The Hindu Business Line : Job-hopping: Pay matters the most

Bangalore, Nov. 21 Losing employees to competition? Then pay for performance could be the carrot companies should dangle to battle rising attrition rates. According to the 8th Annual Asia-Pacific Salary Increase Survey, a study conducted by global HR firm Hewitt Associates, external inequity of pay is the top reason for employees leaving jobs.

In the new employee-driven economy, organisations have become dealers in talent, adopting aggressive pay positioning and increased benefits. Mr Nishchae Suri, Head of Hewitt’s Talent and Organisation Consulting Analytics practice in Asia, says: “The pull is on the side of the people today. With more opportunities and avenues, organisations are increasingly at the mercy of employees making a choice.”

Hewitt’s study indicates that variable pay continues to be an important means of attracting and retaining talent, with 91.8 per cent of responding organisations using this practice. Within variable pay choices, individual performance awards continue to be the most popular, with nearly 68 per cent of organisations saying that this is their preferred type of variable pay plan, followed by special recognition awards and business incentives. According to the study, companies reported variable payouts of 14.5 per cent of their payroll in 2007. This year, actual variable payout was the highest for top executives at 22.1 per cent, and is expected to rise to 23 per cent in 2008.

The study covering 1,800 organisations across 14 markets in the Asia-Pacific region says in 2007, Sri Lanka reported the highest average salary increase at 15.3 per cent. India, ousted to second position, reported an increase of 14.8 per cent, up marginally from 14.4 per cent in 2006. Vietnam’s booming economy reported an increase of 10.3 percent, in China it rose by 8.6 per cent and the Philippines recorded an average overall salary increase of 8.2 percent.

India highlights

In India, none of the participating 262 companies expected a salary freeze for 2008. Employees at junior manager/supervisor/professional level received the highest average increase of 16.0 per cent in 2007 and are expected to do so again next year with 15.6 per cent. For the top executive, the spending on variable pay plans at 21.1 per cent is seen to be highest. Stock options are the most popular form of long-term incentive among participating companies.