Friday, July 17, 2009

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Corporate India optimistic, only 6 per cent firms cut pay

Amid the economic down-turn impacting companies worldwide, India Inc rema-ins 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 acr-oss industries are strongly differentiating rewards on the basis of performance but majority of them are not considering any layoffs or severe salary cuts in the present financial year.

“With only five per cent of the organisations consi-dering layoffs, minimal salary reduction at 6 per cent and salary freeze at 16 per cent, India Inc looks cautiously optimistic,” He-witt’s Performance and Rewards Consulting pract-ice leader in India Sandeep Chaudhary said.

The survey revealed that 16 per cent of companies surveyed have a salary freeze and they were mainly organisations in the finan-cial services, IT and ITeS sector.

Moreover, only 6 per cent of the firms have cut salaries and just 5 per cent were considering layoffs for FY10.
“During these unprece-dented times when firms across the world conside-red 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 man-aging a short to medium term slowdown, while keeping an eye on long term growth,” he added.

Interestingly, about 30 per cent of the organisa-tions 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, emplo-yees who were rated as ‘far exceeds expectations’, ha-ve received a salary incre-ase 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 conduct-ed 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 apprai-sal and salary related polic-ies at the start of the financial 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.

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