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Organisations in India that focus on maximising employee contribution to business growth are better positioned for growth, according to a PwC Saratoga India Survey 2010 on human capital effectiveness. The survey conducted amongst 37 Indian companies across different industries provides detailed performance metrics and benchmark data to help companies understand their employees' contributions to business performance.
According to the survey, with an average remuneration of Rs 4.8 lakh and profit of Rs 6 lakh per employee, the human capital return on investment is 1.79 for organisations in India.
The survey reveals that organisations in India make a profit of Rs 15 per employee on every Rs 100 of revenue earned (an average for the entire workforce). Organisations are making investments of Rs 7,000 on learning and development (L&D) per employee, and delivering 14.6 L&D hours per full time employee per year.
Most profitable sectors
According to the study, the engineering and manufacturing sectors earn the most revenue and profit per employee, aided by the highest proportion of performance related pay relative to total compensation. This is followed by the FMCG and pharma sectors.
Pharmaceutical companies spent the highest (Rs 10,000) on L&D per employee and delivered the highest number of L&D hours per employee, while IT and ITeS were found to spend the least on L&D per employee. IT/ITeS also witnesses the highest termination and resignation rate.
Attrition Concerns
Indian employers are worried about workplace effectiveness, thanks to the 18 per cent termination rate and 15 per cent resignation rate, according to PwC.
In the pharma sector, more than 33 per cent of employees resign within a year. The average tenure in the FMCG sector (78 months) was found to be significantly higher than in all the other sectors (approximately 32 months).
Hiring Cost
On an average, Indian organisations spend around Rs 25,500 per hire, according to the study. The FMCG sector though, spends over Rs 51,000 per hire, a cost attributable in part to the high cost of their recruitment teams, explains the study.
Among large organisations, those with the maximum external recruitment rate have the least cost per hire, finds the study, as they spread the fixed costs of hiring over a larger number of hires.
According to PwC, the human capital return of 1.79 is the median figure for all-India participants and is calculated as revenue minus non-people cost and divided by full time employees multiplied by average remuneration.
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