Performance pay helped top executives get 10-22% hike in 2013
Faced with one of the roughest years for global economy, top corporate executives in India appear to have weathered the storm in 2013
New Delhi: Faced with one of the roughest years for global economy, top corporate executives in India appear to have weathered the storm in 2013 as performance linked pay helped them get salary hikes of 10-22 per cent.
According to experts, sluggish economic trends did not have much impact on executive remuneration packages and 35-40 per cent of corporate leaders also managed to secure their bonus payments linked to individual and company performances.
This assumes significance in the backdrop of top executives being affronted with tremendous pressure to maintain profit margins, control costs, retain talent and manage business sentiments.
The HR consultants say the performance of company executives in India has in fact turned out to be above average and better than those in developed countries.
HR consultancy Unison International’s Managing Director Udit Mittal said “the performance of many executives has been better this year compared to last year and despite the global slowdown, overall performance has been above average”.
“India has been a self-sustainable economy and in other countries due to global market sentiment, performance has been comparatively bad,” he said.
Echoing the view, HR services firm Randstad India’s CEO Moorthy K Uppaluri said, “Corporate India CEOs, were lucky compared to their Western counterparts as India was still a growth market, though the rate of growth was modest”.
“On the other hand, senior executives in developed countries, particularly Europe were faced with a stagnant growth prospects, financially constrained governments and diminishing returns,” he added.
In terms of remuneration, top executives pay is estimated to have increased by 8-10 per cent on an average in 2013, while senior executives got a hike of 20-22 per cent.
As per executive search firm MANCER Consulting, there was a rise of 15-20 per cent in compensation levels for executives in 2013.
“There is positive increment expected in financial year 2014-15 as well, as senior executive salaries is inching towards their foreign counterparts slowly,” MANCER Consulting CEO Satya D Sinha said.
As per Randstad, Indian top executives got a pay hike of 5-10 per cent in 2013, while 35-40 per cent of senior leaders were given bonuses based on their performance.
“Most companies rewarded senior executives who could take a lead in transforming their business and deliver expected results,” Uppaluri noted.
Executive search firm Spectrum Talent Management Director Vidur Gupta said, “Companies have rewarded the ones who did well and at the same time most average performers had to do with very ordinary hikes”.
However, Deloitte India Senior Director Human Capital Advisory P Thiruvengadam is of the view that top executives witnessed moderate increases in salaries that just barely compensated for the inflation.
Predicting a brighter 2014, experts believe that next year holds a lot more in terms of new jobs and the average increment could be at least 15 per cent for top executives.
“Being the chief executive of an Indian company has never been more rewarding for professionals with expensive cars, a large house, overseas holidays and an eight-figure salary, with year-end bonus and stock options thrown in,” MANCER’s Sinha said.
Meanwhile, tough business climate had its fallout as well and some companies saw changes in their top management team. The attrition rate was also high.
Unison International has estimated that attrition rate of executives was on an average 14 per cent, more than in 2012.
Individually, data provided by MANCER Consulting showed that pharmaceutical industry faced the highest level (30-35 per cent) of attrition rate among its executives followed by IT/ITES sector (20-25 per cent), healthcare (15 per cent), chemicals (14 per cent) and real estate (10 per cent).
Lowest attrition rate was witnessed by steel sector and the telecom sector at 2 per cent and 4 per cent, respectively.
Experts say that a large part of attrition can be attributed to under-performance and cost-cutting measures, while there have also been cases of early retirement.
Randstad pegs the average tenure for top executives at 6.8 years and estimates 60 per cent of Indian CEOs to be holding office for less than 5 years.
Sector-wise, senior executives in many industries such as telecom, automobiles, infrastructure, real estate, power and aviation had the most disappointing time owing to slowdown, falling rupee, rising cost of fuel and raw material as well as difficulty in raising funds for business operations.
In contrast, top corporate leaders across IT, ITES, healthcare, FMCG, hospitality, retail, e-commerce, education had a relatively rewarding year.
“Rupee depreciation augmented the good performance of companies with export opportunities,” Randstad’s Uppaluri said.
“Power and Infrastructure has definitely been the worst hit last year owing to a tough political scenario as projects haven’t moved well and it has been difficult to perform,” Spectrum’s Gupta noted.