Top Performers likely to Get Higher Pay Hikes than Rest

Top-performing executives in India Inc are likely to walk away with a disproportionately higher share of increment payouts this year, more than ever before. Officials from a cross section of companies, including HDFC Bank and ICICI Bank in financial services, Ashok Leyland among manufacturers and Dabur, LG and Shoppers Stop in the consumption space, told ET reporters that they will reward top talent disproportionately more than other executives.
The annual salary increment survey by global human resource consulting firm Aon Hewitt, released on Wednesday, quantifies this growing gap between highflyers and the rest for the first time ever. Key talent will get an average 14.1% pay hike this year, while average increments across the board will be only 10.3%. However, these average numbers mask the sharp differentiation that is now creeping in between India Inc’s very best executives and all the rest.
At Ashok Leyland, for example, junior level top performers will get 25% increments, while the rest will get only 10% in the 2013 increment cycle. Compensation experts say that top talent can get increments as high as 15-18% or even more this year, while lesser performers will get only a 0-4%.
This sharp divide is emerging in a year when average increments, according to Aon Hewitt data, will be among the lowest in recent memory, a clear sign that employers are placing a premium on their bestperforming executives.
“So far, most companies only spoke about pay for performance,” says Muninder Anand, director-information solutions, at consulting firm Mercer. “Now, it is actually coming into play.”
Adds K Sudarshan, managing partner, EMA Partners: “Differentiation is key. One needs to differentiate between those who are good and those who have potential to grow further.” Companies in sectors that are doing well and in sectors that aren’t are both leaning towards rewarding outliers more. Says K Ramkumar, executive director human resources, customer service & operations from ICICI Bank: “The business environment has been challenging and any entity incurring a wage cost of over 10% could be termed as being adventurous.”
Within this constraint, the
bank will reward better performers more than the rest. “We have given out a much higher increment this year, because you need to keep your flock of best performers from being poached,” says Umesh Dhal, VP, HR and MS, LG India. The company is targeting a growth rate of 20% for 2013. Adds A Sudhakar, senior executive director-HR, Dabur India: “The company is doing well and so we will take care of our best performers.” Videocon Industries CMD Venugopal Dhoot says that the top 30% performers in the group will be paid a 20% hike this year compared to 15% last year. Average increments, on the other hand, will remain same as last year at 12%.
Aon Hewitt says that with salary budgets shrinking, organisations are creating sharp differentiation in salary increases between their key talent and the rest of the staff. Over the years, this gap is widening.

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