KPMG in India’s Annual

Compensation Trends
Survey 2018-19

April 2018

KPMG.com/in
About the survey
KPMG in India’s Annual Compensation Trends Survey
aims to understand a wide range of current and emerging
compensation trends in organisations across India and
provide them with a reference point on key aspects such
as increments, variable pay, benefits, employee attrition
and retention, and potential future HR trends.
This survey analyses and brings together findings from
272 companies across 18 sectors.

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 2
Survey approach

Survey Survey launch Data auditing Data Report

design and data and query analysis launch
collection resolution

Key parameters of the
study were finalised and
a structured
questionnaire was
designed as the primary
tool for data collection.
A broad cross section of
sectors and
management levels
covered in the study
were finalised
To solicit participation, The responses received Data received was Launch of Annual
formal e-mail invitations from all participants collated and analysed to Compensation Trends
and an online were validated and get detailed insights on Survey Report (FY
questionnaire were sent checked for consistency sector-wise practices, 2018-19)
to the target compensation and
and completeness. In
respondents benefits trends
case of a query, reports
were sent out to the
participating companies

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 3
 Definition of management levels
Executives who directly report to
the top management and manage
a wide range of functions but are
not regarded as top management.
This also includes direct reportees
to different key functional and
business heads
Includes supervisory staff usually
involved in the day-to-day
functioning of a small team (first
level of people management
responsibility)
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The senior-most executives in the
organisation (CEOs) coordinating
between all the functions, providing
leadership, overall direction and control
of the company’s operations. Also
Top includes key executives (direct reportees
executive to CEO) within the organisation heading
key functions and businesses, actively
participating in developing company
policies, who tend to work closely with
Senior the top executive (CEO) and the board of
management directors(if any)
Includes executives with supervisory
Middle responsibilities for a sub-function, part of
management a business, etc. who directly report to
senior management
Junior
management
Professional contributors required to
deliver value for the business through
their own efforts to influence others both
Individual within and across functions. Roles have
contributor no direct people management
responsibility, but may have indirect
responsibility via project team
4
Participant profile
Two hundred and seventy two organisations from 18 sectors participated in our Annual Compensation
Trends Survey for 2018-19. 42 (15.4%)

32 (11.8%)

23 (8.5%) 24 (8.8%)
19 (7.0%) 19 (7.0%)
15 (5.5%)
12 (4.4%) 9 (3.3%) 12 ( 4.4%)
9 (3.3%) 10 (3.7%) 8 (2.9%)
8 (2.9%) 8 (2.9%) 8 (2.9%) 8 (2.9%)
6 (2.2%)

Auto Auto Banking Financial Insurance Consumer Energy & Engine Infra. IT ITeS Life NGO/ Professional Retail Telecom Transport & Others**
components services goods Natural ering / & Real Sciences/ NPO Services Logistics
Resources Manufa Estate Pharma. &
cturing Healthcare
n*= 272

Employee strength Sales turnover (in INR) Organisation type

20 (7.4%)
84 (30.9%) 29 (10.7%)
24 (8.8%) 120 (44.1%)
< 500 < 100 Crores 152 (55.9%)
500 - 2000 32 (11.8%)
18 (6.6%) 100 - 300 Crores
2000 - 5000
300 - 500 Crores
5000 - 10000
28 (10.3%)
54 (19.9%) 10000 - 25000 500 - 1000 Crores

> 250000 > 1000 Crores

Indian
41 (15.1%)
72 (26.5%) 142 (52.2%) Multinational
* n reflects the actual number of respondents who have provided this specific data point Source : KPMG in India's Annual Compensation Trends Survey 2018-19

** Others include companies in Hospitality, Entertainment, Education, Facility Management and a few conglomerates. Considering the limited number of responses
from these sectors within the specified timelines, separate sector reports have not been published
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 5
Executive summary | Key survey findings

9.6% 15.7% 13.1% 57.3%

Average projected Average projected variable Average annual voluntary Organisations identified
increment for the year pay across sectors, 0.3 attrition across sectors ‘re-inventing PMS’ as one
2018-19, an increase of per cent higher than that of the most important
0.2 per cent from 2017-18 in 2017-18 future HR trends

The highest increment of The highest variable The highest voluntary 51.1 per cent of the
10.7 per cent is reported pay of 20.7 per cent is attrition of 18.5 per cent respondents are also
by the Professional reported by the is reported by ready for the change
services sector, Financial services retail, while the lowest the PMS
the lowest of 8.3 per cent sector, the lowest is of 6.6 per cent is
is that of Non - profit that of NPO at 10.6 per reported by the
Organisations (NPO) cent automobile industry

Source : KPMG in India's Annual Compensation Trends Survey 2018-19

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 6
Executive summary | Key survey findings
Top three reasons reported for Top three compensation levers Top three compensation
attrition for talent retention levers for attracting talent

31.0% Better career opportunities

20.2% Performance-based variable pay 19.9% Attractive benefits offerings

25.2% Better pay elsewhere

18.5%
Recognition awards - cash/non-
cash 21.5%
Sign on bonuses

Personal reasons - marriage,

17.4% health, children, relocation
13.4% Retention bonus
14.6% Referral benefits/awards
etc.
n = 242 n = 238 n = 246
Top five elements for determining increments

81.0% 61.3% 76.2% 65.7% 74.6%

Organisation Productivity of Business unit Positioning with Industry
performance employees performance respect to outlook
competitors in
relevant markets n = 248
Top five rewards challenges

64.4% 56.8% 72.9% 68.2% 54.2%

Differentiating Creating/improving Maintaining Addressing Executing and
rewards for key performance and market the diverse announcing rewards
talent productivity linkage competitivene needs of your programmes
to rewards ss of pay workforce
levels
n = 236
Percentages can sum up to more than 100 per cent due to multiple selections by a few organisations
Source : KPMG in India's Annual Compensation Trends Survey 2018-19

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 7
 Executive summary I Actual vis-à-vis projected
Average 9.4%
Actual (2017-18)
Overall Average
Overall Average
Projected (2018-19)
9.6%
increment 10.0%
10.1%
Auto
Auto Components
Automotive
Auto Components
9.8%
10.2%
8.2% Banking, Financial Services & Insurance
Banking 8.3%
8.3% Financial Services
Financial services 8.7%
9.3% Insurance Insurance 9.4%
10.2% Consumer Goods
Consumer goods 10.3%
9.0% Energy
Energy and and Natural
natural Resources
resources 9.3%
9.3% Engineering
Engineering and Manufacturing
and manufacturing 9.4%
9.4% Infrastructure
Infrastructure and estate
and real Real Estate 9.0%
9.5% IT IT 9.6%
9.8% ITeS ITeS 9.9%
10.9% Life
Life Sciences
Sciences / Pharma
/ Pharma / Healthcare
/ Healthcare 10.5%
8.0 % NGO / NPO NGO / NPO 8.3%
10.4% Professional
Professional services Services 10.7%
9.2% Retail Retail 9.6%
9.3% Telecom Telecom 9.0%
8.3% Transport Transport
& Logistics& Logistics 8.6% n = 272

Average 15.4%
Actual (2017-18)
Overall Average
Overall Average
Projected (2018-19)
15.7%

variable pay 15.8%

14.4%
Auto
Auto Components
Automotive
Auto Components
16.0%
14.8%
18.3% Banking Banking 18.5%
20.4% Financial Services
Financial services 20.7%
19.7% Insurance Insurance 20.2%
17.7% Consumer Consumer
goods Goods 18.1%
11.4% Energy
Energy and and Natural
natural Resources
resources 11.6%
13.8% Engineering
Engineering and and Manufacturing
manufacturing 14.1%
11.6% Infrastructure
Infrastructure and estate
and real Real Estate 11.7%
15.8% IT IT 16.1%
13.0% ITeS ITeS 13.4%
17.6% Life
Life Sciences
Sciences / Pharma
/ Pharma / Healthcare
/ Healthcare 17.8%
10.3% NGO / NPO NGO / NPO 10.6%
19.7% Professional
Professional services Services 19.8%
15.5% Retail Retail 15.9%
11.2% Telecom Telecom 11.4%
11.4% TransportTransport & Logistics
& Logistics 11.6% n = 248
Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 8
 Overview | Average increments
All sectors surveyed projected an increase in the average increments in 2018-19. The maximum increase is being projected by
the Financial services and Retail sectors, where Financial services sector has projected an increment from 8.3 per cent
(actual) to 8.7 per cent (projected) while the Retail sector has projected an increase from 9.2 per cent (actual) to 9.6 per
cent (projection).
Actual Projected
Average increments percentage (2017-18) (2018-19)
Overall Average 9.4%
9.6%
Automotive 10.0% Top
9.8% 9.0% 9.1%
Auto Components 10.1% executive
10.2%
Banking 8.2%
8.3%
Financial services 8.3%
8.7%
Senior
Insurance 9.3% 9.1% 9.3%
9.4% management
Consumer goods 10.2%
10.3%
Energy and natural resources 9.0%
9.3%
Engineering and manufacturing 9.3% Middle
9.4%
Infrastructure and real estate 9.4%
9.3% management 9.4%
9.0%
IT 9.5%
9.6%
ITeS 9.8%
9.9%
10.9% Junior
Life Sciences/Pharmaceuticals & Healthcare
10.5% 9.9% management 10.2%
NGO/NPO 8.0%
8.3%
Professional services 10.4%
10.7%
Retail 9.2%
9.6% Individual
Telecom 9.3% 10.4% contributor 10.7%
9.0%
Transport & Logistics 8.3%
8.6%

Actual (2017-18) Projected (2018-19) n=272 n = 261

Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 9
 Overview | Average variable pay
The Average variable pay projection has increased from 15.4 per cent in 2017-18 to 15.7 per cent in 2018-19. This indicates
that organisations are continuing to move towards paying for performance and variable pay holding a higher percentage in the
CTC. The highest variable pay as a per cent of CTC is reported by the Financial services sector and lowest by NGO/NPO.

Actual Projected
Average variable pay (as a percentage of CTC) (2017-18) (2018-19)
Overall Average 15.4%
15.7%
15.8% Top
Automotive
16.0% 21.3% executive 22.1%
Auto Components 14.4%
14.8%
Banking 18.3%
18.5%
Financial services 20.4%
20.7% Senior
Insurance 19.7%
20.2%
19.0% management 19.4%
Consumer goods 17.7%
18.1%
Energy and natural resources 11.4%
11.6%
Engineering and manufacturing 13.8% Middle
14.1% 15.2% 15.6%
11.6% management
Infrastructure and real estate 11.7%
IT 15.8%
16.1%
ITeS 13.0%
13.4%
Junior
Life Sciences/Pharmaceuticals & Healthcare 17.6% 11.2% 11.4%
17.8% management
NGO/NPO 10.3%
10.6%
Professional services 19.7%
19.8%
Retail 15.5% Individual
15.9%
11.2%
10.3% contributor 10.5%
Telecom 11.4%
Transport & Logistics
11.4%
11.6%

Actual (2017-18) Projected (2018-19) n=248 n = 233

Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 10
 Overview | Prevalence and frequency of variable pay
Prevalence of variable pay plans
Almost 90.7 per cent (225 of 248)
Team awards 97 (39.1%) respondents say they have a variable pay
programme in their organisation. The
Special recognition awards 148 (59.7%) most prevalent programme being
Individual Performance Awards commonly
Functional/Business unit 128 (51.6%) given to middle management and
individual contributor cadres.
Organisational 154 (62.1%)
The average pay out as a per cent of CTC
Individual performance is seen to increase in ascending order
204 (82.3%)
awards from individual contributor to top
n = 248 executives.
Frequency of pay out

Annually 202 (81.5%)

Bi-annually 26 (10.5%)

Quarterly 34 (13.7%)

Monthly 22 (8.9%)
n = 248

Percentages can sum up to more than 100 per cent due to multiple selections by a few
organisations
Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 11
Overview | Performance management
Almost 75% (174 of 232) respondents identify high
The most prevalent frequency of potential (HiPo) employees and offer them an average
performance review is reported hike of 14.7%
to be annual for most Only 8% (19 of 240) respondents have reported
organisations surveyed. giving an off-cycle salary hike.
Average increment by performance rating
15.5% 15.2% 15.8%15.4%
Almost all organisations reported 14.6% 14.3% 14.4% 14.2%
using a threshold for including 13.3% 13.1% 13.7% 13.3%

new joiners in the performance

cycle, with 231 of 248 (93.0%) 10.3% 10.6%
9.3% 9.6%
organisations keeping it at six 9.0%
9.2%

months

Frequency of performance review

26 (10.4%)
Annually

Overall employees

management

management

Junior management
Top executive

Individual contributor
Middle
Senior
221 (88.4%) 66 (26.4%) Bi-annually
31 (12.4%) Quarterly
Monthly
9 (3.6%)
Met expectations Exceeded expectations HiPo
n=250 n = 250

Source : KPMG in India's Annual Compensation Trends Survey 2018-19

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 12
 Overview | Long term incentives (LTIs)
Percentage of organisations granting LTIs Out of the 212 respondents who
answered this question, 126 (59.4%)
organisations give some form of equity
Stock Options 91 (72.2% )
compensation to their employees.
Stock options and restricted stocks are
the most prevalent form of LTI plans
Restricted Stocks 94 (74.6%) used across sectors according to our
respondents. Coverage under LTI plans
is prevalent more in top executive and
senior management levels across
Performance Shares/Units 53 (42.1%) sectors.

Phantom Stocks 23 (18.3%)

Others 34 (27.0%)

n = 126

Percentages can sum up to more than 100 per cent due to multiple selections by a few
organisations

Source : KPMG in India's Annual Compensation Trends Survey 2018-19

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 13
Overview | Average voluntary attrition (2017-18)
Automotive 6.6% The average annual voluntary attrition appears to have gone
down from 13.4 per cent to 13.1 per cent.
Automotive components 7.9% The highest attrition was reported by the Retail sector, with
e-commerce being on the higher side with an average
Engineering and manufacturing 8.4% voluntary annual attrition of 18.5 per cent.
Energy and natural resources 8.5% Average annual voluntary attrition by levels
NGO/NPO 9.2% 16.6%
15.2%
Consumer goods 12.8%
13.1% 13.1% 12.8%
Infrastructure and real estate 13.3% Overall
average
Transport & Logistics 13.7% 8.3%
7.8%
IT 14.6%

Telecom 14.6%

Life Sciences / Pharma / Healthcare 14.8%

ITeS 15.1%

Top executive

Junior management
management

management
Overall employees

Individual contributor
Middle
Senior
Banking 17.8%

Professional services 18.1%

Financial services 18.2%

Insurance 18.3%

Retail 18.5% n = 256

Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 14
Overview | Insurance benefits

212 (81.5%)
Organisations provide life
230 (88.5%)
Organisations provide accident
255 (98.1%)
Organisations provide medical
insurance benefits to employees insurance benefits to insurance benefits that cover
employees employees, spouses and
dependent children

145 (56.9%)
Organisations cover parents in
addition to employees, spouses
and children under their medical
n = 260 n = 260 insurance plan n = 260
Percentages can sum up to more than 100 per cent due to multiple selections by a few organisations
Source : KPMG in India's Annual Compensation Trends Survey 2018-19
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 15
 Future HR trends | Criticality vis-à-vis Readiness
Re-inventing Gamification Robotics and Digital Predictive Gig economy
PMS cognitive HR talent analytics
automation
Readiness

Readiness

Readiness

Readiness

Readiness

Readiness
Criticality

Criticality

Criticality

Criticality

Criticality

Criticality
57.3% 51.1% 19.1% 15.2% 40.4% 34.8% 48.9% 38.8% 45.5% 33.1% 26.4% 22.5%

Percentages indicate percentage of respondents indicating high criticality / readiness for each element . For example: 57.3 per cent of the respondents n = 178
consider Re-inventing PMS as critical and 51.1% number of respondents believe they are ready to re-invent PMS

Source : KPMG in India's Annual Compensation Trends Survey 2018-19

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 16
KPMG in India’s People
and Change Advisory
Services

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 Our capabilities
We help clients implement progressive people strategies with an aim to achieve breakthrough business performance

Organisation Workforce Talent HR Behavioural

development
An approach to develop and
re-develop organisations to
achieve specific objectives
intelligence management transformation change management
A focus on strategic A thorough approach to attract, A strategic transformation of A proactive structured approach
workforce planning, rewards develop and retain talent and HR functions through process, to facilitate complex changes
and HR analytics capability to help deliver a technology and operating
competitive advantage model streamlining

Our offerings Our offerings Our offerings Our offerings Our offerings
• Organisational • Total rewards • Talent strategy • HR audit and road map • Business case and
vision, mission and strategy • Performance • HR vision, strategy and vision for change
values • Compensation management including performance measures • Change risk analysis
• Diagnostics for structuring KPIs • Design HR service • Change strategy
organisation’s structure • Compensation and • Competency modelling, delivery model • Change leadership
effectiveness and benefits talent assessments, HIPO
readiness for future • Design HR process/ • Stakeholder
benchmarking identification maturity assessment
• Organisation’s structure management
• Job evaluation and • Leadership development, and enhancement
benchmarks • Involvement strategies
grade structure career paths and • HR technology and
• Strategic design • Organisational
succession planning tools assessment/
organisation design integration
• Short and long-term • L&D service offerings implementation
• Role definitions incentive plan design • People transition and
• Employee engagement • Design HR shared workforce effectiveness
• Critical workforce • HR analytics and and culture assessment services and transition
segmentation dashboards • Benefit realisation and
• Employee value • HR capability building sustainable performance
• Strategic workforce • Workforce analytics proposition • HR due diligence. • Communication and
planning and modeling. • Talent analytics. engagement.
• Mergers and acquisitions.

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 18
Our team
We are a trusted advisor in the Human Resources domain providing
services to a multitude of multinational as well as Indian organisations
operating in the private, public, and government sectors. We focus on
developing strategies, structures, systems, processes as well as
building capabilities that can enable organisations to attract, develop,
engage, retain and manage talent. We deploy leading methodologies to
assist HR functions and business partners to align their strategies and
enable organisations to focus on their people priorities while taking into
account costs, capability, capacity, connection, and compliance-related
considerations.

Acknowledgements:
We acknowledge the efforts put in by the following team members:
• Mandar Ranade
• Shikha Ashwani
• Joydeep Podder
• Shagorika Das

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. 19
Thank you
Key contacts:
Mritunjay Kapur Vishalli Dongrie Saptarshi Chatterjee
National Head, Markets and Strategy Partner and Head Director
Head - Technology, Media and Telecom People and Change Advisory Services People and Change Advisory Services
T: +91 124 307 4797 T: +91 226 134 9502 T: +91 803 065 4091
E: mritunjay@kpmg.com E: vishallidongrie@kpmg.com E: saptarshic@kpmg.com

© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated wi th
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
kpmg.com/socialmedia
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
This document is meant for e-communication only.