgets, it has become imperative for firms to ensure that their ‘top talent’ is identified and remunerated accordingly. Research shows that the segment of population that features as ‘high performers’ have fallen to 7.5%, the lowest number recorded in the 21 years of the Salary Increase Survey in India. 
 
Consequently, the multiplier that India Inc. is offering these employees continues to be high. At 1.8 times, India is one of the highest differentiators across Asia. 
 
“The last year has shown organizations take a strong view towards performance differentiation and not only have bell curves become sharper, the pay differentiation between top and average performers has also increased,” said Ghose. 
 
Meanwhile, the attrition rate in India was similar to 2015 at 16.4%. While attrition was contained at a broader level, key talent attrition increased from 7.3% in 2015 to 12.3% in 2016. While inequity of pay remains a concern, the key reasons cited by employees for voluntary attrition are role stagnation and limited growth opportunities.

Exclusive: Salary budgets are slowing down and there is going to be a dip in appraisals, as per this report

Indian firms are changing their style of working and rewarding compensation and are also getting more and more performance driven.
 This means, employees have to come out of their comfort zone and perform in a bid to get desired salaries and variable pays. Well, this is now also becoming a norm for CEOs of the <keyword id="46431" type="CITY" weightage="100" keywordseo="India-Inc">India Inc</keyword>. 

	The fixed pay of CEOs is dropping and their salaries are now based on performance.
 

	Nearly 50 per cent of the CEO salary is fixed and the remainder is performance-based.
 

	Aon Hewitt had conducted an executive compensation survey 2015-16 across eight industries. ET reported that one of the major factors for high percentage of pay for performance is pressure from shareholders, which has prompted companies to tie a greater percentage of their CEO compensation to outcomes and results.
 

	"CEO compensation is outcome-driven. Shareholders need to see there is connection between compensation and outcome. As CEO compensation increases so does percentage of performance-linked pay," Anandorup Ghose, partner, Aon Hewitt, told ET.
 

	On one hand where Fortune 250 companies have nearly 70 per cent allocation to long-term incentives, globally, pay for performance can account up to 85 per cent of CEO salary.
 

	"Listed organisations are more aggressive in pay for performance, and these would also pay a chunk of CEO salary in ESOPs (employee stock option plans). The upside for listed companies is that markets are funding the CEO compensation," Ghose told ET.
 

	Meanwhile, employees are lauding the move as it is a fair game. 
 

	Speaking about increments, the survey stated that there was a marginal drop in fixed pay at CEO and CXO levels.
 

	Also, the best long-term incentives that companies are giving are the stock options.
 

	(Image: Thinkstock)

Time to get out of the comfort zone? This big change is affecting salaries of CEOs

As the appraisal season approaches, reports suggest that start-ups will be leading the way with giving out biggest pay hikes this appraisal season. On the other hand, big and established companies plan to roll out lower increments. 
 Talking of figures, start-ups and early stage companies will give out average increments of 15.6% this year, while last year the figure was 14%. In comparison to this, the rest of <keyword id="46431" type="CITY" weightage="100" keywordseo="India-Inc">India Inc</keyword> will be rolling out a healthy 10.3% pay hikes, a bit lower than last year’s 10.6%. These numbers have come from Aon Hewitt's annual Salary Increase Survey 2015-16, which was done over 700 companies in India. 
 
The survey also reveals that organisations that employ more than 15,000 people are looking forward to announcing lower salary increase numbers, that of 9.8%, as compared to other India Inc. companies. 
 
"The larger the brand, the lesser its need to pay high increments," Anandorup Ghose, Partner, Aon Hewitt, told ET. "For start-ups, salary increases are a necessity, and not a luxury. E-commerce companies and start-ups have to build their employer brand," he added. 
 
Speaking of performance, top performers would be taking home 1.8 times the average increments, owing to the 'pay for performance' agenda that several companies are using. 
 
"Indian companies are taking very clear steps to arrest the steady increase in compensation budgets. The lower inflation rates in the economy has also helped companies in deciding on the reduced salary increases without creating too much of a disruption in the lives of employees," Ghose added. 
 
<a href="http://timesofindia.indiatimes.com/thumb/msid-51007046,width-400,resizemode-4/51007046.jpg">Image source</a>

Start-up employees likely to get more appraisals than rest of India Inc

Indian companies are taking very clear steps to arrest the steady increase in compensation budgets, as is clear by the annual <keyword id="3249253" type="UNKNOWN" weightage="100" keywordseo="salary-increase-survey">Salary Increase Survey</keyword> report by <keyword id="6462982" type="COMPANY" weightage="100" keywordseo="Aon-Hewitt">Aon Hewitt</keyword>. The results reflect a pragmatic approach adopted by corporate India towards pay increases. Companies are taking a cautious stance instead of 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. “The lower <keyword id="22195" type="COMPANY" weightage="100" keywordseo="Inflation">inflation</keyword> rates in the economy has also helped companies in deciding on the reduced salary increases without creating too much of a disruption in the lives of employees,” said Anandorup Ghose, Partner at Aon Hewitt India. 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 <keyword id="944185" type="UNKNOWN" weightage="100" keywordseo="salary-increase">salary increase</keyword> 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% salary increase projected for 2016, they feature as number one, with the closest second being Life Sciences at 11.6%. 

	 
	 
	Increasing Focus on Talent and Merit 
 

	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.
 

	Investing in key talent emerged as a major trend. Key talent would mean high potential and hot skills apart from high performers. The payout gap between an average performer and key skills is growing year on year. At 63%, this is the highest differentiation India Inc. has observed.
 

	Additionally, in the last five years, the percentage of employees with top performance rating has dropped by close to 30%, 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. India places 8.2% of its overall population at top rated. This number has significantly dropped in the last five years.
 

	Anandorup Ghose commented, “At an average pay increase budget of 10.3% 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.”
 

	Attrition rate at its lowest for five years
 

	The attrition rate in India is dropping. At 16.3%, 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% in 2014 to 7.3% in 2015. Increasingly organisations are developing separate retention plans and policies for their top talent. While Rewards continues as a retention tool to fence top talent, programs around leadership opportunities and coaching, overseas assignments, fast track programs for hi – potentials are fast gaining prominence.
 

	Aon Hewitt is a global talent, retirement and health solutions business of Aon plc. The study, the largest of its kind in India, analysed data across 700 companies.

	 
	 
	(Image credits, indiatimes, Aon Hewitt)

Expecting a steep salary hike? Won't happen anytime soon

In a bid to retain talents employees, <keyword id="6362513" type="ORGANIZATION" weightage="20" keywordseo="Startups">startups</keyword> are giving out as much as 150% hike in the salaries in this appraisal season. 
 
Often, startups find it difficult to hire talent and are forced to go to B-schools during recruitment season. 
 
Once hired, they don’t the talented lot to leave the organisation and the startups do anything to retain top performers such as accelerated promotions, sponsored family trips, executive programmes to global B-schools, apart from increments. 
 
As per reports, food tech firm Faasos is planning to give high-potential employees at the junior-mid level 150% increment, compared to 100% last year. 
 
"We are also offering additional incentives in direct proportion to sales (for the sales team) with no upper limit. ESOPs will be offered to top performers," Aditya Adyar, chief people officer at Faasos, told ET. 
 
Likewise, Pronzo also plans to give 100% raise and ESOPs. 
 
Meanwhile, India Inc is expected to give 10.5%-10.6% hike for 2015-16. 
 
"It's still a very competitive scenario when it comes to retaining and attracting key talent and increments are a big talent attractor. Unlike corporates, where there is a much more structured system in place, in startups, you have to pay what top performers demand. It's a business requirement," Anandorup Ghose, rewards consulting practice leader at Aon Hewitt, told ET. 
 
BigBasket will offer underpaid top performers up to 50% increment. 
 
(Image: Thinkstock)

Startups don’t want to part ways with top performers, give out 100% salary hike to retain talent

A few weeks ago, we had invited a set of chief executives and HR leaders of large Indian companies and conglomerates to a discussion on the future of the workplace. The group around the table represented some of the brightest HR and business minds in the country and, over cups of coffee, the conversation veered towards the oft discussed area of how automation is affecting the workplace. We have all been talking about it – in some ways more in abstractions than in real figures or examples. Here was the first time we had people talk real life experiences of how their organizations are actively working towards a future where jobs will be automated and employees would be redundant. 
 
The reader might still stifle a yawn – yes we are all aware of it. It’s the future of the world. And I would have probably felt the same way. But what shocked me personally as I sat on that table with ten of India’s largest companies representing different industries, is that it suddenly was all too real. Software engineers were being gradually made redundant through “bots” that could their task more efficiently, agricultural scientists were losing jobs because there were apps that could interpret the nature of problem that was affecting crops, paralegals were not required because AI tools could look for issues in legal contracts and summarize key points for lawyers to work on. 
 Let’s put things in context – as India adds close to a million people to the working population every month, it is critical for the economy to constantly add jobs. But India over the last few decades has had a leap from an agricultural economy to a service oriented economy – and while in the recent past there has been significant push towards driving the manufacturing sector, the results are still to be felt. As a broad estimate while the value added in the services sector has slowed like in the agricultural or industrial, it still is growing at about 1.4 times the industrial sector. Interestingly the <keyword id="81847" type="UNKNOWN" weightage="20" keywordseo="Job-creation">job creation</keyword> story works in the reverse – in two decades the percentage of employment in the services sector has gone up by only 3%. And on top of this, over the last 5 years most Indian companies have seen employee costs grow faster than revenues. 
 
So as companies face a more complex global environment where countries are increasingly, to quote the Economist, “closing the gates and raising the drawbridges”, there is little doubt that the focus for the future lies in optimizing cost of delivering products and services to remain competitive. Therefore it's no surprise that Indian companies are rapidly figuring out ways to drive higher productivity through automation. This automation, as I mentioned earlier, is happening equally in both the manufacturing as well as services sectors. But as jobs disappear, there is a parallel increase in the need for high end jobs – in technology, services and even manufacturing, but these jobs are not in India. Our education system produces very few people who are truly capable of taking up these jobs that. 
 
Are we therefore heading towards a future where we will actually not be able to provide employment for people joining this workforce? And are we also heading to a future where companies will need to retrench significant number of their workforce who will lose their jobs to robots and Artificial Intelligence software? How equipped are we to reformat the structure of our education system to produce better quality talent that cannot get replaced by machines and software? And, as one our participants suggested that day, as companies start having to hire less and fire more will the government bring in legislation against retrenchment? And finally is there a humane way to go about the process of telling that 50 year old agricultural scientist whose job is being replaced by an app that he needs to learn a new skill – and really, can he? 
 
As I left the room that day, I couldn’t help but think of the future for my young daughter – I should actively encourage her to not be an engineer or accountant but perhaps focus on playing a game or learning ballet. 
 
 (The article is authored by Anandorup Ghose, Partner – Talent &amp; Rewards, <keyword id="6462982" type="COMPANY" weightage="20" keywordseo="Aon-Hewitt">Aon Hewitt</keyword> Consulting. This article is part of the six-article series, ‘Aon #ImagineeringTomorrow: A Co-creation Journey’, with <a href="http://www.aon.com/human-capital-consulting/default.jsp">Aon Hewitt</a>) 
 
(Image: Thinkstock)

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