CHENNAI: All the talk about the revival after the slowdown is going to finally show up your wallets. Most companies are approaching the appraisal season and HR experts say early indications are that there will be a marginal increase hikes this year.
“This year has been cautious but has not been as bad as last year, so hikes will be better than last year, albeit marginally,” said Ashok Reddy, co-founder of staffing company TeamLease Services. Annual hikes could be between 12% and 15%, slightly higher than the 10-12% last year, as companies have to rate their workforce, he said.
The bonuses or TVPs (total variable pay), however, would remain the same range as last year – about 18%. TVPs or bonuses are a percentage of the salary given out lump sum payments to employees at the end of the financial year based on their performance, and the quantum of bonuses vary for employees different levels of management the company. Over the last few years, more companies are taking to the concept of TVPs and the ratio of fixed pay versus variable pay is changing as companies are looking to differentiate and reward employees based on performance.
“Early indications show that payouts will be the same range as last year. Good performers will get around 20-25%, and average performers around 10-12%,” said P Thiruvengadam, leader of human capital advisory services at Deloitte.
Bonus payouts also depend on the performance of the sector and, hence, employees working for sectors like pharmaceuticals, healthcare and life sciences could expect good payouts while those manufacturing and infrastructure will be for a disappointment.
Also, the way appraisals are done is changing this year with companies focusing more on knowledge-based performance and specialized performance rather than taking a blanket approach.
“Companies are taking people with special, niche skills and compensation will be done based on their contribution. Companies will look at retaining special talents rather than rewarding people just because they have been working with them for long ,” said Rajiv Krishnan, head, people & organization, EY. And for people looking to shift organizations post-appraisal, the season looks good as more companies are offering new hires higher joining bonuses (money paid by a company to a prospective employee as an incentive to jothe company). To maintaparity between pay packages of existing employees and new hires, more companies are taking to offering high joining bonuses rather than revised pay packages for new/lateral hires, Krishnan said.