Three in 5 recruiters to offer salary hikes of 6-12% this year: Mint+Shine study

A highly competitive job market where companies are looking for specialists is likely to push employers to offer an estimated 9-12% increments this year. According to the Mint+Shine Talent Insights report, 34% of the HR executives surveyed said they expected a hike of that range, possibly targeted to boost employee morale and prevent them from changing loyalties.

More than 3,000 HR executives and job seekers were surveyed during the quarterly study conducted during the January-March period. Around 49% of the recruiters expressed a positive sentiment about the upcoming appraisal cycle.

Another sizeable segment of recruiters, roughly 25%, is planning more moderate raises of 6-8%. This aligns with the rising cost of living and acknowledges the value of experienced staff who contribute to the company's success, the report said.

Job seekers, employees hopeful of bigger hikes than employers expect to give this year

Among job seekers, around 24% of those surveyed said they expected a 10-15% salary hike, while another 24% expected a more than 20% hike. This shows job seekers and employees were hopeful of even bigger hikes than employers expect to give this year.

The proposed increments come at a time India Inc has over the last year seen hiring numbers drastically cut down. During 2021 and early 2022, firms across sectors hired at a breakneck speed to transform their traditional businesses into digital ones. But since the second half of 2022, macro-economic sluggishness, geopolitical tensions, and private equity firms dialling down their investments had impacted IT, startup and retail industries.

Read also: Dry promotion: 'New title, no raise' appraisal trend leaves employees in a pickle

Annual appraisals may fetch an average pay hike of 9.5% this year while top performers stand to win 1.74 times more, according to a study by consulting firm Aon. Last year, companies had given an average hike of 9.7%

Some profiles are expected to get better hikes given their demand. "Over the past few years, many sectors have seen a trend towards more substantial increments for tech and digital roles, while traditional roles may see steadier, moderate increases. The increments would follow a similar pattern as the previous year," said Ruchira Bhardwaja, chief human resources officer at Kotak Life.

According to the Mint+Shine study, just 2% of the recruiters anticipate minimal raises of 0-2%. This comes on the back of economic challenges faced in certain industries and budget constraints limiting their ability to offer better increments.

However, even with stringent budgets, companies are ensuring that the top performers get a prominently higher raise and that can go as much as 1.7-1.8 times the average increment.

Read also: Average salary appraisals in Indian IT sector projected between 8.4% to 9% in 2024

Companies like Tata Steel made changes in their appraisal process and organizational bands to offer more opportunities to their top performers. The steel maker introduced Accelerated Career Enhancement Scheme (ACE) in 2023. Through this policy, sub-bands have been introduced within the junior to middle management levels to provide additional opportunities for career progression based on certain eligibility criteria.

“…additional opportunities are provided to eligible high performing officers who can apply for next level opportunities and can get promoted in a fast-track manner within the organisation,” said Atrayee Sanyal, vice president, Human Resource Management, Tata Steel, in an email response to Mint.

Promotions are another tool that are widely used to halt exits. “With the introduction of sub-banding and ACE we have observed a 40% dip in the attrition rate of high performers from that of the previous year,” Sanyal said

But rolling out promotions at large scale without looking into the impact within the team may backfire.

“While promotions can serve as a tool for retaining talent, they should be equitable, merit-based, and integrated into a comprehensive talent strategy,” said Akhil Gupta, chief executive, Shine.com. Gupta noted that leveraging AI-driven analytics to augment the appraisal process can enable more precise evaluations.

But managing high potential will remain a challenge. Sheetal Sandhu, group CHRO, ICRA, said that although firms have recovered from the "Great Resignation, they will continue to face headwinds in the 'war for talent'."

Sandhu noted that organizations are experimenting with dual-role opportunities, more aggressive career paths, and early CXO roles to build an in-house leadership pipeline.