Salary increases poised to be smaller for bosses this year

When a company cuts corners and trims wage bills to battle rising costs, it is not often that the boss faces the music. But things may be changing. Himani Chandna Gurtoo reports.

When a company cuts corners and trims wage bills to battle rising costs, it is not often that the boss faces the music. But things may be changing.

Thanks to the rationing of salary hikes at the top, come April, your boss may get a dull, single-digit increase. What's more, a large portion of the hike is likely to be performance-linked.

"In the last six years, top management increases have fallen by almost 40%," said Sandeep Chaudhary, partner, talent and rewards, Aon Hewitt India, a consultancy firm. "This year we have estimated a 9.3% hike in top-level salaries against 15% in 2007."

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However, at other levels, companies are expected to dole around 10.3% increase in pay cheques against 11% last year, the decade's lowest hike.

"The economic turbulence is having a cascading effect on executive compensation," said Shridhar Ganesan, rewards practice leader at human resource consulting firm Hay Group, while pegging the modest increase of 9-9.4 % in the compensation of chief executive officers (CEOs) and other top executives this year.

Enterprises may also address salary increases by moving higher parts of the increments into the pay-for-performance section. "A very small proportion of the hike would affect the salary's fixed components as many projects are in limbo and companies are adopting far more conscious outlook," said Uday Sodhi, CEO, HeadHonchos.com, a job portal for senior-level hiring. "Today, around 40% of the overall compensation mix comprises of incentives."