India Inc cautiously optimistic; just 6% firms reduce salary

Amid the economic downturn impacting companies worldwide, India Inc remains cautiously optimistic with just 16 per cent firms freezing salaries and as low as 6 per cent reducing pays for 2009-10, a survey by HR consultancy Hewitt Associates says. According to a mid-year survey on 'Performance & Reward Trends' by Hewitt Associates, companies across industries are strongly differentiating rewards on the basis of performance but majority of them are not considering any layoffs or severe salary cuts in current fiscal. "With only five per cent of the organisations considering layoffs, minimal salary reduction at 6 per cent and salary freeze at 16 per cent, India Inc looks cautiously optimistic," Hewitt's Performance and Rewards Consulting practice leader in India Sandeep Chaudhary said. The survey revealed that 16 per cent of the companies surveyed have a salary freeze and were mainly organizations in the financial services, IT and ITeS sector. Moreover, only 6 per cent of the firms have cut salaries and just five per cent were considering layoffs for FY'10. "During these unprecedented times when firms across the world considered options such as mass layoffs and salary cuts, India Inc also considered the same measures but with maturity," Chaudhary added. "It reflects the response of a growth economy managing a short to medium term slowdown, while keeping an eye on long term growth," he added. Interestingly, about 30 per cent of the organisations have deferred their salary revision cycle. They have been deferred from April to July or October, the survey stated. The survey said the firms were laying stringent focus on performance and productivity with as much as 69.2 per cent employees getting a rating of 'met expectations' or 'below'. "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 almost two times higher than that provided to employees who only 'met expectations'," the survey added. The general trend which has emerged is that several firms are considering a salary increase only for their top performers for the year 2009-2010. The survey was conducted across 137 firms (foreign-owned, locally-owned, and joint-venture private sector) and 9 primary industries during the period of May-June 2009. "The survey was carried out at this time as most companies set their appraisal and salary related policies at the start of the fiscal year in April," Chaudhary added. The survey pointed out that 61.9 per cent of respondents have reported that their salary increase budget is different from the previous forecast and all employee levels have been impacted by the reduction in salary increase budgets.