Report: Salary freeze, reduction in increments in MNCs in India

Hit by the economic meltdown, R&D centres of multinational corporations in India have either resorted to salary freeze, reduction of average increments or postponed their merit increase cycle, according to a study conducted by a management consulting firm.

Zinnov Management Consulting, a leading management consulting firm, in its annual compensation and benefit study 2009 released in Bangalore said over 27 per cent of the participating organistions announced a salary freeze across the board.

The study, spread over Bangalore, Pune and Chennai,covered compensation and benefits analysis of software product development companies for the year 2009. Bangalore stands highest in its average salary for MNC R&D companies, followed by Pune and Chennai.

It said the percentage of salary freeze was expected to increase further in the coming months.

The average increment for 2009 announced by some participating organisations ranges from five to 12 per cent.

The study said of all the participating companies, 15 per cent have postponed their merit increase cycle and will take a call based on the economic scenario at a later stage. Similarly, 12 per cent of them have announced salary cuts ranging from five per cent to 10 per cent either to the senior management team or across all levels.

The study higlighted the fact that companies are shifting focus to the variable pay component to reward and retain top performers, as opposed to fixed pay and some of them have even restructured their compensation, linking employee rewards to individual and organisational results.