Time for cautious optimism

Companies are making variable pay a bigger component of salaries, a trend that is likely to catch on.

Hitesh Oberoi        Print Edition: March, 2010

Hitesh Oberoi
Hitesh Oberoi
After a painful year for both employees as well as companies, the job market has started looking up. The upturn in the last quarter's revenues (after a dip in the previous four quarters) seems to be continuing. What is driving this surge? Are companies truly out of the woods and is it going to be smooth sailing from now on? While seeking answers to these questions, it is important to keep in mind that not all sectors were affected by the slowdown in the same measure and some, like PSUs, autos and FMCG, continued to hire during this period. Now, some companies are filling up the positions that fell vacant during the slowdown. Others, including the IT and BPO sectors, which are not past the worst, are considering fresh hiring.

However, we are not back to the days when candidates jumped from one job to another with over 50 per cent hikes in remuneration. This is because companies are more circumspect now.

Another important shift is that salary is not the sole motivator (though still an important one) for switching jobs. Many people are moving because of other reasons like a better role in an organisation, better brand or personal reasons like relocating or moving closer to their home states or cities.

In this context, it was the best time to conduct a job survey as employees across sectors are anxious about their pay revisions, which should start in a month or so. This is one reason why we got such an amazing response to the survey that was conducted between 15 January and 15 February 2010—about 1.7 lakh people answered the questions. Another reason is that the questionnaire was sent to only those members of naukri.com who have been 'active' in the past three months, which means that they have either updated their resumes or inquired about jobs on our portal.

As the survey reveals, a majority of the respondents (69 per cent) feel that because the economic situation has improved, they deserve a raise. Whether they actually get it will depend on the sector in which they are employed. The companies that have done well despite the slowdown will be under pressure to give good hikes to retain talent. Others may be more cautious in terms of increments and perks.

One effect of this cautious optimism is that many companies are making variable pay a bigger component of salaries, a trend that is likely to catch on. This helps companies, especially those that are still not sure of a long-term recovery, to avoid a high, fixed-cost remunerative structure. This system gives companies the flexibility to vary remuneration depending on how employees perform. Employees also enjoy a little more stability as the company can afford to retain them at a lower cost without laying off people in large numbers.

In future, recruitments will pick up in sectors like manufacturing and infrastructure, which include energy, power, steel, cement, etc. Given the government's focus on these sectors and the number of new projects being launched, companies will need to hire in large numbers over the next 10 years. They will require not just engineering graduates, but people for functions such as administration, human resources, etc. Apart from this, workforce will be needed in smaller ancillary units and suppliers to these bigger companies.

Nevertheless, it will be a good idea for employees not to compare their increments with those of others in different sectors because the recovery is sectoral.

Hitesh Oberoi is COO & Director, Naukri.com

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close