Image courtesy: Garret Harkawik
Indian industry is facing a double whammy of sorts. Demand dried up as the country went into lockdown along with the rest of the world. Cash flows dried up too as payments got delayed and bereft of cash, enterprises had to let go of staff, forcing others to work double shifts. Economists say there are green shoots of revival visible, but it may still take time for greenery to return.
The last six months have been nothing short of a roller coaster for most. Micro enterprises have shut down and chased new, if lesser paying ideas. Several small businesses are clutching at the occasional straw in the form of government support. Other enterprises have cut themselves to size in the hope that the green shoots would soon flourish.
However, amidst all these economic jingoism and jargon-bashing, it is the employee who has borne the brunt of a pandemic about which the world still knows precious little, save for the fact that a magic formula in the form of a vaccine could deliver good health. Of course, its efficacy and the it would take to reach the remotest corner of our world is a bigger mystery.
When the lockdown started, industry and the media went overboard talking about planning for the new normal. Only that this new normal was highly subjective, as employees could soon be finding out. Why? Because most enterprises are preparing for their annual appraisal cycle that could well make employees reach out for the skip button that takes them straight to 2021.
According to consulting giant Deloitte, companies appear to have found a way to save money and the ones at the receiving end could be the employees as increments this year may have already dried up. In fact, some of the sneaky ones have given poor ratings to employees, who probably worked longer hours in the lockdown. And increments, if any, has been paltry.
The proportion of employees whose performance is rated below average has gone up amid falling revenues and deferred increment decisions. The proportion of employees whose performance is seen to be above average is also seen to fall in the current financial year ending March 2021 (FY21), says a report in the Business Standard, quoting a Deloitte survey.
The Workforce and Increments Trends Survey for India (download and read it here) paints a sad picture of companies reducing the percentage of increments, albeit by just 100 basis points. It may not sound like a big change, but the survey also points out senior and top management gets two-thirds of the increment given to the middle management.
The 2020 projected average salary increment in India has dropped by 40 bps compared to actual salary increment in 2019. Adjusted for company size (measured via headcount), 2020 projected increment decreases to 7.1 percent implying that larger organisations are being more cautious with respect to increments. And while the 2020 projected increment is lowest in Services, the fall in increment is the highest in manufacturing reflecting the state of economic activity in the sector.
From an industry perspective, it is quite obviously the manufacturing sector that’s borne the brunt of the mess. Increments were in the range of 6% while in telecom it was marginally better at 6.5%. The situation in the BFSI segment was also pretty similar with the best increments going to the IT products segment, followed closely by the ITES industry, the former doling out around 10% followed by 9% by the IT services business.
While the previous year’s performance continues to be the key determinant for increments, a third of the companies chose a forward-looking metric like potential. One out of three also moved to differentiating increments by management levels with reduced increments shaving off the grade-based differentiation. The silver lining though came in the form of companies seeking to correct earlier wrongs by doling out larger increments to those they consider underpaid.
