Rewards 2021: More companies would be willing to roll out increments; better pay hikes for top achievers

The good news is there’s total consensus more companies would be willing to roll out increments in 2021 compared with 2020. There’s less of a consensus in the amounts but most HR consultancies forecast an increase of about 7-7.7% in 2021. In sum, 2021 could be a good year for corporate executives with Anandorup Ghose, partner, Deloitte India, estimating that 92% of companies plan to reward employees financially versus only 60% in 2020.

However, what could set 2021 apart is that only star performers and target achievers would be rewarded and not all employees. “This year will see an acceleration of the existing trend of sharper differentiation and more incentive-based awards than fixed cost increases,” Ghose told FE.

Sudeep Sen, business head, TeamLease Services, too, believes the approach will be to pay for skills and KPI achievements. “Due to the pandemic-induced situation, multi-tasking and remote working was on a high. Those who have exhibited the skills to adapt and perform will be remunerated more than the general crowd and that shall take precedence in the coming year as well,” Sen said.

The average increment of 7.3% expected to be given in 2021 would be significantly higher than 2020’s 4.4%, according to the first phase of the 2021 Workforce and Increment Trends Survey by Deloitte Touche Tohmatsu India LLP. Global professional services firm Aon Consulting predicts average increments this year at 7.7%, again bigger than the 6.1% rolled out by companies.

Teamlease Services, however, believes the average increment could be small or even slightly lower. For the executive level, the projected median is 7%, 0.1 to 0.15% lower than in 2020. For the middle management, professional and support staff, increments could stay more or less flat at 7.3% in 2021 compared with 7.5% in 2020.

Despite better increments, for the majority of companies, the increase in the wage bill would be equal or less than the budget for salary hikes; this suggests they’re taking a hard look at their team strength.

Ghose points out companies are cautious in an economic environment in which top-lines have not grown significantly. For an aggregate of the 3,900 odd companies, revenues have grown just 2.5% in Q3FY21. “In such an environment employers are caught in a bind. There is a significant push to retain critical talent and at the same time manage costs as aggressively as possible,” he explained.

Aon lists e-commerce and venture capital, hi-tech/information technology, ITeS and life sciences as sectors that could offer bigger increments and hospitality and restaurants, real estate and infrastructure, and engineering services as those where increments could be the smallest.

TeamLease Services projects IT – products, pharmaceuticals, consumer goods and retail will give a median salary increase of around 8%, higher than the consensus. For financial services and manufacturing, the forecast is 7%, while for BPOs the projected increment is 6%; for energy it is a small 4.6%.