Majority of Indian Employees Seeking a Job Change despite Receiving Salary Hikes in 2023
A survey of 3000+ India-based employees has revealed a startling appraisal trend that could shape the future of talent retention in 2023. According to the latest survey by foundit, 76% of Indian employees are actively searching for a new job in 2023. 62% of employees received a salary hike despite the stiff economic conditions and restricted growth in 2023. So, employers may not be able to retain their top talent despite giving them a salary hike this year. Overall, a majority of respondents (62%) who received a hike felt the appraisal did not meet their expectations. However, 52% of respondents felt their appraisal process was fair and transparent in evaluation.
foundit (previously Monster APAC & ME), a reputed talent platform, published the findings in the “foundit Appraisal Trends Report“. foundit’s CEO Sekhar Garisa mentioned the role of having a strong compensation structure to accommodate the needs and demands of the modern workforce in India. In addition to a respectable hike in salaries, employees could be expecting additional and alternative variables in their salary brackets. These could be in the form of ESOPs, bonuses, and promotions. Sekhar pointed to the changing sentiments among employees based in the non-metro cities who received respectable pay hikes this year despite a volatile global economy. For example, 13% of professionals from non-metro cities received a salary hike of more than 20% this year. In comparison, only 11% of employees in metro cities received a hike in the same range. However, it is unclear whether the salary hikes considered the base components of HRA and other components that typically differentiate the pay structures of employees belonging to the metro versus non-metro cities.
“Today, several factors, such as workplace culture, skilling opportunities, and team-leading opportunities, highly influence employee morale. And, the role of leadership and HR team to ensure these cannot be emphasized enough,” added foundit’s CEO.
Nonetheless, these findings underscore the growing opportunities and rewards offered to talent in non-metro areas as more and more organizations move out of urban spaces to save costs and improve access to a larger talent pool.
Are entry-level professionals ignored for appraisals?
62% of entry-level professionals in India did not receive any salary hike this year. These professionals are either freshers or have an experience of less than 3 years in the industry. 9% of entry-level professionals received a hike of less than 5%, while 10% received a hike in the range of 5% and 10%. In the current market, the professionals belonging to the top-level management and associate-levels gained the most from salary hikes trends. 19% of professionals with 16+ years of experience received a salary hike in the range of 5-10% in 2023.
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As per the report, the appraisal distribution across different experience levels paints a diverse picture this year. Salary hikes for Entry-level professionals (0-3 years experience) reflected an interesting trend, with 62% of total respondents claiming that they did not receive any appraisal this year. 10% of them received a 5-10% hike, while 9% secured a 0-5% salary raise.
This is how others in the ladder fared in their appraisal records:
- 17% of Associate (4-6 years) level employees secured a 5-10% hike
- 15% of Associates secured a 10-15% raise
- 23% of Mid-senior (7-10 years) level employees received an increment in the 5-10% range
An astounding finding: 30% of employees at each experience level did not qualify for any kind of salary hike in this year’s appraisal cycle.
It is also notable that over 30% of employees in each experience level category did not receive any appraisals this year.
Would ESOPs and bonuses replace hikes?
49% of respondents were incentivized with ESOPs and bonuses as an alternative to yearly pay hikes in 2023. These were considered as part of the rewards and recognition to motivate the top-performers. 20% of respondents were promoted in their roles, but without new hikes to match their expectations.
If the market doesn’t correct itself, employees could find themselves losing out to yearly hikes against bonuses and ESOPs or promotions. This could make talent retention very challenging by the time next appraisal cycle arrives.
Which industries gave out the best hikes this year?
Here’s what the different industries paid as hikes to their employees during the appraisal:
Healthcare
- 29% employees got a 5-10% hike
- 27% employees got a 10-15% hike
BPO/ITES
- 49% employees secured a 0-5% appraisal
- 26% got a 5-10% raise
BFSI
- 20% employees receiving a 10-15% hike
- 30% a 5-10% increment
IT
- 82% of respondents received some hike in their salaries this year
- 30% getting a 10-15% hike
- 21% a 5-10% appraisal
20% of respondents employed in the Engineering/Construction industry secured a salary hike exceeding 20%.
Can employers retain talent with salary hikes?
A salary hike is not the only thing that would keep an employee stay at your organization. A positive work-life balance, flexibility at workplace, career mobility, and the scope of growth, and much more… A lot goes into nurturing and executing a talent retention roadmap which includes providing a competitive performance appraisal. However, employees would still look out for new opportunities elsewhere to ensure their career growth aligns with their aspirations. That’s why 76% of Indian professionals expressed they are open to new job opportunities, whether they received a hike or not. Nearly 3 out of 10 respondents (26%) received a hike of 5-10% this year and yet they are willing to move out of their organization for different reasons.
If appraisals are backed by a positive work culture, flexibility, equitable work, fair learning opportunities, and leadership development, you could have a higher chance of retaining top talent who received the highest salary hikes.
So, what should a great talent retention strategy look like? How can HR teams plan a compensation management strategy to keep their top performers happy and engaged during challenging economic conditions?
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