increment strategy fy 2014-15 slide share

FY 2014-15 trends, Outlook for Economic Growth,

Hiring trends & Salary Hike Projections FY 2015-16 &

Increment Strategy FY 2014-15

Global Scenario

GLOBAL GDP GROWTH (SECTORAL)Global GDP Growth Forecast by Sector for 2014-15 & 2015-16(By Kenanga Research)

Kenanga Forecast

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1H14 2H14 2014-15 2015-16

By Sector

Agriculture 4.3 0.1 2.4 5.8 1.0 2.1 4.6 5.6 5.2 3.2

Mining -2.4 -6.5 -0.3 -5.5 1.4 0.5 0.6 2.2 1.4 2

Manufacturing 1.2 -9.0 11.9 4.7 4.8 3.4 7.1 5.9 6.5 5

Construction 4.2 6.2 11.4 4.7 18.1 10.9 14.3 8.2 11.1 8.5

Services 7.6 2.9 7.4 7.0 6.4 5.9 6.3 5.6 5.9 5.5

Real GDP 4.8 -1.5 7.4 5.1 5.6 4.7 6.3 5.7 6.0 5.1

Note: *The government recently updated the overall GDP forecast but break-down still based on data published in 2013/14 Economic Report.Source: Kenanga Research, Finance Ministry's Economic Report 2013/2014

Growth of the global gross domestic product (GDP) from 2010 to 2020 (compared to the previous year)

The statistic shows the growth in global gross domestic product (GDP) from 2010 to 2014, with projections until 2020.

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

A Glance on Growth in 2015-16 Global GDP growth prospects

GLOBAL GDP at a Glance

a2 a4 a5 a6 a7

a8

a9

a10a11a12

a13

INDIAN SCENARIO

Source – Aon Hewitt Salary Increase Survey 2014-15

GDP Growth rate April 2012 to March 2013 : 4.8% April 2013 to March 2014 : 4.7% April 2014 to March 2015 : 7.4%

Index of Industrial Production GrowthApril 2012 to March 2013 : 1.90%April 2013 to March 2014 : 1.40%

April 2014 to March 2015 : 2.10%

Growth of Mining & Metal April 2012 to March 2013 : - 2.33%

April 2013 to March 2014 : - 1.23% April 2014 to March 2015: -1.08% FDI FY 2012-13 : USD 22.42 bn FY 2013-14 : USD 36.40 bn FY 2014-15: USD 42.00 bn

Inflation (Consumer Price Index) April 2012 to March 2013 : 10.44%

April 2013 to March 2014 : 10.00% April 2014 to March 2015 : 10.30%

Broad Outlook—Indian Economy FY 2014-15

India’s business outlook7 out of 10 organizations foresee an improved business outlook in

The Indian economy is showing signs of a growth turnaround Positive sentiment in the market driven by anticipation around a stable government pushing a pro-

reform agenda Marginal recovery in global growth (especially the US economy moving from strength to strength), low oilprices in the Euro area impacting sentiment tooSource – Aon Hewitt Salary Increase Survey 2014-15

27.2% 26.6%

7.7%4.0%

Declining

2015 (P) 2014 2013

69.4%

30.6%

65.1%

59.0%

10.4%

Improving Stabilizing

2015-16

India continues to lead the pack for Asia in salary increases The projection does not include Variable Pay. Almost all leading APAC nations projecting a marginal to significant improvement in salary

increases over the previous year


2010 2011 2012 2013 2014 2015 (P)

Figures in %

Australia China Hong Kong India Japan Malaysia Phillipines Singapore2010 3.8 7.9 3.1 11.7 2.4 5.2 6.4 3.62011 4.4 9 4.7 12.6 2.7 6 6.7 4.52012 4 9.4 4.8 10.7 2.3 6.2 7.1 4.62013 3.8 8.5 4.6 10.2 2.3 5.5 6.9 4.52014 3.4 7.9 4.5 10.4 2.2 5.4 6.4 4.42015 (P) 3.6 8.2 4.8 10.6 2.4 5.6 7.1 4.6

Salary increase trends across APAC have seen an upward move

Expectations of positive performance & market competitiveness have become key reasons for firms

revising their compensation budgets this year


83% of the organizations have revised their salary budgets FY 2014-15Expectations of stronger performancecited as a key reason

Reasons for Higher Budgets (% of Org)

Multiple Responses

Strong expected company performance

Response to higher budgets among comparator group

Current pay levels are below market

68%

32%

31%

Budgets were reduced due to economic conditions

There was a freeze in place in 2014, removing the same

Shift in spending from variable pay to fixed pay

20%

4%

4%

Source – Aon Hewitt Salary Increase Survey 2014-15 Figures in %

Below India average proj.Salary increase projections across

sectorsAbove or at India average proj.

9.9 9.9

Low dispersion in 2015 -16 between the highest and lowest paying industries (2.8%), down from 5-7% earlier .

The projection does not include Variable Pay

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12.2 12.0 11.8 11.7

9.8 9.5 9.4

10.8 10.7 10.7 10.6 10.6 10.6 10.4 10.2

TOP 3 BOTTOM 3

2015-16

India takes an upward yet cautious leap at 10.6%

Comparing 2014-15 and 2015-16All manufacturing industries projected a salary increase higher than actuals of 2014-15

In 2015-16, all manufacturing industries projected a salary increase higher than payouts of 2014-15. RE – Infra,

Engineering Services and Automotive projected the highest movement Consumer Products, Retail and Media projections are lower than 2014-15 payout Hospitality and Transport projection numbers remained same as 2014-15*In relative change terms, salary increase moved by 1.92(i.e. in comparison to 2014-15, the 2015-16 projected increase is 1.92% higher)Source – Aon Hewitt Salary Increase Survey 2014-15

5.4 5.1

3.3 3.0

-7.1

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3.9 3.9 3.9

2.1 1.90.9 0.8

-0.9

-3.1

6.1

RE-Infra, after a gap of three years is again reporting the highest increase. Life Sciences continues to project

increases on the higher side Consumer Products and Engineering Manufacturing have gone down in their ranking with regard to increases Industries like Telecom, Retail and Financial Institutions that have traditionally given high increases, no longer

feature in the top 10Source – Aon Hewitt Salary Increase Survey 2014-15

The top 10 industries with highest projected increases for 2015-16 & their ranks across the years


1. Productivity Improvement2. Capital Dilemmas- allocation &

access3. Social License to operate(SLOT)4. Resource nationalism5. Capital projects6. Price & currency volatility7. Infrastructure access8. Sharing the benefits9. Balancing talent needs10. Access to water & energy

Top 10 business risks for Mining and Metal Industries

PAY FOR PERFORMANCE


Highlights Of Increment FY 2014-15, Hiring & Salary trends FY 2015-16Actuals of FY 2014-15

The average salary across industry in FY 2014-15 was 10.4% apart from variable salary(incentive) paid out in most industries.

The actual paid out variable pay stood at 12.7 per cent across sectors and levels. Oil and gas sector remained at the top at 15.4 per cent for 2014, followed by FMCG at 14.5 per cent and chemicals at 14.4 per cent, the report said.

"Another interesting trend that we've noticed is how companies are now choosing to unfollow the 'one size fits all' approach

"pay for performance" trend continues for India Inc, with payouts widely influenced by both individual and company performance.

Trends of FY 2015-16

Maximum movement of Employees will be in Manufacturing, Pharma, IT and Retail sector

60 per cent companies operate a different remuneration policy for graduates as opposed to the company's standard pay policy.(GET,DET & Mgmt.Trainee & General Bachelor Degree Trainee)

Typical hiring salary for a graduate with a Bachelor Degree on an average is 350,000 in local currency. The figure for a graduate with a Master's degree is 470,000.

The year 2015 is likely to see an average pay increase of 11.3 per cent across job roles, with FMCG and chemical industry expected to lead the market.

Hiring Trends & increased salary cost for Key Talents with Projections FY 2015-2016

Investment in key talent continues in 2015 with paying above the market continues to be a key strategy for

retention of key talent Gap between salary increase awarded to key talent vs. others is widening y-o-y


Key Talent vs Overall - Average Salary Increase

Key Talent differentiation by levels of management

Top & Senior Middle Junior Clerical Staff2012 2013 2014 2015 (P)

Overall Salary Key Talent

16.614.711.5 11.611.110.5 10.69.6

14.714 13.512.8

10.7 10.2 10.4 10.6

2015-16(P)

Performance rating linked payout is becoming a norm; organizations have become increasingly stringent in

doling out top ratings to its employees Employee distribution has become significantly sharper since 2007. Almost 68% of the population falls

under ‘Meets expectation and below’ category. This proportion has increased by approximately ~20% since2012Source – Aon Hewitt Salary Increase Survey 2014-15

Performance Rating Distribution expressed as %

Far Exceeding Expectations

Exceeded Expectations Met Expectations Did not meet expectations

2014

2013

8.5 24 56.2 11.3

8.7 23.8 54.6 12.9

2010-12

2007-09

8.9 33.5 50.4 7.2

12.8 31.2 49.7 6.3

Employee distribution across performance rating scalesRecognizing ‘True’ performance only

Bell Curve Distribution

Rating A B C D E

Bell curve distribution @ Across Industry level8.50% 24% 56.20% 11.30% NA

Bell Curve distribution @ ASHAPURA10.00% 30.00% 50.00% 8.00% 2.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Bell curve distribution @ Across Industry levelBell Curve distribution @ ASHAPURA

A B C D E

Overall industry analysis - Voluntary attrition analysisVoluntary attrition rate across sectors (in %)

25FY 2014 FY 2015

0

5

10

15

20

Overall Industry

Auto BFSI Chem CB Eng Energy Hi-Tech ITeS Infra Log Media Pharma Retail

© 2015 Deloitte Touche Tohmatsu India Private Limited

FY 2014-15 16.2 11.4 18.7 10.6 18.4 10.9 10.4 19.4 21.5 17.5 16.6 17.2 18.2 18.9

FY 2015-16 16.5 11.6 18.9 10.7 18.7 11.1 10.5 19.9 21.9 17.8 16.8 17.5 18.6 19.4

Conclusion

Salary increase trends show far greater optimism in the country as compared to the same time last year – however it does not yet show a complete resurgence

While India tops Asian markets on salary increases yet again, all Asian markets have shown an increase in projections

The composition of industries giving high salary increases has changed compared to earlier years - this is on the back of resurgence in a few industries as well as the lack of increases provided by companies in these sectors

The trend of more distinct differentiation based on performance and potential continues this year

The incentive payout projected for FY 2015-16 has been distinctly higher than the previous two years

Attrition levels have slight changes in 2015-16 as compared to 2014-15 period and remain at a moderately similar level as last year.

WHAT WE HAVE BROUGHT FOR YOU !!!!!

Increment cost of a Bell curve should be within 15% (Excluding PBI)Promotion increment – PMS rating A & B eligible for Promotion & also its component as additional increment (1-4%).Salary Correction – Will be applicable only in exceptional cases if justified.(1-5%)Retention Bonus – will be applicable as under;MGR & Above Service length 2-3 years: PMS rating A & B only (0-2%) Service length 3.1 years to 8 years: PMS rating A, B & C (0-4%) Service length 8.1 years & above years: PMS rating A, B & C (0-5%)Below ManagerService length Upto 03 years: PMS rating A & B only (0-4%)Service length 3.1 years to 8 years: PMS rating A, B & C (0-6%)Service length 8.1 years & above years: PMS rating A, B & C (0-7%) Increment will be distributed as per CTC breakup. Issue of basic salary pertaining to old employees to be resolved rationally.PBI will be paid as per management decision over & above increment but will not be

broken up as per CTC structure & Retention bonus & PBI will not be eligible for an increment in ensuing financial year.

Employee being Promoted will not be eligible for Salary Correction.

Increment Strategy

SALARY INCREMENT STRATEGYCap for Increment for the Organisation : 15 % of Salary Cost /CTC for Increment (Bell Curve wise)

Grade

Inflation & Performance

Promotion)%(

Salary Correction(

)%

Retention Bonus

Level MGR & above(Based on length of Service)

Below MGR(Based on length of Service)

MGR & above (%) Below MGR (%) 2-3 Yr 3.1-8 Yr 8.1 & above

Yr 2-3 Yr 3.1-8 Yr 8.1 & above Yr

A

B

C

D

E

TRENDS OF INCREMENT DURING PAST IN OUR GROUP

Year % Increment

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015 % (PROPOSED)

increment strategy fy 2014-15 slide share

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