Deloitte Compensation Trends 2013

Compensation Trends Survey 2013 14
Deloitte Human Capital Consulting
March 2013
Contents
Survey Details Survey Highlights General Industry Analysis
Detailed Sector-wise Analysis

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Contents

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Survey Details
Scope of the Survey
The Deloitte Compensation Trends Survey is an annual study conducted by Deloitte Human Capital Consulting. The aim of the survey is to understand key compensation trends across sectors in the Indian market. This is the third edition of this survey
Elements detailed in the Compensation Trends Survey 2013 14

Salary Increase for 2013 2014 Variable Pay given / to be given for 2013 2014 Key Benefits given across sectors Attrition rate and key reasons for attrition faced by organizations Key Human Resource Challenges faced by organizations
2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.
Survey Details
Survey Methodology
Design the Survey Instrument
The parameters of the study were finalized and a structured questionnaire was designed as a primary data collection tool
Finalization of Target Basket

The sectors covered in the study were finalized along with the leading organizations from each sector
Invite and Seek Consent for Participation

A formal invitation e-mail was sent to the Human Resources in the chosen organizations requesting for participation
Data Collection and Validation

The responses received from all participants were validated and checked for accuracy and intended interpretation
Data Analysis
The data received was collated and analyzed to get detailed insights on sector wise practices and compensation trends
Compensation Trends Survey 2013 14 Report
Survey Details
Participant Profile
155 organizations participated in the Compensation Trends Survey for 2013 2014
Industry-wise participation Annual Revenue
6% 10% 5%
6%
7% 5%
7%
Consumer Business & Retail Manufacturing Infrastructure & Real Estate
15%
50%
24%
19%
Pharmaceuticals Financial Services Information Technology
9%
ITeS
Advertising & Media
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
>1000 Cr.
8% 12% 10%
7%
Energy & Natural Resources Hospitality Logistics
Employee Strength
6% 11% 6% 26%
The greatest participation in this survey came from the Manufacturing sector, followed by Financial Services, IT and ITeS sectors Annual revenue of majority of the organizations (50%) is ` 500 1000 Cr. This is followed by 19% in ` 300 500 Cr. range and 15% in the ` 100 300 Cr. range Majority of the organizations (27%) who participated in the survey have employees between 500 2000
6
<500 5000 - 10000
23% 27%
500 - 2000 10000 - 25000
2000 - 5000 >25000
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Survey Highlights
Executive Summary
The median salary increments across sectors is projected at 11.3% Highest increment figures have been reported in the Pharmaceuticals, Health Care and Life Sciences sector at
13.1%
The Financial Services sector continues its trend from last year, of being the most conservative sector in terms of increment projections for 2013 2014 at 9.6% Overall Variable Pay (as a % of CTC) across sectors is 17.3 last year
% which is an increase of 1.3% points over 20.1%
The highest variable pay percent median is observed in the Financial Services sector at
The overall average attrition rate across industries is 14%. Better career opportunities and better pay have been cited as the key reasons for attrition across most sectors The highest attrition rates have been recorded in the ITeS (17%), Advertising & Media (16%) and IT (15%) sectors. These sectors are followed closely by Pharmaceuticals (14%) and the Infrastructure & Real Estate sectors (14%) Hiring and Retaining skilled talent has been identified as a perennial challenge for organizations across most sectors. Developing potential future leaders is an emerging concern in many sectors
Contents

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General Industry Analysis

Market Overview
The Indian Economy is currently going through a challenging phase as GDP growth slowed down to nearly a decade low in 2012-13 with domestic as well as external factors playing a part in this downfall Macroeconomic issues such as high public expenditure, depleting investment and saving levels, worsening current account balance as well as depreciation of the Rupee have added to the present economic pressures over-shadowing positive aspects such as moderation in inflation and recovery of stock markets during the year Since the global financial crisis of 2008-09, the Indian economy grew to a healthy 8.6% till 2010-11. Since then, growth started declining. The trend continued in 2012-13 with a disappointing growth rate of 5.4% in the first half, resulting in lowering of expectations. The second quarters growth at 5.3% is one of the lowest quarterly growth rates seen in the last decade and the annual growth of 5% will be the lowest since 2002-03 The latest Index of Industrial Production (IIP) figures indicate that the industrial sector has grown at a rate of 0.7% during the period April 12 to December12 compared with a growth rate of 3.7% in the corresponding period last year, overall far lower than the annual growth of 6.8% in 2010-11. Worrying figures primarily in the mining and manufacturing sectors have contributed to this The Government is focusing on cutting costs to curb rising inflation. At the same time, it is planning on introducing proposals to induce more investments by encouraging Infrastructure Debt Funds and providing incentives for the manufacturing sector undertakings to invest more in plant and machinery This state of the Indian economic environment should shed some light on the reason behind increment and variable pay decisions taken by organizations this year
Source: Economic Outlook 2012 13 Deloitte Budget Publication
10

Annual Increments 2013 14 (Projections) vis--vis 2012 13 (Actuals)
18.0% 16.0% 14.0% 12.0% 12.0% 10.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
Consumer Business & Retail Manufacturing Infrastructure & Real Estate Pharmaceuticals Financial Services Information Technology ITeS Advertising & Media Energy & Resources Hospitality Logistics
15.0%
15.0% 13.1% 12.0% 13.8% 12.0% 10.0% 11.0% 10.7% 9.6% 12.4% 11.5%11.1%
11.2%
10.6%
10.3%
11.0% 10.2%
10.6%
9.8%
2012-13
2013-14
The overall annual increment median for this year is projected at 11.3% Highest increment for this year is expected in the Pharmaceuticals industry at 13.1%. It is the only sector where increments are expected to be higher than last year Financial services sector maintains a conservative estimate given the overall mood of the economy and is expected to have the lowest increment median at 9.6% This year, two new sectors have also been introduced Hospitality (11.1%) and Logistics (9.8%) The most significant decline in increment medians is observed in the Manufacturing and Infrastructure & Real Estate sectors Employers have shown a trend this year of an increased focus on variable pay percent to compensate for the low annual increments projected in most of the sectors
11

Annual Increment 2013 14
Organizations across industries are expected to continue their trend of being conservative, especially given the reserved outlook of the economy
Increment Percentiles 10th 25th 8.4% 9.2% 10.1% 11.7% 50th 9.8% 10.9% 11.6% 12.5% 75th 11.6% 12.1% 13.8% 14.7% 90th 13.9%

JM
MM SM TM
7.1% 7.9% 8.3% 9.1%
The median levels of Junior and Middle Management increments are expected to be lower than the overall median level increment of 11.3% There is not much variation seen between Junior and Middle Management increments across the ranges Increments for the Top Management in the Pharmaceutical sector are significantly higher than the cross-sector median increment for Top Management
14.4% 15.0% 16.1%
16 15 14 13 12 11
Comparison of Level-wise Median Increments Across Sectors
JM MM SM TM
10 9
8
12
Please Note: JM Junior Management; MM Middle Management; SM Senior Management; TM Top Management 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.

Increments have reduced across the ranges; highest decline projected for Junior Management and a corresponding increase seen for Top Management
10th Percentile 2012-13 9.0% 25th Percentile 10.0% Median 12.0% 75th Percentile 14.1% 90th Percentile 15.1%
2013-14
7.5%
9.8%
11.3%
13.2%
14.9%
20%
Median Increments Across Levels

18% 16% 14% 12.0% 12% 10% 10.9% 9.8% 11.0% 10.0% 12.0% 11.6% 12.5%
At the median level, the increments across sectors are expected at 11.3%, displaying a slight reduction compared to last years median Most organizations across sectors have adopted a cautious approach to increments this year A significant decline of 2.2% points has been witnessed at the Junior Management level over last years increment figures for the same level Higher increments across sectors are still expected around the 15% mark. However, on the lower side, the increments have also reduced to 7.5%
8%
6% 4% 2% 0%
JM
MM 2012 - 13
SM 2013 - 14
TM
All in all, companies are giving lower increases this year and higher variable pay percentages, so that the risk of nonperformance is mitigated
13

Annual Variable Pay Trends
25%
Hospitality and Logistics are new sectors in this survey. Hence, variable pay percent projections are not available
20.0% 20% 18.2% 18.8% 17.8% 15.0% 15.4% 15% 18.0% 15.0%
20.0% 20.1% 16.3% 15.1% 16.1% 13.5% 14.4% 13.3% 10.5% 16.5%
17.5% 15.6%
10%
5%
0%
Consumer Business & Retail Manufacturing Infrastructure & Real Estate Pharmaceuticals Financial Services IT ITeS Advertising & Media Energy & Resources Hospitality Logistics
2012-13
2013-14
The median variable pay percent projected across all industries is 17.3% Across most industries, variable pay percent at the median level has increased, indicating a focus of organizations on building competitiveness within their markets to maintain profitability and steady growth rates in an environment that is not currently conducive for the same Although the Manufacturing sector is showing a slight decline in the variable pay percent, this level is still higher than the cross-sector median Financial Services sector is expected to provide the highest median variable pay at 20.1% Similarly high levels of variable pay are observed in all service oriented sectors
14

Variable Pay 2013 14
Variable pay projections expected to increase across all ranges compared to last year
Variable Pay Percentiles 10th 25th 11.9% 12.7% 13.4% 14.1% 50th 16.4% 17.1% 17.7% 18.5% 75th 22.2% 23.8% 24.6% 25.1% 90th 26.4% 27.1% 29.3% 31.2%
The overall median variable pay percent across sectors is 17.3% an increase of more than 1% point over last year Across all levels, the spread of variable pay percent is relatively wide with Junior Management getting variable pay from 8.9% 26.4% and Top Management receiving 10.9% - 31.2% Lowest variable pay percent at the Junior Management is expected in the Infrastructure & Real Estate sector Median variable pay percent for Junior, Middle and Senior Management in the Financial Services sector projected to have marginal variation
JM
MM SM TM
8.9% 9.4% 10.1% 10.9%
Comparison of Level-wise Variable Pay Percent Across Sectors

24 22 20 18 16 14
JM MM SM TM
12
10 8
15

Variable Pay 2013 14 vis--vis 2012 13
Variable pay percent increase opted for by many organizations; increased focus on higher performance under the current economic circumstances, especially at the Junior Management level
10th Percentile 2012-13 8.9% 25th Percentile 12.0% Median 16.2% 75th Percentile 20.1% 90th Percentile 30.1%
2013-14
9.2%
12.7%
17.3%
23.4%
30.8%
Median Annual Variable Pay (as % CTC)

50%
40%
The trend lines seen for the annual increments across levels this year are countered here. Junior Management has witnessed an increase in the median variable pay percent, with a corresponding decline at the Top Management level A decrease of 4% points is expected in the median variable pay percent at the Top Management level
22.5% 20.0%
30%
20%
16.4%
17.1% 17.7% 18.5%
The higher range of variable pay across sectors is expected at 30.8%, and on the lower side the variable pay percent is projected at 9.2%
10%
14.0%
15.1%
0% JM MM SM TM
2012 - 13
2013 - 14
16

Key Benefits
Leave encashment allowed by 40% companies, with median of 34 Days; Mobile Allowance not provided to many companies to Junior Management, provided on actuals to Top Management by 60% companies
Vehicle Allowance - Car
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 4.8 1.2 MM 11.7 8.5 1.4 SM 13.4 20.6 32.6 TM 14.2 25.1
Mobile Allowance (Bill Reimbursement)

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 52.0 9.9 1.3 MM 48.0 17.7 15.9 SM 33.3 16.1 43.3 TM 10.3 6.9 22.8
94.0
78.3
1.0
32.4
54.0
6.6
36.8
18.4
6.5
0.8
60.0
-
Driver: 61.5% and 45% of the companies across all sectors provide Driver or Driver Allowance for the Top and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM 7.1 1.7 MM 23.5 12.1 3.8 SM 7.4 19.1 32.7 TM 5.2 18.1
Medical Insurance
1% 10% 35% Employee Only Employee & Spouse Employee, Spouse & Children 54% Employeee, Spouse, Children & Parents
0.8 90.4
1.4 59.2
11.1
10.4 19.3
35.1
25.8 15.9
Long Term Incentive Plan

24.5% of the companies across sectors provide LTIPs to their employees. The most frequently provided LTIPs are ESOPs and Deferred Cash
Leave Encashment Percentage of companies allowing leave encashment: 40% Median number of days encashable across sectors: 34 Days
All figures provided are in terms of % of companies providing the benefit amount at the particular level
17

Attrition
30% 25%
21%
Average Attrition Rate
13%
12%
14%
14%
15%
15%
25%
17%
16%
12%
13%
11%
23%
20%
15% 15%
18% 17% 16% 14% 14% 13% 12%
18% 15%
18%
18% 15% 15% 13% 13% 12% 12% 14% 14% 13% 12% 14% 11% 10% 9%
15%
12%
10% 5% 0%
9%
13% 12% 11% 10%
13% 12%
12% 11%
14% 13% 11% 10%
Consumer Business & Retail
Manufacturing
Infrastructure & Real Estate
Pharmaceuticals Financial Services
IT
ITeS
Advertising & Media
Energy & Resources
Hospitality
Logistics
Junior Management
Middle Management
Senior Management
Top Management
Attrition rates have reduced slightly across sectors. However, it continues to be a concern at the Junior Management level Highest attrition rate recorded at the Junior Management level in the ITeS sector (25%) This sector also faces the highest overall attrition rates (17%), closely followed by IT, Pharmaceutical and Infrastructure & Real Estate sectors The most prevalent reason employees leave organizations is better career opportunities entry into the market of many foreign players across sectors has increased the job opportunities especially at Junior Management level, allowing easy movement of the workforce Employees are also leaving for better pay elsewhere as well as for personal reasons and better work-life balance
1
Key Reasons for Attrition
Better career opportunities
Better pay elsewhere
Personal reasons
18

HR Challenges
Key HR Challenges
Across all sectors there is an intense competition for hiring the right talent with the right skill sets Given the diverse skill-sets available in the market, several sectors vie for the same talent pool as these people possess transferable skill-sets Retaining critical talent is also becoming an increasing challenge for organizations as there are a vast number of organizations looking to recruit from the same talent pool. Employees are likely to leave organizations for even the slightest pay hike Under the current economic climate of the country and the need for stabilization as well as innovation, organizations are finding it a challenge to develop potential leaders for the future; leaders who will be able to innovate and lead from the front and spearhead a resurgence for these companies As one can see, the critical challenges lie within the employee talent lifecycle, signaling that increased focus and investment on talent initiatives is a necessity in order to gear up for future growth plans within all sectors
Hiring skilled talent
Retaining critical talent
Developing potential leaders
19
Contents

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20

Executive Summary
The median annual increment in this sector is 10% - significantly lower across most levels as compared to last year
The variable pay percent in the sector stands

at 18.8% at the median level a slight increase over that of last year Attrition rate for this sector on average is
13%. Highest attrition rates for Junior and

Middle Management 15% - which is mainly due to the attrition rates in Retail Organizations attribute attrition mainly to Better Career Opportunities and Better Pay Elsewhere Hiring and Retaining Talent is a key challenge
faced by the sector

22

Sector Snapshot
Industry Overview
Indias FMCG sector was able to perform relatively well despite the slowdown in the overall Indian economy during 2012 The outlook for Indian FMCG is positive because of growing sales, strong financials of leading players and ever increasing urbanization The Indian Retail sector contributes to 22% of the countrys GDP and also accounts for approximately 8% of the total employment in the country The biggest highlight for the Retail sector in India in 2012 was the decision of the Indian Government to allow Foreign Direct Investment (FDI) in Multi-Brand Retail formats Rising per capita income is helping the sector grow. Our Deloitte research shows a constant increase in per capita spend since 2010. The total retail spending is estimated to double in the next five years E-tailing is showing a high promise for exponential growth over the next few years
Source : Deloitte Retail POV Opening More Doors; GRDI 2012; IBEF; www.emergingmarketsdirect.com;
Key Challenges
Diverse spread of customers requires stores to stock a wide and varied mix of merchandise to cater to such a broad demographic People prefer to buy most of the fruits and vegetables on a daily basis and approaching a corner store for groceries still, thereby creating a challenge for supermarkets / hypermarkets It is difficult to find suitable properties in central locations for retail, primarily due to fragmented private holdings, infrequent auctioning of large government owned vacant lands and litigation disputes between owners The indirect taxation structure is complex in India with varying tax rates, multiplicity of taxes and multiple tax enforcement authorities. This has a significant impact on the Retail set up Challenge to mom-and-pop stores revenues by big foreign brands entering the market and selling goods at discounted rates
Performance Highlights
India's retail sector is expected to grow to about US$ 600 billion by 2015 and to US$ 850 billion by 2020 Traditional retail is expected to grow at 7% and reach a size of US$ 650 billion (about 76%), while organized retail is expected to grow at 25% and reach a size of US$ 200 billion by 2020 The FMCG sector in India has grown at 17% over the last five years and is expected to grow to US$ 100 billion by 2025
23

Participant Profile
Annual Revenue Wise Break Up
9% 18%
64% of the companies participating in this sector had an annual revenue between 500 1000 Cr. The second highest number of participants fell in the 100 300 Cr. range
9%
64%
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
>1000 Cr.
Employee Strength
9% 9%
18%
45% 18%
45% of the companies participating from this sector have an employee strength of 500 2000 The second highest participation came from organizations who had an employee strength between 2000 5000 and less than 500
<500
500 - 2000
2000 - 5000
5000 - 10000
10000 - 25000
24

Annual Increments 2013 14
Median annual increment in this sector projected to be one of the lowest this year
Increment Percentiles
The median annual increment projected for this sector is 10.0% The range between the Junior and Top Management increment medians is one of the largest of any sectors When compared to other sectors, the increments for Junior Management are lowest at the median level at 8.4%
10th
25th 7.9% 9.1% 9.9% 11.6%
50th 8.4% 9.6% 10.3% 12.0%
75th 11.7% 12.9% 13.1% 14.2%
90th
JM
MM SM TM
7.1% 8.0% 9.3% 10.7%
12.5% 13.8% 14.6% 15.4%
16 15 14 13 12 11 10 9
JM
MM SM TM
25

The annual increment median for this sector is projected to be 2% points lower than last years median
10th Percentile 2012-13 9.0% 7.4%
25th Percentile 10.8% 8.6%
Median 12.0% 10.0%
2013-14
20%

18% 16% 14% 12.0% 12% 10% 8% 8.4% 6% 4% 2% 0% JM MM 2012 - 13 SM 2013 - 14 TM 9.6% 10.3% 10.0% 12.0% 11.8% 12.0%
The conservative outlook of the market is expected to continue to influence the increment levels in this sector with the median increments of Junior, Middle and Senior Management expected to be lower than last year The highest reduction in increment Management level a 3.6% point drop is at Junior
This is followed by Middle Management a 2.4% point drop, and Senior Management 1.5% points below last years median level
26

Range of variable pay percent across levels is very wide; variable pay at all levels expected to be second highest across sectors
Median variable pay percent for this sector is expected to be at 18.8% This is significantly higher than the cross-sector median and slightly higher than last years median for the same sector Top Management median levels for variable pay percent is projected to be 21.2% The variable pay percent for this sector ranges from 8.9% to 34.8% across levels
JM
MM SM TM
8.9% 10.4% 12.4% 14.3%
24 22
20
18 16 14 12 10 8
JM MM SM TM
27

Variable pay has marginally increased across levels as compared to last year; almost no change at Top Management level
10th Percentile 2012-13 10.0% 9.8% 25th Percentile 14.3% 13.9% Median 18.2% 18.8% 75th Percentile 19.0% 24.7% 90th Percentile 28.0% 30.2%
2013-14

50%
The median variable pay percent has increased marginally from 18.2% last year to 18.8% this year Considering the high turnover rates in this sector, the high variable pay percent may indicate that there is a continued focus within the sector of linking performance with pay across cadres to motivate employees across levels and maintain competitiveness Through this, we can also infer that organizations are considering lower increments leading to lower fixed components of employees salary and a greater emphasis on the performance linked incentives
40%
30% 19.4%
25.0%
20%
16.3%
17.9%
21.2% 19.0% 14.0%
10%
15.0%
0% JM MM 2012 - 13 SM 2013 - 14 TM
28

Key Benefits
Most of Top Management and almost half of Senior Management receive Driver allowance; Mobile allowance not made available to Junior Management by some companies
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 9.1 90.9 MM 18.2 81.8 SM 18.2 27.3 18.2 36.4 TM 9.1 45.5 45.5 -

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 81.8 18.2 MM 72.7 9.1 9.1 9.1 SM 36.4 18.2 18.2 18.2 9.1 TM 9.1 18.2 27.3 45.5 -
Driver: 81.8% and 45.5% of the companies in this sector provide Driver or Driver Allowance for the Top Management and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM 9.1 MM 9.1 SM TM -
Medical Insurance
36%
Employee, Spouse & Children 64% Employeee, Spouse, Children & Parents
9.1
81.8
18.2
18.2 54.5
18.2
27.3 27.3 9.1 18.2
18.2 36.4 45.5

18.2% of the companies in this sector provide LTIPs to their employees. The most preferred LTIP is Cash Plan
Leave Encashment Percentage of companies allowing leave encashment: 72.7 % Median number of days encashable in the industry: 26 Days
29

Human Capital Trends
Human Resource Challenges Reasons for Attrition
3 Engaging and Motivating Employees
Pursue further studies
Attrition rates in this sector are highest at the Junior Management level Given this turnover, attracting and retaining skilled talent is the most immediate concern for organizations Engaging and motivating the employees to remain with the organization as well as to perform at ever increasing level is another significant HR Challenge This also explains the increases in variable pay across grades as organizations are trying to motivate employees and incentivize loyalty as well as high performance
With the introduction of international players in the industry, organizations in this sector are finding it increasingly difficult to retain their employees The most common reason for attrition is better career opportunities elsewhere as employees have a lot of options to choose from given that their skills can be easily transferable Better pay elsewhere is also a frequent reason for attrition as employees are likely to move even for the slightest pay increase to get more cash in hand Personal reasons is the third highest reason for attrition. This may be because many employees at the lower levels consider this sector, like the ITeS sector, as a stop-gap solution while pursuing other avenues in their personal lives
30
Manufacturing
Manufacturing
Executive Summary
The increments in the Manufacturing sector are expected to be around 11.2% - the same level as the overall cross-sector median increment Variable pay percent median for this sector is projected at 17.8% The overall attrition rate for this sector is 12%.
The highest attrition rate is at the Junior

Management level (14%) Hiring skilled talent and developing potential future leaders are key HR focus areas for organizations in this sector
32
Manufacturing
Sector Snapshot
Industry Overview
Deloittes global index, 2013, for 38 nations, has ranked India the fourth most competitive manufacturing nation, behind China, the US and Germany The Global Manufacturing Competitiveness Index, 2013, based on a survey of CEOs, executives and other officials of 550 global manufacturing companies, has positioned India as second five years down the line, next only to China Indias manufacturing sector, which accounts for around 16 per cent of the countrys GDP, also accounts for 1.8% of the global manufacturing pie
Key Challenges
Corporate India reported an average overall attrition of 19.3% for 2012 Manufacturing industry in India took a hit in FY2012 in terms of growth given the ever rising fuel costs, production cuts and temporary plant shutdowns
Source : Deloitte 2013 Global Manufacturing Competitiveness Index; IBEF
Purchasing Managers' Index (PMI) - a measure of factory production - stood at 53.7 in November 2012, up from 52.9 in October 2012, indicating an improvement in the overall health of the Indian manufacturing sector Manufacturing exports from India could increase from US$ 40 billion in 2002 to about US$ 300 billion by 2015, such an expansion would make India rake-in a share of approximately 3.5 per cent in the world manufacturing trade
33
Manufacturing
Participant Profile
5% 8% 11%

55% of the participating companies have an annual revenue between 500 1000 Cr. The second highest participation is accounted for by companies between 300 500 Cr., followed by the 100 300 Cr., and less than 100 Cr. brackets
21% 55%
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
>1000 Cr.
Employee Strength
5% 3% 3% 32% 26%
The highest percentage of companies participating have an employee strength of less than 500 and between 500 2000 This is followed by 26% of the companies having employee strength between 2000 - 5000
32%
<500
500 - 2000
2000 - 5000
5000 - 10000
10000 - 25000
>25000
34
Manufacturing
This sector is expecting a median annual increment of 11.2% - at the same level as the overall cross-sector median increments
Increment Percentiles 10th 25th 9.8% 10.2% 11.0% 11.9% 50th 10.1% 10.9% 11.5% 12.8% 75th 11.8% 12.6% 13.3% 14.1% 90th 13.4%

The median increment for this sector is 11.2%, which is at par with the cross-sector median The increment ranges across levels for this sector are quite narrow, ranging from 9.3% to 15.9% Top Management median level increments are expected to be around 12.8% which is the third highest increment across all sectors
JM
MM SM TM
9.3% 9.9% 10.4% 10.8%
14.0%
15.2% 15.9%
16 15 14 13 12 11 10 9 8
JM
MM SM TM
35
Manufacturing
Annual increment level has shown a significant decline at the median level; highest decline at Junior and Middle Management levels
10th Percentile 2012-13
9.0% 9.5%
25th Percentile
12.0% 10.6%
Median
15.0% 11.2%
75th Percentile
15.0% 12.7%
90th Percentile
17.0% 13.9%
2013-14
20% 18% 16% 14.0% 14% 12% 10% 10.1% 8% 6% 4% 2% 0% JM
15.0% 13.0% 13.0%
12.8% 10.9% 11.5%
Rising inflation impacting fuel, transport and wage bills has impacted the bottom lines of most organizations. This in turn has led to a significant review of the increments given and a conscious effort has been made to provide increments at a lower median level in this sector. The increments have come down from 15.0% last year to 11.2% this year The range of increments from 10th to 90th percentiles has also shrunk from 9.0% - 17.0% last year to 9.5% - 13.9% this year The highest decline is seen at the Junior and Middle Management levels where the median increment levels have witnessed a 3.9% points and 4.1% points decline The increment given to Top Management remains the same as the previous two years in the vicinity of 12.8%
MM 2012 - 13
SM 2013 - 14
TM
36
Manufacturing
Variable pay percent for this sector are projected to be more than competitive with the market level variable pay projected
Median variable pay percent for this sector is expected to be at 17.8% This is approximately 0.5% point higher than the cross-sector median variable pay percent The range of variable pay at all levels has also significantly expanded, especially at Junior Management level where the variable pay percent ranges from 9.8% to 27.1% There is a significant leap of 1.6% points in the median variable pay percent of Junior and Middle Management
JM
MM SM TM
9.8% 11.1% 13.9% 15.2%
24
22 20 18
16 14 12 10 8
JM MM SM TM
37
Manufacturing
Variable pay percent projection has seen a decline in this sector; Median variable pay across levels largely unchanged
12.0% 10.1%
25th Percentile
16.3% 13.6%
Median
20.0% 17.8%
75th Percentile
25.0% 22.9%
90th Percentile
30.0% 27.7%
2013-14

50%
The range of variable pay percent for the overall sector has remained the same, albeit it has declined by a couple of percentage points at all percentiles The variable pay percent median levels for Junior and Middle management show a slight increase over last years figures, while those for the Senior and Top Management show a corresponding decrease over the same period
15.9% 17.5% 20.0% 21.8%
40%
30%
20%
18.4%
19.8%
10%
15.0%
15.0%
The lower variable pay projections can be explained by the conservative approach that organizations are bound to be adopting for the coming year in the manufacturing sector, as the industry as a whole witnessed a slowdown in the growth rate
0% JM MM 2012 - 13 SM 2013 - 14 TM
38
Manufacturing
Key Benefits
Car provided to some Junior and Middle Management in the sector; Leave encashment median at 30 Days
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 7.9 13.2 78.9 MM 13.2 18.4 15.8 52.6 SM 7.9 23.7 26.3 10.5 31.6 TM 26.3 36.8 23.7 13.2

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 15.8 5.3 5.3 73.7 MM 21.1 21.1 26.3 31.6 SM 10.5 23.7 34.2 31.6 TM 15.8 26.3 57.9 -
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM 26.3 MM 36.8 SM 26.3 TM -
Medical Insurance
13% Employee Only 34% Employee, Spouse & Children 53% Employeee, Spouse, Children & Parents
2.6 71.1
15.8
5.3 2.6 39.5
21.1
15.8 15.8 10.5 10.5
15.8
21.1 31.6 31.6 -

18.2% of the companies in this sector provide LTIPs to their employees. The most frequently provided LTIP is Restricted Stock Units
Leave Encashment Percentage of companies allowing leave encashment: 44.7% Median number of days encashable in the industry: 30 Days
39
Manufacturing
Developing Potential Leaders
3 Retaining Critical Talent
There is a challenge hiring skilled talent in manufacturing industry as the skilled talent is more likely to choose working in the Hi-tech industry because of better pay and other benefits Identifying and developing potential leaders for future, in order to ensure the long term success of the organizations and increased growth of the sector, is a major challenge in manufacturing industry Due to better pay in IT and other Hi-tech industry, talent is also likely to shift from manufacturing industry to these other sectors, making retaining critical talent a key HR focus area for the sector
Attrition at the Junior management level is relatively low compared to the other sectors. However, it is still a concern for organizations in this sector Due to the competitive nature of the market, companies are losing employees to better pay elsewhere mostly in sales sector Pursuing higher studies is another key factor for attrition. Employees in the engineer cadre are likely to pursue management degrees in order to increase their chances of rising up the management ranks
40

Executive Summary
Increments have been conservative at 10.6%; increments have dropped considerably at the median level for this sector
The median variable pay for this sector is

15.4% - almost 2% points lower than the cross-sector median Annual average attrition rates for this sector
have been indicated to be 13% - this is

consistent across all levels of management Career management, retaining critical talent, etc. cited as key HR challenges in this sector
42

Sector Snapshot
Industry Overview
In 2012, the real estate and infrastructure sector accounted for 25 per cent of the total FDI inflows into India which is expected to grow even further in 2013. Construction is expected to account for a major chunk of this investment Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative FDI worth USD 21,765.55 million from April 2000 to November 2012. Total revenue from real estate sector is around USD 75 Billion which has been growing at a CAGR of 10% India has seen a high demand for residential space, commercial space, retail space and space for hospitality industry. This can be attributed to urbanization, growing economy, easy financing options and growth in tourism
Key Challenges
Challenges to the Real Estate industry continue to revolve around transparency of dealings, an inability to forecast accurately as well as off-the-books deals and improper maintenance of land records. This is further affected by the lack of proper and systematic, urban and rural planning and development activities by the Government With the slowing Indian economy and reduced consumer interest, real estate firms are facing a difficult time. They are increasingly turning to private equity investors to fund their business as the traditional means of funding from banks are getting tougher
Source : Deloitte POV End Use Monitoring for Real Estate Industry; IBEF ; www.investindia.gov.in
This sector is expected to grow at the rate of 30% over the next 10 years Increasing Government support for FDI in the real estate and infrastructure sector is expected to give a major boost for the exponential growth predicted for this sector
43

Participant Profile

20%
50% 20%
Half of the companies participating have an annual revenue between 500 1000 Cr. The second highest participation came from companies with an annual revenue between 100 300 Cr. and less than 500 Cr.
10%
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
Employee Strength
10%
40%
50% of the companies participating from this sector in the survey have an employee strength of 500 2000 40 % of the companies have less than 500 employees
50%
<500
500 - 2000
>25000
44

Projected median annual increment for this sector is 10.6%; Junior Management expecting an increment of 9.7% at median level
10th
25th 8.4% 9.7% 10.0% 11.5%
50th 9.7% 10.4% 11.3% 12.2%
75th 11.8% 12.4% 13.1% 13.9%
90th 13.1% 13.9% 14.7% 15.6%

The overall median increment for this sector is 10.6% - lower than the overall cross-sector median increment level Senior and Top Management levels in this sector are set to receive increments that are in the range of the overall crosssector median of 11.3% at the median level While increments in this sector vary from 7.6% to 15.6%, when compared to the rest of the sectors, this sector fares somewhat well on an average
JM
MM SM TM
7.6% 8.5% 9.3% 10.9%
16 15 14 13 12 11 10 9 8
JM MM SM
TM
45

Increments have significantly declined at the median level from 15.0% last year to 10.6% this year
10th Percentile 2012-13 6.4% 7.9%
Median 15.0% 10.6%
2013-14
20% 18% 16% 14% 12.0% 12% 10% 8% 6% 4% 2% 0% JM 9.7%
15.0% 12.5%
Increments have declined across all levels except for Top Management, where the increments, after falling considerably last year, are beginning to look upwards again
12.2%
11.3% 10.4% 10.0%
The highest decline is witnessed at the Senior Management level which was otherwise consistent at around 15% for the last two years
MM 2012 - 13
SM 2013 - 14
TM
46

Junior Management expected to receive lowest variable pay percent at median level when compared to rest of the sectors
There has been a marginal increase in the overall median variable pay percent level from 15.0% to 15.4% At Junior Management level, the sector has one of the lowest variable pay percent medians compared to all the other sectors The range of variable pay percent at the Junior Management level is also wide, going from 7.9% to 20.3%
JM
MM SM TM
7.9% 9.8% 11.1% 12.9%
24
22 20 18
16 14 12 10 8
JM MM SM TM
47

Variable pay percent increase seen at Junior Management level; unchanged at the Top Management level
10th Percentile 2012-13 9.5% 8.2%
Median 15.0% 15.4%
2013-14

50%
The overall variable pay percent range for this sector goes from 8.2% to 22.5% Junior and Middle Management have seen virtually no change in their variable pay percent levels at the median mark At the Senior and Top Management level, the variable pay percent has seen a significant decline of 4.1% points and 3% points respectively
20.0% 20.0%
40%
30%
20% 12.2% 10% 12.0% 15.0% 14.8% 15.9% 17.0%
Last years trend, shown by companies in this sector, of moving away from ad-hoc payments and more structured and planned variable pay policies seems to be continuing. Especially at the Senior and Top Management levels, variable pay seems to be becoming more standardized across the sector
0% JM MM SM TM
2012 - 13
2013 - 14
48

Key Benefits
LTIP not a common practice; Fuel Allowance by half the companies to Middle Management and by 90% of the companies to Senior Management; 40% companies allow leave encashment
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 100.0 MM 10.0 90.0 SM 20.0 30.0 30.0 20.0 TM 10.0 20.0 70.0 -

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 50.0 40.0 10.0 MM 50.0 40.0 10.0 SM 50.0 50.0 TM 10.0 90.0 -
Driver: 90% and 70% of the companies in this sector provide Driver or Driver Allowance for the Top Management and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
Medical Insurance
20% 20% Employee Only Employee, Spouse & Children Employeee, Spouse, Children & Parents 60%
10.0
80.0
30.0
50.0
20.0
40.0 10.0 10.0 10
10.0 30.0 60.0 -

None of the participating companies provide a Long Term Incentive Plan in this sector
Leave Encashment Percentage of companies allowing leave encashment: 40% Median number of days encashable in the industry: 33 Days
49

3 Career management
Better work life balance
Hiring talent has become a key challenge for the Infrastructure players. The reason for this can be attributed to better salaries and growth opportunities offered by the foreign players Infrastructure sector has been facing a middle management crisis where the middle management is not groomed for the future roles. This results in attrition at middle management due to lack of development opportunities. As a result, developing potential leaders is a key HR challenge Most of the companies are also struggling to define a career path for the junior management
Increasing FDI in infrastructure and consistent growth rate could be the key drivers for the better career opportunities in the sector 70% of the participants think Better pay elsewhere provided by competitors is one of the key reason for attrition Some of the participants also believe that better work life balance could be one of the reason for the attrition in infrastructure and real estate sector
50
Pharmaceuticals, Health Care and Life Sciences

Executive Summary
The median annual increment in this sector is the highest across all sectors at 13.1% At 18%, the variable pay percent median of
this sector is also higher than the crosssector median The average attrition rate for this sector is 14%. This is due to the attrition rate at the
Junior Management level which includes

Sales staff (17%) Retaining and Engaging / Motivating employees is a key challenge faced by this sector
52

Sector Snapshot
Industry Overview
The expected CAGR from 2012-16 pharmaceutical market is 14-17% for the Indian
Key Challenges
There is a need felt within the sector for improvements in workforce training and development, integration of information technologies, upgrades and expansions of clinical services, physician alignment and cost reduction The GDUFA (Generic Drug User Fee Act) has been introduced in the US. As per this act, the generic companies are required to pay user fees to USFDA, for application of drugs and manufacturing facilities. This fee will be utilized by USFDA to engage additional resources in order to reduce current and pending applications and speed up the approval process. This act was passed in 2011, which was signed into Law in July 2012 The threat of controlled licenses being awarded to companies to manufacture patented drugs at cheaper rates
At the same time, the domestic pharmaceutical market is expected grow at a fast pace of 13-14% in 2013 The Ministry of Commerce has proposed an ambitious Strategy Plan to double pharmaceutical exports from US$ 10.4 billion in 2009-10 to US$ 25 billion by 2013-14 The Government has also planned a 'Pharma India' brand promotion action plan spanning over a three-year period to give an impetus to generic exports
There is a major challenge for small and mid sized companies who are losing their patents.
Another challenge is the rising influence of retail in the Indian market. This will have a result in the shift from Physicians and manufacturers to retail over the counter medicines
Source : IBEF; Department of Industrial Policy and Promotion (DIPP) Report; Pharmaceutical Exports Council of India
The cumulative drugs and pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 9.78 billion between April 2000 to November 2012 India's exports of drugs, pharmaceutical and fine chemicals grew by 27% to USD 11.19 billion for the year ended March 2012
53

Participant Profile
7%
47% 40%
Majority of the companies participating in this survey have a revenue between 500 1000 Cr., followed by 100 300 Cr. A small percentage of companies also have revenues of less than 100 and between 300 500 Cr.
7%
<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr.
Employee Strength
7% 20%
13%
20% 40%
Companies with an employee strength of 2000 5000 account for 40% of the participants in this sector The second highest participation (20%) comes from companies with an employee strength of less than 500 and between 500 2000
<500
500 - 2000
2000 - 5000
5000 - 10000
10000 - 25000
54

Median annual increment in this sector projected to be the highest across all sectors at 13.1%
10th
25th 11.7% 11.9% 12.8% 13.6%
50th 12.4% 12.8% 13.7% 15.1%
75th 13.9% 14.5% 15.3% 16.2%
90th 15.0% 15.9% 16.7% 17.5%
At 13.1%, the median annual increment level for this sector is the highest across all sectors this year Across all levels, increments are the highest as compared to any other sector Increments in this sector range from 10.5% to 15.0% for Junior Management, 10.8% to 15.9% for Middle Management, 11.2% to 16.7% for Senior Management and 12.3% to 17.5% for Top Management
JM
MM SM TM
10.5% 10.8% 11.2% 12.3%
16 15 14 13 12 11
JM MM SM TM
10
9 8
55

Across all ranges, the increments for this sector have risen considerably, with the highest increase seen at Top Management level
2013-14
20%

18% 16% 13.7% 14% 12% 12.0% 10% 12.0% 12.0% 12.0% 12.4% 12.8% 15.1%
When compared to the increment range from last year, the range this year has increased from 11.0% to 16.1% for the overall sector While the increments were standard across all sectors last year, a sharp increase in Top Management increments can be observed this year a jump from 12.0% to 15.1% Senior Management has also received considerably high increments this year (13.7%), while those for Junior and Middle Management have increased within the range of 1% point
8%
6% 4% 2% 0% JM MM 2012 - 13 SM 2013 - 14 TM
56

Variable pay percent for this sector are projected to be competitive with the market
Median variable pay percent for this sector is expected to be at 18.0% This is significantly higher than the cross-sector median and slightly higher than last years median for the same sector Top Management median levels for variable pay percent is projected to be 21.2% The variable pay percent for this sector ranges from 8.9% to 34.8% across levels
JM
MM SM TM
9.8% 10.7% 11.3% 12.0%
24 22 20 18 16 14 12 10 8
JM MM SM TM
57

Variable pay percent increase seen at Junior Management level; unchanged at the Top Management level
10th Percentile 2012-13 8.7% 10.5%
Median 15.0% 18.0%
2013-14

50%
At 18%, the median variable pay percent for this sector is higher than the cross-sector median variable pay percent While Junior Management has received lower increments than the rest of the levels, the variable pay percent for this level has witnessed a significant leap to 16.0%, indicating a push from the companies in this sector towards greater competitiveness
20.1% 20.0%
40%
30%
20%
16.0%
17.2%
18.9% 20.0%
Sales incentives and performance linked pay has been identified as the most suitable way of retaining critical sales force employees as well as driving higher growth rates of the organizations as well as the sector
10% 11.0%
15.0%
0% JM MM SM TM
2012 - 13
2013 - 14
58

Key Benefits
Leave encashment not a popular benefit in the sector; Mobile allowance for Top Management indicated to be relatively low by 40% companies; varying medical coverage provided across the sector
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 6.7 93.3 MM 20.0 6.7 73.3 SM 13.3 26.7 40.0 20.0 TM 13.3 26.7 46.7 13.3

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 66.7 13.3 20.0 MM 66.7 13.3 13.3 6.7 SM 60.0 40.0 TM 40.0 13.3 46.7 -
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM MM 26.7 SM 6.7 TM -
Medical Insurance
13% 33% Employee Only
7%
Employee & Spouse Employee, Spouse & Children
6.7 93.3
6.7
13.3 53.3
20.0
26.7 6.7 26.7 13.3
26.7
26.7 6.7 26.7 13.3
47%
Employeee, Spouse, Children & Parents

33.3% of the companies in this sector provide LTIPs to their employees. The most frequently provided LTIP is Deferred Cash
Leave Encashment Percentage of companies allowing leave encashment: 20 % Median number of days encashable in the industry: 40 Days
59

3 Engaging and Motivating Employees
High technology changes and advancements in the medical field has made it difficult to get skilled talent in the industry Employee turnover in this sector has made Engaging and Retaining talent a perennial burning priority in this sector Due to increasing competition for developing new patents there is an increasing pressure on the employees to perform. This in turn has affected the motivation of employees
As many MNCs are investing directly in India and are opening many operations, career opportunities have widened for people in this industry This, coupled with the easy mobility and transferability of skills that the sales force especially enjoys in this sector, has led to relatively high attrition levels in this sector at the Junior Management level Such employees are also likely to switch companies for even the slightest added benefit, or pay, making better pay elsewhere a key reason for attrition Pursuing further studies is the third key reason for attrition indicated in this sector
Retaining employees, especially at the sales force level, is a critical challenge for this sector, as sales employees find it easy to switch jobs due to easily transferable skills
60
Financial Services
Financial Services
Executive Summary
The median annual increment in this sector is 9.6% This is a slight decrease over last years
increment
The variable pay in this sector stands at 20.1% at the median level The overall attrition rate for this sector is 15% - especially being a concern at the junior management level where it is 21% The key HR challenges in this sector are
hiring and retaining skilled talent, and

developing potential leaders
62
Financial Services
Sector Snapshot
Industry Overview
The growth of financial sector in India at present is nearly 8.5% per year. The rise in the growth rate suggests the growth of the economy. The financial policies and the monetary policies are able to sustain a stable growth rate The financial sector in India had an overall growth of 15%, which has exhibited stability over the last few years although several other markets across the Asian region were going through a turmoil The opening of the financial markets variety of products and services were introduced to suit the need of the customer. The Reserve Bank of India (RBI) played a dynamic role in the growth of the financial sector of India The number of foreign financial institutions are on the rise as Indias long-term potential makes it an attractive market for them
Key Challenges
As their counterparts do in other countries, various regulatory authorities, including the RBI and the Ministry of Finance, play major roles in the Indian financial services system. While many of the proposed changes have yet to be made, central government and RBI officials have stated their intention to reform and open the Indian financial services sector gradually, especially the banking sector.
Source: Deloitte 2013 Financial Services Industry Outlook
The financial services industry is expected to grow at about 9% per annum The recently concluded annual budget laid down various new initiatives for the financial services industry especially in the banking sector
63
Financial Services
Participant Profile
10%

15% 50%
55.6% of the participating companies indicated an annual revenue of between 500 1000 Cr. The second highest participation came from organizations with annual revenue between 300500 Cr.
19%
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
Employee Strength
6% 17% 22% 6%
22% 28%
The highest participation in this sector was accounted for by companies having between 5000 10000 employees This was followed by 22% of the organizations having between 2000 5000 and between 10000 25000 employees
<500
500 - 2000
2000 - 5000
5000 - 10000
10000 - 25000
>25000
64
Financial Services
Increments in the Financial Services industry are projected to be the lowest across all sectors at 9.6%
10th
25th 7.8% 8.5% 8.7% 9.4%
50th 9.1% 9.4% 9.9% 10.8%
75th 11.3% 11.7% 12.4% 13.1%
90th 13.0% 14.3% 15.2% 15.7%
The median increments across levels for this sector range from 9.1% for Junior Management, to 10.8% for Top Management The increments in this sector are the lowest across all levels and ranges The focus for this sector has been directed at performance linked incentives this year. Hence, there has been a conscious decision of setting annual increments at a lower level by companies across the sector
JM
MM SM TM
6.9% 7.2% 7.9% 8.2%
16 15 14 13 12 11 10 9 8
JM MM SM TM
65
Financial Services
Annual Increments this year have shown a marginal change from those of 2012 13; the highest difference is seen at the Top Management level
2013-14
20% 18% 16% 14% 12%
Compared to 2012-13, the industry as a whole has witnessed a marginal decrease increments While increments for Junior and Middle Management are lower than last year, Top Management increments have shown a slight increase by 1.5% points The general mood of this sector has been quite conservative resulting in increments considerably lower than the overall cross-sector median level increment
10.8% 10.0% 10.0% 10.0%
10% 8% 6% 4% 2% 0% JM MM 2012 - 13 SM 2013 - 14 TM 9.1% 9.4% 9.9% 9.3%
66
Financial Services
Variable Pay is the highest in the Financial Services sector at 20.1%
Variable pay % for this sector are the highest out of all the sectors with the median across levels ranging from 19.2% to 22.3% The range of variable pay across levels is very wide ranging from 13.1% to 45.1% The median variable pay percent for Junior, Middle and Senior Management are quite close to each other This sector by far has the highest median variable pay across levels when compared with all the other sectors
JM
MM SM TM
13.1% 13.7% 14.8% 15.5%
24
22 20 18
16 14 12 10 8
JM MM SM TM
67
Financial Services
Median Variable Pay has increased for Junior Management, but reduced marginally for Top Management
10th Percentile 2012-13 13.1% 13.4%
Median 20.0% 20.1%
2013-14

50%
40%
The spread of variable pay range has remained almost the same as in 2012-13; across the sector the variable pay range between 10th & 90th percentile is 13.4 42.4% as compared to 13.1 48% last year At the median level, the variable pay has not changed. This may also indicate that the sector is continuing its focus on performance linked incentives rather than increasing fixed pay components, given the intense competition that is a feature of this industry The increase in Junior Management variable pay indicates that the focus is now shifting on increasingly inducting junior management to the performance driven culture of the companies in the sector
30% 19.2% 20% 20.0% 10% 15.0% 19.8%
22.3%
20.5%
22.0% 25.0%
0% JM MM 2012 - 13 SM 2013 - 14 TM
68
Financial Services
Key Benefits
ESOPs are a common form of LTIP in this sector; Leave encashment is not allowed in most organizations; Value of Car Amount provided to Top Management in majority of the organizations in this sector
Car Value

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 38.9 16.7 44.4 MM 50.0 27.8 11.1 11.1 SM 33.3 38.9 16.7 11.1 TM 5.6 11.1 83.3 -
Driver: 88.5 and 61.1% of the companies in this sector provide Driver or Driver Allowance for the Top and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
Medical Insurance
94.4
16.7
5.6 72.2
11.1
27.8 27.8 11.1 22.2
11.1 16.7 72.2 -

44.4% of the companies in this sector provide LTIPs to their employees. The most preferred LTIP is ESOPs
69
Financial Services
3 Developing potential leaders
Personal reasons
The turnover rate in this sector is high especially at the junior management level making hiring and retaining skilled talent a key concern for this industry The highly competitive nature of the industry and easy transferability of skills of the talent pool plays an important role creating a challenge for organization to engage and retain talent on a long-term basis. This challenge in retaining talent also has a knock-on effect on the ability to prepare and develop future leaders within the organization, thus making this another key HR challenge for organizations in this sector
Attrition is a challenge faced by this sector primarily in the Junior Management level Better career opportunities ranked as the number one reason for attrition. This may be explained by the fact that employees, especially at the junior level, may be in the habit of changing companies frequently in order to move upwards through the ranks at a quicker pace While organizations try and have competitive pay, they are still losing employees to better pay elsewhere within, as well as outside the sector Personal reasons also ranks high as a reason for attrition in this sector
70
Information Technology
Executive Summary
The median annual increment in this sector is projected at 10.7% which is slightly lower than last years increment (11%)
At a median of 16.3%, the variable pay this

year for this sector has seen a considerable increase from last year (15.1%) This sector has seen overall attrition of 15%
across all levels. The highest attrition is seen

at Junior and Middle Management levels 18% and 15% respectively Given the attrition rates, hiring and retaining skilled talent are the major concerns for this sector
72
Sector Snapshot
Industry Overview
The IT sector has seen the emergence of full service players offering not just traditional services such as application development, maintenance and testing, but also infrastructure facilities, consulting and system integration. The focus of the sector is also now shifting to a vertical-driven approach so that the depth of services are also concentrated upon not just the breadth of services offered With the emerging focus on applications of Cloud Computing and new platforms within the domestic market, the services provided by the sector are getting increasingly diversified and this represents an immense growth opportunity for the sector as a whole
Key Challenges
Hiring and retaining critical talent is a perennial challenge for this industry The sector also faces a concern of the skill-levels of the talent pool that it sources employees from. Although there is an increasing number of institutions that are providing engineering education in the country, the skill level of the graduates remains a concern due to the quality of the education that is imparted in these institutions The western markets especially Europe have been slow in their path to recovery after the economic slowdown. Hence, this has in turn affected the performance of the sector which is as dependent on the demand from foreign markets as it is on domestic markets
Source : NASSCOM; Deloitte POV Technology, Media & Telecommunications India Predictions 2013
IT outsourcing market is set to grow at a CAGR of about 8% over 2011 to 2013 The market for enterprise mobility solutions alone is expected to grow to USD 17 billion by 2015
73
Participant Profile
23% 38% 8%
At 38%, the highest participation in this sector came from companies with annual revenues between 500 1000 Cr. The second highest participation (31%) was that of organizations with revenues between 300 500 Cr., followed by 23% falling below 100 Cr.
31%
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
Employee Strength
23%
23%
15%
15%
23%
There was equal amount of participation (23%) by companies with employee strengths below 500, between 2000 5000 and greater than 25000 This was followed by equal participation (15%) by companies having between 500 2000 and between 5000 10000 employees
<500
500 - 2000
2000 - 5000
5000 - 10000
>25000
74
Median annual increments in this sector at the Junior and Top Management level are expected to be 9.9% and 11.6% respectively
10th
25th 8.6% 9.3% 9.8% 10.1%
50th 9.9% 10.5% 10.9% 11.6%
75th 11.1% 12.7% 13.2% 13.9%
90th 13.9%
Across all levels except Top Management, the median annual increment ranges are projected to be lower than the overall industry median Middle and Senior Management increments from the 10th 75th percentiles do not show much variation
JM
MM SM TM
7.5% 8.1% 8.6% 8.9%
14.8% 15.6% 16.2%
16
15
14 13 12 11 10 9 8
JM MM SM TM
75
Overall annual increments in this sector are expected to remain almost consistent with last year, albeit displaying a fractional decline
8.9% 7.7%
25th Percentile
9.8% 9.0%
Median
11.0% 10.7%
75th Percentile
12.0% 11.9%
90th Percentile
13.3% 13.1%
2013-14
20% 18% 16% 14% 12% 10% 8% 9.9% 12.0%
The Information Technology sector has shown a significant decline in the projected annual increments for Junior Management from 12.0% last year to 9.9% this year
11.6% 9.0% 10.0% 10.0%
10.5%
10.9%
At the Middle and Senior Management levels, the increments have risen only marginally. However, at the Top Management level the increments projected have gone up from 9.0% last year to 11.6% this year The overall outlook for this sector is relatively restrained and expected to be slightly lower than the market median. However, this sector has fared slightly better than the ITeS sector
6%
4% 2% 0% JM MM 2012 - 13 SM 2013 - 14 TM
76
Variable pay ranges in this sector have shown a significantly wide spread across all levels
Variable Pay Percentiles
The overall median variable pay percent for this sector is 16.3%
10th 25th 11.5% 13.1% 14.4% 15.2% 50th 14.9% 16.1% 17.5% 18.7% 75th 18.3% 19.9% 20.2% 21.4% 90th 23.2% 23.9% 24.6% 25.3%
JM
MM SM TM
9.1% 10.7% 11.6% 11.9%
Across all levels, the spread of variable pay percent is relatively wide with Junior Management getting variable pay from 9.1% 23.2% and Top Management receiving 11.9% - 25.3% The variable pay median received by Junior Management in this sector is relatively low compared to many other sectors
24 22 20 18 16 14
JM MM SM TM
12 10 8
77
Across the sector, variable pay has shown a pattern of leveling out across management levels
10th Percentile 2012-13 8.4% 9.4%
Median 15.1% 16.3%
2013-14

50%
The sector median for variable pay percent is 16.3%, This is considerably higher than last years 15.1% Across all levels, variable pay percent median for Top Management is down to 18.7% from last years 25%, Senior Management is down to 17.5% from 20%, Middle Management has a slight increase from 15.0% to 16.1% and Junior Management has spiked from 10.5% to 14.9%
40%
30% 20.0% 20% 14.9% 16.1% 17.5%
25.0%
18.7%
10% 10.5% 0% JM
15.0%
MM 2012 - 13
SM 2013 - 14
TM
78
Key Benefits
Medical coverage extended to close family as well by majority companies; Fuel Allowance not provided at Junior and Middle Management; Leave encashment practice not followed by many companies
Car Value

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 61.5 38.5 MM 46.2 15.4 7.7 30.8 SM 23.1 15.4 61.5 TM 7.7 15.4 38.5 38.5 -
Driver: 84.6% and 46.2% of the companies in this sector provide Driver or Driver Allowance for the Top and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
Medical Insurance
46% 54%
Employee, Spouse & Children Employeee, Spouse, Children & Parents
100.0
7.7
84.6
15.4
23.1 7.7 7.7 30.8
7.7
15.4 38.5 38.5 -

79
Personal reasons
Given the growth prospects of this sector, and the job opportunities available to employees, retaining critical talent is emerging as the key challenge for HR in this sector There is an increasing need witnessed in this sector for developing a robust talent strategy in order to not just retain talent but also source top quality talent from the best schools and then developing them to go on to become future leaders of the organizations Organizations in this sector are poised at a crossroad where they have an opportunity to deal with these challenges in time to be prepared for the growth predicted
Employees in this sector are well aware of the global opportunities that are available for IT professionals from India. As a result of this demand, they face no problems in finding employment elsewhere and changing companies for a better opportunity These opportunities are not only limited to international transfers to other organizations, but also domestically where a marginal increase in pay and other fringe benefits can persuade a jump from one organization to another Personal reasons also rank high in the causes for attrition and these may include marriage, further education (e.g. MBAs), etc.
80
Information Technologyenabled Services (ITeS)
ITeS
Executive Summary
This sector is expecting a median annual increment of 10.3% - a considerable decrease from the 12.0% median increments observed last year At the median level, the variable pay in this sector has risen significantly to 16.1% almost at par with the overall cross-sector
median
The highest attrition levels across all sectors is seen in the ITeS industry 17% overall and 25% at the Junior Management level on average Key reasons for attrition noted in this sector are better career opportunities and better pay
82
ITeS
Sector Snapshot
Industry Overview
According to a NASSCOM report, the Indian ITeS industry continues to be the most cost-competitive provider of offshore services One of the main reasons for this is the ready availability of a large and qualified talent pool that is required for this industry to source its people from Non-captive organizations are able to tailor their services to the various needs of the clients and this flexibility in operations as well as the round-the-clock services offered to cater to global companies is a major advantage for this sector in India The increasing computer literacy in the countrys youth also contributes to the increasing skill level of the talent pool that this sector can tap into
Key Challenges
Increasing competition from other low-cost countries like China, Brazil, Mexico, Indonesia which has made India a less favored market for the ITeS sector Exposure to US and Europe slowdown has considerably affected the ITeS sector and it is currently recuperating from the after-effects of the same
Changing policies in the host countries in Europe and the US are also affecting the ITeS sector by creating an environment of uncertainty with regards to the future business plans
Economic uncertainties are also currently forcing organizations to reset their operational costs and technology related spending Compliance to standardized processes, regional statutory norms and internal controls is another hurdle that the sector has to deal with
Source : NASSCOM, IBEF
India's BPO sector exports are expected to grow by 12-14% in FY14 to touch USD 84 billion - USD 87 billion The industry is moving towards a Platform BPO approach where service delivery is more platform-centric than people centric and on a pay-per-use model
83
ITeS
Participant Profile
7.1
14.3
28.6 50.0
Companies with an annual revenue of 500 1000 Cr. account for 50% of the total organizations participating in this sector The second highest participation is of organizations falling in the 300 500 Cr. revenue bracket
<100 Cr.
300 - 500 Cr.
500 - 1000 Cr.
>1000 Cr.
Employee Strength
14.3 28.6
21.4 7.1 7.1 21.4
The highest participation of companies in this survey from an employee strength perspective, comes from organizations who have between 500 2000 and more than 25000 employees This is followed by organizations who have between 2000 5000 employees and then less than 500 employees
<500
500 - 2000
2000 - 5000
5000 - 10000
10000 - 25000
>25000
84
ITeS
Increments have been conservative; organizations in this sector continue to remain cautious
10th
25th 8.1% 8.9% 9.3% 9.8%
50th 9.5% 10.1% 10.7% 11.2%
75th 11.8% 12.7% 13.6% 14.4%
90th 13.3% 14.5% 15.3%

The median increment for this sector is expected to be 10.3% this year Increments for this sector are marginally lower than those for the IT sector, across all levels The range of median increment across levels in this sector is narrow, ranging from 9.5% to 11.2% Top Management is expected to receive some of the lowest increment percentages across all sectors
JM
MM SM TM
7.2% 7.8% 8.4% 8.7%
16.1%
16 15 14 13 12 11 10 9 8
JM
MM SM TM
85
ITeS
Overall annual increments across the range show a significant decline from last year
10th Percentile 2012-13 9.8% 7.5%
Median 12.0% 10.3%
2013-14
20% 18% 16% 14% 12.0% 12% 10% 8% 6% 4% 2% 0% JM 9.5%
Increments this year have been cautious. This may be attributable to the degree of uncertainty that organizations in this sector are currently operating in
13.0% 11.0% 11.2%
10.1%
10.7% 10.0%
Outsourcing policy reviews in the host countries of organizations, in a bid to increase employment in those countries is a threat to this sector. As a result, organizations are adopting a conservative approach to the increments, in order to optimize costs Marginally higher increments are expected at Top Management level. However, Junior and Middle Management have seen a significant decline in the increment levels
MM 2012 - 13
SM 2013 - 14
TM
86
ITeS
Median variable pay for this sector is almost at the same level as that of the overall industry median
Variable Pay Percentiles
The median variable pay percent for this sector is 16.1%

10th 25th 11.2% 12.7% 13.4% 15.7% 50th 14.6% 15.7% 16.5% 18.3% 75th 19.3% 19.8% 20.7% 21.9% 90th 22.8% 23.3% 24.1% 25.0%
JM
MM SM TM
8.7% 10.3% 11.2% 11.6%
The variable pay percent for this sector ranges from 8.7% to 25 % - indicating a wide variation between organizations and levels Junior Management has received the widest range in variable pay this year from 8.7% at the 10th percentile to 22.8% at the 90th percentile Compared to the IT sector, the variable pay percent in this sector is marginally lower at all levels
24 22 20 18 16 14 12 10 8
JM MM SM TM
87
ITeS
Variable pay for this sector has seen a sharp jump across organizations at the Junior Management level and has stayed constant at Top Management level
2013-14
Median Annual Variable Pay (as a % of CTC)

50%
The sector median for variable pay percent is 16.1%, This is considerably higher than last years 13.5% Variable pay percent at the median level for Junior Management has seen a sharp jump from 10.5% to 14.6 % since last year However, Top Management variable pay has remain unchanged at the median level and Middle Management has seen a slight decline from 18.5% to 16.5%
40%
30%
20%
14.6%
15.7%
16.5% 18.5%
18.3% 18.3%
10%
10.5% 0% JM
15.0%
MM 2012 - 13
SM 2013 - 14
TM
88
ITeS
Key Benefits
Almost all companies provide Driver to Top Management; close to half of the companies provide a Deferred Cash plan as an LTIP; 13 Days leave encashable is the median for this sector
Car Value

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 57.1 42.9 MM 42.9 14.3 14.3 28.6 SM 21.4 21.4 57.1 TM 7.1 21.4 35.7 35.7 -
Driver: 92.9% and 71.4% of the companies in this sector provide Driver or Driver Allowance for the Top and Senior Management respectively Vehicle Allowance - Fuel
Amount (`)
Medical Insurance
43% 57%
Employee, Spouse & Children Employeee, Spouse, Children & Parents
85.7
7.1
64.3
14.3
28.6 14.3 21.4 7.1
7.1
7.1 42.9 42.9

89
ITeS
Personal reasons
Since the skills in this sector are easily transferrable to different organizations within the same industry, retaining critical talent becomes a major challenge for the Human Resource Department of this sector To address the high attrition percentage faced by this sector, they need to be aggressive in their hiring strategies and have to go for recruitment in large numbers especially at the lower level. In this quest for large numbers and that too in a competitive market, hiring becomes their second most critical challenge As a retention mechanism, providing added incentives such as career growth and training becomes one of the other major challenges for the organizations in this sector
Attrition is a challenge faced by this sector primarily in the Junior Management level where there is plenty of movement across organizations in the same industry While organizations try and pay competitively, they are still losing employees to better pay elsewhere and this is a perennial problem faced by all organizations in this sector The reason other than an attractive pay, in this industry, is the tendency of the junior level of employees to go for further studies, in turn using this type of employment as a stop-gap and earn some money in the process Another trend observed in this sector, especially with female employees, is that the shift timings become a hurdle to their personal lives and hence they attrite from these organizations
90
Advertising & Media
Advertising & Media

Executive Summary
The median annual increment in this sector is 10.2% which indicates a slight decrease from 11% in 2012 13
Analysis indicates that the variable pay

percent in this sector is 14.4% at the median level - a significant rise over last year (10.5%) Attrition is a major concern at the Junior
Management level (23%) and the overall

attrition rate for this sector (16%) is the second highest across all industries Key reasons for attrition are better career opportunities and a need for a better work-life balance Some of the key challenges faced by HR in
this sector are better career opportunities,

better pay elsewhere, etc.
92
Advertising & Media

Sector Snapshot
Industry Overview
Television is considered the reigning emperor for entertainment and has the most perceived advertising persuasiveness across all age groups However, according to a Deloitte study, print media is expected to remain pervasive and will continue to form part of the fabric of the Indian landscape. Newspapers are still the second biggest influencer behind television as the preferred advertising media With the rise in the use of Social Media, more and more companies are turning to Social Networking sites to increase their brand visibility, representing an immense growth opportunity for the advertising segment to tap into
Key Challenges
Though advertising on television is not the only option, it surely is a very effective medium. Ad rates will be affected with digitization stepping in and would be based on more realistic viewership ratings The Average Revenue Per User for TV in India remains low and this is a significant challenge for the television industry
As the printing industry rejuvenates itself, the focus will be on making investments in digital printing, which represents a market growth opportunity for technology vendors, as well as, users
More people read newspapers than ever before, thanks to the many ways they now can be accessed. Publishers will need to find more ways to match that growth with revenues from other avenues, such as, the digital platform
Source : Deloitte POV The State of Media Democracy in India and Technology, Media & Telecommunications India Predictions 2 013
The television sector has grown by around 12.2% between 2007 and 2012 and is expected to expand at a compounded annual growth of 11% to hit USD 15 billion by 2017, up from the current USD 9 billion New newspapers being published will continue to grow at around 6% every year
93
Advertising & Media

Participant Profile
13% 38%

Half the companies participating in this sector have an annual revenue between 100 300 Cr. The second highest participation comes from companies with revenues between 300 500 Cr.
50%
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
Employee Strength
13%
38% 25%
38% of the participating organizations had an employee strength of less than 500, followed by 25% organizations with employee strength between 500 2000 and between 2000 - 5000
25%
<500
500 - 2000
2000 - 5000
5000 - 10000
94
Advertising & Media

Annual increment ranges in this sector are expected to be narrow across all levels, and lower than 2012 13
10th
25th 8.1% 8.7% 9.4% 10.2%
50th 9.0% 9.8% 10.5% 11.6%
75th 11.9% 12.7% 13.9% 14.6%
90th 14.4%
Increment ranges across all levels are expected to get narrower as compared to last year, with the widest range seen at Top Management level 9.3% to 17.7% There is not much variation seen between the increments projected at the median level across Junior to Senior Management these range from 9.0% at Junior Management to 10.5% at Senior Management level
JM
MM SM TM
7.3% 8.0% 8.7% 9.3%
15.2% 16.5% 17.7%
16 15 14 13
12
11 10 9 8
JM MM SM TM
95
Advertising & Media

Compared to 2012 13, the sector is expected to see the highest decline in annual increments in Junior and Middle Management levels
2013-14
20% 18% 16% 14% 12% 10% 15.0%
15.0% 12.5% 12.5%
This sector is expected to see a decrease in the annual increments between 1 1.5% from the 10th to the 75th percentiles The greatest decline is seen at Junior and Middle Management levels with 6% and 5.2% points reduction respectively Media also has its fair share of challenges, with rising operational costs contributing to a need for a conservative approach
11.6%
10.5%
8% 6% 4% 2% 0% JM MM 2012 - 13 SM 2013 - 14 TM 9.8% 9.0%
96
Advertising & Media

Variable pay in the Media and Advertising sector (14.4%) is expected to be the lowest across all sectors
Variable pay percent projections for this sector appear to be conservative at the median level when compared to the other sectors At the median level, there is a marked increase in the variable pay percent from Senior to Top Management of almost 2% points from 14.9% to 16.7% Variable pay percent projected for this sector at the median level for Junior Management is the second lowest across all sectors
JM
MM SM TM
10.5% 11.2% 12.1% 13.0%
24
22 20 18
16 14 12 10 8
JM MM SM TM
97
Advertising & Media

Junior and Middle Management have experienced a significant increase in variable pay percent; however, this is still lower than the trend across sectors
2013-14

50%
The lower variable pay percent is expected to be around 10.7% and the higher percent is projected at 22.6% The sector median variable pay stands at 14.4%; lower than any other sector This is primarily attributable to the low variable pay percent offered at Junior and Middle Management levels. Although these levels are experiencing a significant increase over last year, the sector median for these levels is still low when compared to other sectors
40%
30%
20% 13.5% 10% 14.1%
14.9%
16.7%
15.0% 10.0% 7.0%
0%
2.5% JM
MM
SM
TM
2012 - 13
2013 - 14
98
Advertising & Media

Key Benefits
Fuel and Mobile allowances low across most levels; Median encashable leave days 22; LTIP not a common practice in this sector
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 100.0 MM 12.5 87.5 SM 25.0 37.5 37.5 TM 12.5 62.5 25.0

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 37.5 25.0 37.5 MM 37.5 37.5 25.0 SM 37.5 37.5 25.0 TM 12.5 87.5 -
Driver: 75% and 50% of the companies in this sector provide Driver or Driver Allowance for the Top and/or Senior Management Vehicle Allowance - Fuel
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM MM 50.0 SM TM -
Medical Insurance
25% Employee Only Employee, Spouse & Children Employeee, Spouse, Children & Parents
38%
100.0
50.0
37.5
37.5 25.0
37.5 62.5 37%

Leave Encashment Percentage of companies allowing leave encashment: 50% Median number of days encashable in the industry: 22 Days
99
Advertising & Media

Better work life balance
3 Hiring skilled talent
Personal reasons
The ability to develop managers who will be able to take up potential leadership positions seems to be a significant challenge in this industry. There is a need to develop potential leaders to assume leadership positions in the organization in the long term Hiring and retaining critical talent are also indicated to be critical Human Resource challenge being faced by leaders today The failure to hire and retain qualified people is costly in a number of ways like loss of training investment, need for higher inventory et al in an industry where talent is a key resource that the profitability of the organizations depends upon to a very large extent
Attrition is a challenge faced by this sector primarily in the Junior Management level. This may be due to the fact that these jobs are often not perceived as career builders in the short run and employees are unable to see a clear career path for themselves. Hence, employees opt for better career prospects in whichever field that they can move to from this sector The need for an improved work-life balance is one of the top three reasons for attrition and this is something that the sector as a whole may need to look at particularly The third focus area also reflects that employees also leave organizations for a variety of personal reasons ranging from relocation to marriage and are unable to continue with work due to the aforementioned lack of work life balance
100
Energy & Resources
Energy & Resources

Executive Summary
The median increments in this sector are projected to be the second highest this year at 12.4%
Variable pay has risen over last years median

level to 16.5%. However, this is almost 1% point lower than the cross-sector median level
Average annual attrition in this sector is lower

than other sectors, at 12% Employees are more likely to attrite in this sector for pursuing higher studies, better pay and better career opportunities
102
Energy & Resources

Sector Snapshot
Industry Overview
The global energy demand is likely to grow by more than onethird by 2035, with China, India and the Middle East accounting for 60% of the increase India is the fourth largest primary energy consumer, after China, USA and Russia and it accounts for more than 4.6 % of total global annual energy consumption Coal is the mainstay of Indias energy sector and accounts for over 50% of primary commercial energy supply and of the total power generated in the country, 69% comes from coal based thermal power stations Indias power sector and the oil and gas sector are expected to undergo major expansion, as the countrys energy sector gears itself to sustain economic growth rates of above 6% over the next 5 years
Key Challenges
India has a high import dependence for energy, especially crude oil and natural gas, which amounts to high vulnerability and compromised energy security of the nation The coal sector has been facing challenges both in terms of domestic as well as imported supplies as these have been stagnating due to Indias exponential growth in demand
Pricing continues to remain a key concern in the India energy sector both in terms of hydrocarbon and coal sector. There is a pressing need to bring in independent regulator in the coal sector and develop regulations around development of coal blocks at an improved pace
The investment environment in the oil & gas upstream sector is getting affected due to regulatory uncertainties as contract administration is currently handled by the Government and not an independent regulatory body
Source : Deloitte POV Long Term Energy Security
Demand for conventional energy in the past five years has demonstrated an increased pace with natural gas growing at highest rate of over 10% CAGR Natural gas constitutes around 10 percent of India's total primary energy basket Over the period 2006-07 to 2011-12 coal consumption has increased at a CAGR of 7.40% year on year
103
Energy & Resources

Participant Profile
18%
18%
Highest participation in this sector was from organizations with an annual revenue between 500 1000 Cr. The second highest participation came from organizations with annual revenue between 100-300 Cr.
27%
36%
<100 Cr.
100 - 300 Cr.
500 - 1000 Cr.
>1000 Cr.
Employee Strength
27% 36%
36% of the participating organizations had an employee strength of under 500 and between 500-2000, followed by 27% organizations with an employee strength between 500 2000 employees
36%
<500
500 - 2000
2000 - 5000
104
Energy & Resources

This sector is projected to receive higher median increments than the overall cross-sector median
10th
25th 10.8% 11.3% 12.0% 12.8%
50th 11.4% 12.0% 12.7% 13.6%
75th 12.7% 13.3% 13.8% 14.5%
90th 13.2%
The overall median increment for this sector is 12.4%. This is almost 1% point higher than the cross-sector increment median of 11.3% The range of annual increments is not very wide in this sector going from 9.7% to 15.1% across levels When compared to other sectors, this sector is expected to give the second highest median increments to the Top Management, well above the cross-sector median for the same level
JM
MM SM TM
9.7% 10.6% 11.4% 12.2%
13.9% 14.3% 15.1%
16 15 14 13 12 11 10 9 8
JM MM SM TM
105
Energy & Resources

The median annual increment projected for Top Management is significantly higher than last year
10th Percentile 2012-13 8.5% 10.8%
Median 13.8% 12.4%
2013-14
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% JM 11.4%
While the median annual increment is lower this year when compared to the last year, it is still higher than the overall cross-sector median
13.6% 12.5% 12.5% 12.5% 12.7% 10.5%
Top Management level, at 13.6%, is projected to receive increments significantly higher than last year (10.5%) Increments in this sector seem to have shrunk across the ranges from the 10th to the 90th percentile ranging from 10.8% to 14.8%
12.0%
MM 2012 - 13
SM 2013 - 14
TM
106
Energy & Resources

Median variable pay for this sector is lower than the cross-sector median; higher than last year
The range for variable pay across levels in this sector has significantly expanded compared to last year There is not much variation between the median levels of variable pay at the Junior, Middle, Senior and Top Management levels When compared across all sectors and levels, variable pay for all levels remains one of the lowest in the Energy & Resources sector
JM
MM SM TM
9.1% 10.5% 11.3% 12.2%
24 22 20 18 16 14 12 10 8
JM
MM
SM TM
107
Energy & Resources

Variable pay has marginally increased across levels as compared to last year; almost no change at Top Management level
2013-14

50%
The sector median for variable pay percent is 16.5% As seen over the last two years, variable pay percent median for Junior and Middle Management has seen a continual increase At Top Management, after the sharp decline in variable pay percent observed last year, the median level has now increased marginally over last years median to figure at 17.9%
15.2%
40%
30%
20%
16.0%
16.7%
17.9% 17.3%
10%
12.3%
13.3%
14.8%
Organizations in this sector continue to face slower growth rates. As a result, performance related bonuses for Top Management have been projected at lower levels
0% JM MM 2012 - 13 SM 2013 - 14 TM
108
Energy & Resources

Key Benefits
22 Days leave encashment allowed at median; Fuel Allowance not provided to Junior Management and by majority of the companies to Middle Management either
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 100.0 MM 18.2 18.2 63.6 SM 9.1 27.3 45.5 18.1 TM 27.3 63.6 9.1

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 72.7 9.1 9.1 9.1 MM 63.6 9.1 27.3 SM 36.4 63.6 TM 9.1 18.2 72.7 -
Amount (`)
Medical Insurance
36%
Employee, Spouse & Children 64% Employeee, Spouse, Children & Parents
100.0
18.2
54.5
27.3
27.3 18.2 18.2
18.2 27.3 54.5 -

9.1% of the companies in this sector provide LTIPs to their employees. The most frequently provided LTIP is ESOPs
Leave Encashment Percentage of companies allowing leave encashment: 81.8 % Median number of days encashable in the industry: 22 Days
All figures provided are in terms of % of companies providing the benefit
109 amount at the particular level
Energy & Resources

The top HR challenges for 2012-2013 broadly reflect the components of the talent management cycle which begins with hiring of skilled talent, retaining critical talent and developing them to become potential leaders of their organizations Hiring the right kind of talent for the industry has come up as the biggest challenge indicating that organizations face a concern to find talent with the right kind of skill sets Retaining the critical workforce then is the second biggest concern considering the competition vying for the same talent pool Along with these concerns, developing potential leaders is the other major challenge faced by this industry
Attrition is a challenge faced by this sector equally across all the levels The employees are always open to better career opportunities, and it has emerged as the top reason for attrition While organizations try and pay competitively, they are still losing employees to better pay elsewhere due to the intense fight for skilled talent in this sector Employees are also looking to upgrade their skills and education and leaving organizations to pursue higher education
110
Hospitality
Hospitality
Executive Summary
This sector has been introduced in this study for the first time The median increment in this sector (11.1%) is
almost at par with the overall cross-sector

median Variable pay (17.5%) is slightly higher than market median; however, range of variable
pay across percentiles and levels is

considerably high Average annual attrition in this sector is recorded at 13% Prime reasons for employee attrition in this sector are pursuing higher studies and better pay and career opportunities
Employee career management is a key HR

112
challenge in this sector
Hospitality
Sector Snapshot
Industry Overview
Hospitality industry consists of 3 main sectors which are tourism, restaurants and hotels According to the Planning Commission, the sector creates more jobs per million rupees of investment than any other sector of the economy The contribution of this industry to India's GDP is around 8% with around 10% of the countrys total population employed in this sector Recently, a large numbers of foreign players have entered into the hospitality sector especially tourism and hotels The World Travel and Tourism Council (WTTC) named India along with China as one of the fastest growing tourism industries for the next 10 to 15 years
Key Challenges
One of the major challenges in the Tourism industry is that it is highly seasonal. The revenue and manpower requirements change sharply from season to season High seasonality leads to shortage / excess of manpower during the various seasons Quality of manpower is important in the hospitality industry. The industry provides employment to skilled, semi-skilled, and unskilled labor directly and indirectly. Due to the labor intensive nature of this sector, and lack of educational institutes, it becomes challenging to source the right quality of manpower
Source : IBEF; www.investindia.gov.in
The Indian tourism and hospitality industry experienced a growth of 24.6% during 20102012 timeframe Forex earnings from tourism in rupee terms during 2012 were USD 17.27 billion with a growth of 21.8% over 2011
113
Hospitality
Participant Profile
33.3 44.4
Nearly 45% of the companies participating in this sector had an annual revenue of less than 100 Cr. The second highest participation in this sector was from organizations with an annual revenue between 200 500 Cr., followed by 100 300 Cr.
22.2
<100 Cr.
100 - 300 Cr.
300 - 500 Cr.
Employee Strength
13%
38%
63%
A vast majority of the participating companies, approximately 63%, have an employee strength of under 500 The second highest participation of companies falls in the 500 2000 employees bracket
<500
500 - 2000
2000 - 5000
114
Hospitality
This sector has been introduced for the first time; median increment level for this sector is 11.1%; high increments at median level for Top Management
Increment Percentiles 10th 25th 9.1% 9.9% 11.2% 12.7% 50th 9.8% 10.4% 11.9% 13.1% 75th 11.2% 12.1% 13.9% 15.3% 90th 12.9% 14.7% 16.1% 17.6%
There is a staggered increase in the increment medians between the Junior and Top Management increment levels in this sector
This sector is expected to give the Top Management the third highest increments across industries. This may be used as a tool to incentivize members of Top Management to remain with the organization in an industry where people frequently shift jobs
JM
MM SM TM
8.4% 9.2% 10.6% 11.9%
16 15 14 13 12 11
JM
MM SM TM
10
9 8
115
Hospitality
Increments have reduced marginally across the ranges; Junior Management expecting increment at the same level as last year
9.4%
25th Percentile
10.6%
Median
11.5%
75th Percentile
13.9%
90th Percentile
15.1%
2013-14
9.3%
10.4%
11.1%
12.6%
13.7%
20%
18%
16% 13.6% 14% 12% 10.0% 10% 8% 6% 4% 2% 0% 9.8% 10.4% 11.9% 10.9% 12.5%
At the median level, the increments for this sector is expected at 11.1%, slightly lower than last year, and very close to the overall cross-sector median increment level This sector has largely shown consistency in the increments between last year and this year, indicating that the performance forecasts may be similar this year Top Management is expecting increments at 13.1% and Junior Management at 9.8%
13.1%
JM
MM
2012 - 13
SM
2013 - 14
TM
116
Hospitality
Median variable pay percent for this sector is slightly higher than cross-sector median (17.5%); variable pay percent ranging widely from 9.3% to 27.3%
Variable Pay Percentiles 10th 25th 12.8% 13.1% 14.4% 15.9% 50th 16.9% 17.2% 18.0% 19.7% 75th 21.7% 23.1% 24.6% 26.2% 90th 26.1% 27.8% 29.2% 31.5% 2013 14
Overall Industry Variable Pay Range 10th 9.6% 25th 13.2% 50th 17.5% 75th 22.4% 90th 27.3%
JM
MM SM TM
9.1% 10.8% 11.2% 12.5%
Across levels, the variable pay percent has a wide range from the 10th to 90th percentiles Performance linked pay is certainly looked at as a retention tool, especially at Junior and Middle Management level, as well as an incentive to drive higher performance levels in a service industry with intense competition
24
22 20 18
16 14 12 10 8
JM MM SM TM
117
Hospitality
Key Benefits
Driver / Driver allowance provided by majority of the organizations to Top and Senior Management level; Fuel allowance not provided by many companies across several levels
Car Value

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM MM SM TM
11.1 11.1 77.8
11.1 33.3 55.6
22.2 22.2 44.4 11.1 -
44.4 55.6 -
Amount (`)
5000 8000 8000 12000 12000 15000 > 15000 On Actuals Not Applicable JM MM 22.2 SM TM -
Medical Insurance
100.0
77.8
55.6 44.4
33.3 55.6 11.1

Hospitality
3 Career Management
High employee turnover in this sector has made attraction and retention of talent a critical challenge Tourism industry amongst hospitality suffers from lack of availability of trained employees due to limited educational institutions in tourism. Due to high competition and a lot of foreigner players entering in hospitality space, it has become critical to retain the critical manpower for the existing players Employees in this industry also feel the need for having a defined career path of growth. The existing lack of clarity could be attributed to the highly fragmented nature of industry
With the introduction of the foreign players in the market, employees get a better salary and also good career opportunities because of the large size of the players It was observed that many of the employees join the tourism industry to support their education or their family. These employees tend to leave the organizations to complete their further studies It was also observed that Hospitality industry was not perceived as an industry where one can make a long term career by many of the employees, due to which employees show an apprehension while getting associated with the industry
119
Logistics
Logistics
Executive Summary
This sector has been introduced in this study for the first time This sector has the second lowest increment
median level across all sectors 9.8%

Variable pay percent median of this sector is 15.6% with not much variation across levels Organizations in this sector indicate an average overall attrition rate of 11% Hiring the right talent and developing future leaders are key HR focus areas going forward
for organizations in this sector
121
Logistics
Sector Snapshot
Industry Overview
The logistics industry is expected to grow at 15-20% CAGR a year to reach around USD350bn by 2015 from its current size of around USD80bn. Several factors helped the growth of logistics industry in India over the last decade that include changing tax system as well as a rapid growth in industries such as automobile, pharmaceuticals, FMCG and of organized retail Increase in foreign trade and India becoming a global manufacturing hub is another reason Overall, the industry has generated employment for 45 million people in the country
Key Challenges
FDI and GST are yet to be implemented in this sector. Furthermore, if the governments plan to allow foreign direct investment (FDI) in multi-brand retail and/or introduce the goods and services tax (GST) is implemented, corporates are likely to tie up with logistics experts to improve efficiency, leading to a further rise in outsourced logistics. Also it will significantly reduce the number of warehouses manufacturers are required to maintain in different states, thereby resulting in a substantial increase in demand for integrated logistics solutions. Increased efficiency and productivity of the transport system would result in lower transit times. Technology usage is still very low in India, which restricts the scope of increasing efficiency and productivity According to industry analysts, logistics costs in India are among the worlds highest and outside of the metros and a few cities, the delivery time is very uncertain
Source : Fitch Ratings; Dinodia Capital Indian Logistics Industry
The revenue of the industry currently stands at USD 80 billion Retail, Automobile, Pharmaceuticals, and FMCG are emerging verticals within the logistics sector, showing potential for growth in the near future
122
Logistics
Participant Profile

38% 50%
Half the companies participating in this sector have an annual revenue of 500 1000 Cr. A high percentage (38%) of companies in this sector have annual revenues between 100 300 Cr. as well 13% of the companies have a revenues between 300 500 Cr.
13%
100 - 300 Cr.
300 - 500 Cr.
500 - 1000 Cr.
Employee Strength
13%
38%
13%
38% of the companies in this sector have between 2000 5000 and 5000 10000 employees 13% of the companies have less than 500 employees and 13% of the companies have between 500 2000 employees
38%
<500
500 - 2000
2000 - 5000
5000 - 10000
123
Logistics
This sector has been introduced for the first time; median increment level for this sector is 9.8% - second lowest increment level across all sectors
10th
25th 8.1% 8.6% 9.7% 9.9%
50th 8.9% 9.5% 10.3% 10.7%
75th 9.7% 10.4% 11.2% 11.8%
90th 10.6% 11.1% 11.7% 12.9%
This sector has the lowest Management across all sectors
median
increment
for
Top
JM
MM SM TM
7.2% 7.8% 8.4% 9.1%
Across all levels, increments are expected to range from 7.2% to 12.9%, indicating that there is not much variation projected in increments across levels
16 15 14 13 12 11 10 9 8
JM
MM SM TM
124
Logistics
Junior Management increments almost same as last year; Top Management expecting decline in increment by more than 1% point
2013-14
20% 18% 16% 14%
Increments across this sector are expected to be lower than last year. At the median level, the increment is expected at 9.8%, almost 1% point below last years median doled out
11.8% 10.9% 10.2% 9.1% 10.3% 10.7% 9.5%
12% 10% 8% 6% 4% 2% 0% JM
From the 10th to the 90th percentiles, the increments are expected to be lower than those given out last year Top Management is expecting a decline in increment this year by around 1.1% points, whereas for Junior Management, the increments are almost the same as last year
8.9%
MM 2012 - 13
SM 2013 - 14
TM
125
Logistics
Projected median variable pay percent for this sector (15.6%) is significantly lower than the market median
Overall Industry Variable Pay Range 10th 2013 14
25th 11.4%
50th 15.6%
75th 19.4%
90th 22.8%
JM
MM SM TM
8.1% 8.8% 9.7% 11.5%
8.4%
While the range of variable pay percent across levels varies significantly, most companies are expected to give variable pay percent on the lower side in this sector Very little variation expected in the variable pay percent median for Junior, Middle and Senior Management
24 22 20 18 16 14 12 10 8
JM MM
SM
TM
126
Logistics
Key Benefits
Most companies provide Driver / Driver allowance for Top and Senior Management; 20 Days encashable at median level; ESOPs provided by 37.5% of companies in this sector
Car Value
3 5 Lacs 5 8 Lacs 8 12 Lacs > 12 Lacs Not Applicable JM 12.5 87.5 MM 12.5 37.5 50.0 SM 12.5 50.0 37.5 TM 12.5 75.0 12.5

Amount (`)
0 - 5000 5000 - 10000 10000 - 15000 On Actuals Not Applicable JM 50.0 50.0 MM 37.5 37.5 12.5 12.5 SM 12.5 37.5 50.0 TM 12.5 87.5 -
Amount (`)
Medical Insurance
25% Employee, Spouse & Children Employeee, Spouse, Children & Parents
0.0 87.5
12.5
12.5 50.0
25.0
50.0 12.5 12.5
37.5 62.5
75%

Logistics
Better pay elsewhere Personal reasons / Pursue further studies
This sector will experience exponential growth because of which movement in jobs might be seen Companies feel the need to develop a robust Talent Strategy in order to retain their quality talent as well as attract the right talent Companies also feel the need to invest in developing capabilities and fostering growth of their employees Succession Planning is vital for sustaining long term growth and strategy for companies in this sector
Better pay is one of the main reasons employees seek employment elsewhere. Companies must be aware where their compensation lies vis--vis the market to stay competitive Some cited further studies as a reason to leave a job. Organizations can look at developing education plans and other benefits or allowing employees to pursue executive education courses while staying with the company
128
Contents

Contact Us
129
Contents

Contact Us
130
Contact Us
P. Thiruvengadam National Practice Leader Human Capital Consulting Direct: +91 80 6627 6108 Email: pthiruvengadam@deloitte.com Dr. Vishalli Dongrie Senior Director, West Region Head Talent, Performance and Rewards Human Capital Consulting Direct: +91 22 6185 4280; +91 9833973458 Email: vdongrie@deloitte.com Sucheta Hota Director, HR Transformation Human Capital Consulting Direct: +91 124 679 2323; +91 9811901669 Email: suhota@deloitte.com
Shivram Sethuraman Director, Rewards Human Capital Consulting Direct: +91 44 6688 5000; +91 9841098482 Email: shsethuraman@deloitte.com
For technical queries, please reach out to the following: Saptarshi Chatterjee Manager Human Capital Consulting Direct: +91 22 6185 4549; +91 9819951648 Email: sapchatterjee@deloitte.com
Gaurav Warudi Consultant Human Capital Consulting Direct: +91 22 6185 4574; +91 9860584841 Email: gwarudi@deloitte.com
Steve Sam Consultant Human Capital Consulting Direct: +91 22 6185 4577; +91 9619783064 Email: stevesam@deloitte.com
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Deloitte Compensation Trends 2013

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Deloitte Compensation Trends 2013

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Compensation Trends Survey 2013 14

Deloitte Human Capital Consulting

Survey Details Survey Highlights General Industry Analysis

Detailed Sector-wise Analysis

Survey Details Survey Highlights General Industry Analysis

Detailed Sector-wise Analysis

Elements detailed in the Compensation Trends Survey 2013 14

Finalization of Target Basket

Invite and Seek Consent for Participation

Data Collection and Validation

Compensation Trends Survey 2013 14 Report

Pharmaceuticals Financial Services Information Technology

100 - 300 Cr.

300 - 500 Cr.

500 - 1000 Cr.

Energy & Natural Resources Hospitality Logistics

500 - 2000 10000 - 25000

2000 - 5000 >25000

Survey Details Survey Highlights General Industry Analysis

Detailed Sector-wise Analysis

% which is an increase of 1.3% points over 20.1%

Survey Details Survey Highlights General Industry Analysis

Detailed Sector-wise Analysis

General Industry Analysis

General Industry Analysis

General Industry Analysis

7.1% 7.9% 8.3% 9.1%

14.4% 15.0% 16.1%

Comparison of Level-wise Median Increments Across Sectors

General Industry Analysis

Median Increments Across Levels

General Industry Analysis

General Industry Analysis

8.9% 9.4% 10.1% 10.9%

Comparison of Level-wise Variable Pay Percent Across Sectors

General Industry Analysis

Median Annual Variable Pay (as % CTC)

17.1% 17.7% 18.5%

General Industry Analysis

Mobile Allowance (Bill Reimbursement)

Long Term Incentive Plan

General Industry Analysis

Average Attrition Rate

18% 17% 16% 14% 14% 13% 12%

13% 12% 11% 10%

14% 13% 11% 10%

Consumer Business & Retail

Infrastructure & Real Estate

Pharmaceuticals Financial Services

Advertising & Media

Energy & Resources

Key Reasons for Attrition

Better career opportunities

Better pay elsewhere

General Industry Analysis

Hiring skilled talent

Retaining critical talent

Developing potential leaders

Survey Details Survey Highlights General Industry Analysis

Detailed Sector-wise Analysis

Consumer Business & Retail

Consumer Business & Retail

The variable pay percent in the sector stands

13%. Highest attrition rates for Junior and