Average salary hike of firm heads to slow down in 2012

New Delhi, March 26 (IANS) Heads of Indian companies will have an average salary hike of 8.3 percent in 2012 against that of 8.4 percent in 2011, a study said Monday.

The raise would, however, be at par with other Asian countries, including China which is projected to have an average salary hike of 6.5 percent.

"In 2011, India saw an actual increase in average base pay for heads of organisations at 8.4 percent which is expected to reduce to 8.3 percent in 2012," said Mercer's 2011-2012 Asia Executive Remuneration Survey -- India Report.

"That said, India leads the actual average base pay increase amongst Asian countries followed by China at 6.8 percent for 2011; and projected at 6.5 percent in 2012," it added.

According to the survey, retention of executive talent and succession planning for executives are very important issues for most Indian companies, especially those in the growth mode.

"Growth, leadership shortages 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," said Shanthi Naresh, principal, Human Capital, Mercer.

"Increasingly, companies are opting for more flexible pay structures which can be adjusted based on business performance," he added.

Fixed pay is still considered the most important and effective pay component in India and constitutes 58 percent of total remuneration for the head of an organisation.

However, short-term incentives as well as long-term incentives are emerging as strong tools for companies to recognize and reward performance of top executives as well.

Companies also find these incentives useful to attract and retain key executive talent as organizations are still in a growth mode and require a healthy supply of leaders.

Long-term incentives make up for 10 percent of the average Indian company head's remuneration package while 87 percent of Indian companies tie short term investment to individual performance measures.

When it comes to the deferral of short term investments, companies from India are less likely to defer short-term investment payments as compared to organizations from the rest of Asia.

A total of 201 companies took part in the survey from across Asia including 41 Indian companies.