Exclusive: Salary budgets are slowing down and there is going to be a dip in appraisals, as per this report

Don’t keep high expectations from your appraisals this year as there has been a dip in salary budgets.

As per Aon Hewitt’s annual Salary Increase Survey, exclusively shared with Business Insider, stated a drop in pay increases to an average of 9.5% across all industries.

The 21st edition of Aon Hewitt’s annual Salary Increase Survey in India analysed data across more than one thousand companies.

“While it’s a marginal decrease from the 2016 spend, it reflects maturity that India Inc. has displayed amidst global and Indian economic and political events. This includes, and is not limited to Brexit, recent changes in the US government and the much talked about demonetisation,” stated the survey.

Anandorup Ghose, Partner at Aon Hewitt India, said, “Political changes and economic headwinds have had an impact on business performance. However, the trend this year reflects a gradual slowing of pay increases and higher emphasis on productivity and performance – quite literally a ‘graying’ of salary budgets for India.”

Even though sectors such as Life Sciences, Professional Services, Chemicals, Entertainment Media, Automotive and Consumer Products will project a double-digit salary increase for 2017, they will still be lower than that of 2016.

With tighter budgets, it has become imperative for firms to ensure that their ‘top talent’ is identified and remunerated accordingly. Research shows that the segment of population that features as ‘high performers’ have fallen to 7.5%, the lowest number recorded in the 21 years of the Salary Increase Survey in India.

Consequently, the multiplier that India Inc. is offering these employees continues to be high. At 1.8 times, India is one of the highest differentiators across Asia.

“The last year has shown organizations take a strong view towards performance differentiation and not only have bell curves become sharper, the pay differentiation between top and average performers has also increased,” said Ghose.

Meanwhile, the attrition rate in India was similar to 2015 at 16.4%. While attrition was contained at a broader level, key talent attrition increased from 7.3% in 2015 to 12.3% in 2016. While inequity of pay remains a concern, the key reasons cited by employees for voluntary attrition are role stagnation and limited growth opportunities.