MUMBAI: Indian heads of organizations are expected to get the best salary hikes of 8.3%, much better than most of their Asian counterparts. While India leads the pack as far as the average base pay increase goes, China stands second at a projected 6.5%, according to global HR consulting firm Mercer's 2011-12 Asia Executive Remuneration Survey-India Report. In 2011, India saw an actual increase of 8.4% in average base pay for heads of organizations.
The findings from Mercer's study said that 83% respondents rated retention of executive talent and succession planning for executives as top talent issues for most Indian companies. This was followed by leadership development for executives, which was pointed out by 68% respondents. Shanthi Naresh, principal, Human Capital, Mercer, said, "Growth, leadership shortage and high inflation have boosted India's executive pay in the past years. There exists an evident need for companies to explore innovative ways to manage and reward executive talent. Increasingly, companies are opting for more flexible pay structures which can be adjusted based on business performance."
Fixed pay is still considered the most important and effective pay component in India and constitutes 58% of total remuneration for the head of an organization, according to the survey. Short-term incentives (STIs) as well as long-term incentives (LTIs) are also emerging as strong tools for companies to recognize performance of top executives. LTIs like stock options account for 10% of the average Indian company head's remuneration package as compared to 25% reported by the rest of the participating countries in Asia.
"Linkage of pay and performance is not as strong in India as in other Asian countries. Progressive companies in India are now trying to link well-defined performance parameters with incentive payouts to recognize and reward performance. Survey clearly underscored the need for greater transparency in awarding incentives," added Naresh.
A total of 201 companies took part in the survey from across Asia. Of them, 59% were firms with Asian headquarters and 41% had headquarters in the West. The average annual revenue of participating companies was $840 million and the average headcount stood at 1,900 employees. The India survey findings are based on a significant collection of market data gathered from both public and private companies. A total of 41 organizations participated in the survey, of which 63% were publicly-traded companies and the remaining 37% were privately-held.
The findings from Mercer's study said that 83% respondents rated retention of executive talent and succession planning for executives as top talent issues for most Indian companies. This was followed by leadership development for executives, which was pointed out by 68% respondents. Shanthi Naresh, principal, Human Capital, Mercer, said, "Growth, leadership shortage and high inflation have boosted India's executive pay in the past years. There exists an evident need for companies to explore innovative ways to manage and reward executive talent. Increasingly, companies are opting for more flexible pay structures which can be adjusted based on business performance."
Fixed pay is still considered the most important and effective pay component in India and constitutes 58% of total remuneration for the head of an organization, according to the survey. Short-term incentives (STIs) as well as long-term incentives (LTIs) are also emerging as strong tools for companies to recognize performance of top executives. LTIs like stock options account for 10% of the average Indian company head's remuneration package as compared to 25% reported by the rest of the participating countries in Asia.
"Linkage of pay and performance is not as strong in India as in other Asian countries. Progressive companies in India are now trying to link well-defined performance parameters with incentive payouts to recognize and reward performance. Survey clearly underscored the need for greater transparency in awarding incentives," added Naresh.
A total of 201 companies took part in the survey from across Asia. Of them, 59% were firms with Asian headquarters and 41% had headquarters in the West. The average annual revenue of participating companies was $840 million and the average headcount stood at 1,900 employees. The India survey findings are based on a significant collection of market data gathered from both public and private companies. A total of 41 organizations participated in the survey, of which 63% were publicly-traded companies and the remaining 37% were privately-held.