SALARY MOVEMENT

AND FORECAST
SURVEY

October 2020
TABLE OF CONTENTS
PARTICIPANT PROFILE
1 HIGHLIGHTS OF THE SURVEY
N = 250
High Technology 21%
2 SALARY MOVEMENT AND FORECAST
Industrial Goods 18%

Services 16%
3 PERFORMANCE MANAGEMENT
Chemicals 9%

Life Sciences & Healthcare 7%

4 SALARY CUTS
Financial Services 7%

Consumer Goods 7%
5 LABOR MARKET
Construction and Materials 4%

Others 11%
6 BUSINESS OVERVIEW
OTHERS INCLUDE RETAIL, NATURAL RESOURCES, EDUCATION AND TRANSPORTATION

© 2020 Korn Ferry. All rights reserved 2

HIGHLIGHTS

38 % Of the organizations are

undecided about giving
salary increments in 2021

41 % 4.6 % Was the median

increment given in
General Industry in 2020
Of the organizations did not give INCLUDES ZEROES

salary increment to its

employees in 2020

7.8% is the median increment

forecasted in General
Industry for 2021
EXCLUDES ZEROES

© 2020 Korn Ferry. All rights reserved 3

 INDUSTRY WISE SALARY MOVEMENT

High Industrial Construction & Consumer Life Sciences

Services Financial
Technology Chemical Goods Building Goods
Services
Materials

2020 Increment
with zeroes 4% 6.9% 4.8% 4.4% 4.8% 2.5% 5.4% 8.4%

2021 Forecast with

zeroes
5.5% 7.3% 5% 5% 5.1% 5% 7.5% 8.7%

2020 Increment
without zeroes 7.8% 8% 6.5% 6% 7.2% 3.5% 8% 8.7%

2021 Forecast
without zeroes 8% 8.2% 6.8% 6% 7.6% 5% 9% 9%

© 2020 Korn Ferry. All rights reserved 4

 2020 Salary Increase 2021 Salary Increase
By MANAGEMENT LEVEL
Employee Group 2020 Actual 2020 Actual Employee Group 2021 Projected 2021 Projected
(Including freezes) (Excluding freezes) (Including freezes) (Excluding freezes)

Executives / Senior Management 2.0% 5.1% Executives / Senior Management 4.8% 7.0%

Middle Management / Seasoned Middle Management / Seasoned

4.0% 6.8% 5.0% 8.0%
Professionals Professionals
Supervisory / Junior Supervisory / Junior
5.0% 7.2% 7.0% 8.0%
Professionals Professionals

Clerical / Operations 5.0% 8.0% Clerical / Operations 7.0% 8.3%

By PERFORMANCE RATINGS
Does not Somewhat Does not Somewhat
Meets Exceeds Meets Exceeds
Statistics meet meets Statistics meet meets
expectations expectations expectations expectations
expectation expectations expectation expectations
75th Percentile 0.0% 5.0% 8.0% 12.0% 75th Percentile 0.0% 5.0% 8.8% 13.5%

50th Percentile 0.0% 0.7% 5.0% 7.0% 50th Percentile 0.0% 0.0% 7.0% 9.2%

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PERFORMANCE MANAGEMENT
More than 80% of the organizations continue to use either bell curve or
management by objectives as the preferred way to measure employee
performance while only one fifth of the organizations also use 360-
degree feedback of the organizations
▪ One fourth of the organizations pay out
70% have promotions
their performance bonus in April, once a year while
followed by March (21%) and July (14%) 13% do it
biannually

73 % was approximately the actual bonus paid

as a percentage of target bonus for the of total employees
entire organization in 2020
5 % in the organization
(median) got

69 % of companies payed out performance

bonus for 2020 promoted in 2020

91% of companies pay the performance bonus once per year

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 PERFORMANCE RATINGS IN 2020

Total headcount that falls under below categories
with respect to performance ratings in 2020
26.3%
Does not meet expectations / Somewhat
meets expectations
For the performance multiplier ‘Exceeds
Expectations’ , companies paid a median
premium of 1.3X while calculating the merit
increment to reward their top performing
talent (Meets expectations is X here)

57.1%
Meets expectations 1.57 X 75th Percentile

16.6%
Exceeds expectations 1.30 X 50th Percentile

We see organizations at both ends of the spectrum – one set

wants to be high on differentiating employees that meet
expectations vs exceed expectations, the other set wants to be
socialistic in these unprecedented times and focus on being 1.15 X 25th Percentile
more empathetic.

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SALARY CUTS

26% of the surveyed

organizations implemented a
salary cut in the last 6 months,
with 12% being the average
salary cut throughout the
organization

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AVERAGE SALARY CUT THROUGHOUT THE
ORGANIZATIONS
15%
12%
10%
8%
% Salary Cut

75th Percentile 50th Percentile 25th Percentile Average

…with maximum impact at the Senior Management level

39 % Statistics
Executives /
Senior
Management
Middle
Management /
Supervisory /
Junior
Seasoned Professionals
Professionals
Clerical /
Operational

50th Percentile 24% 15% 5% 0%

of the companies
which implemented
salary cuts are Average 21% 14% 6% 4%

continuing it
© 2020 Korn Ferry. All rights reserved 9
LABOR MARKET - EMPLOYEE TURNOVER RATE IN THE
LAST ANNUAL CYCLE
Healthcare & Life Science 6.0%
10.0%
OVERALL TURNOVER DETAILS
Transportation 9.1%
10.3%
17%
Retail 10.5%
11.5%
Natural Resources, OG 2.8%
4.1%
12% Construction and Materials 4.0%
10.7%
10% Financial Services 10.0%
10.0%
Consumer Goods 10.0%
19.0%
6% Chemicals 5.0%
7.9%
5%
Consumer Durables 4.0%
7.5%
3%
Services 12.0%
16.0%

Industrial Goods 5.2%

8.9%
75th Percentile 50th Percentile 25th Percentile 11.0%
High Technology 15.0%
Total Turnover Voluntary Turnover
Voluntary Turnover Total Turnover

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JOB FAMILIES WITH THE HIGHEST EMPLOYEE
TURNOVER

31% 27% 21%

Information
Sales Engineering Technology

20% 14%
Finance &
Production Accounting

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 BUSINESS OUTLOOK BUSINESS OUTLOOK
2020NS 2021
29%
24%

17% 18% 17% 18%

16%
13%
11% 11%
7% 7% 8%
4%

Increase in Increase in Maintain or Decrease in Decrease in Decrease in Not Increase in Increase in Maintain or Decrease in Decrease in Decrease in Not
revenue of revenue of increase in revenue of up revenue of revenue of applicable revenue of revenue of increase in revenue of revenue of revenue of applicable
more than more than revenue of up to -5% more than - more than - more than more than revenue of up to -5% more than - more than -
15% 5% to 15% to 5% 5% to -15% 15% 15% 5% to 15% up to 5% 5% to -15% 15%

42% of the organizations said that their revenue 30% of the organizations expect a decrease in their
decreased during 2020 revenues in 2021

18% of the organizations said that their revenue 54% of the organizations foresee an increased
decreased by more than 15% during 2020 growth in revenue in 2021

Only 4% of the organizations saw an increase of more Only 7% of the organizations foresee an increase of
than 15% in revenue in 2020 more than 15% in revenue in 2021

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HEADCOUNT PLAN FOR THE NEXT 12 MONTHS
Reasons for reducing headcount

16%of surveyed organizations plan

to reduce headcount in the
next 12 months while only 23%
plan to add headcount

Other includes restructuring, process improvement,

cost control

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PRESENT KEY FOCUS AREAS FOR COMPANIES
% of companies
60%
49%
45%
38% 38%

4%

Specific cost Higher profitability Expansion - revenue Competitiveness - Rightsizing of Other

reductions growth higher market share business to new
business
environment

SPECIFIC COST REDUCTIONS MEASURES INCLUDE

Reducing business-related travel expenses 87%
Redeployment of employees to different jobs 49%
Redesigning work processes 48%
Having a greater focus on removing poor performers 43%
Not replacing employees who leave 39%
Reducing compensation/holding back on salary increases 34%
Delaying promotions 33%
Reducing marketing/advertising budgets 31%
Reducing the number of training programs and costs involved 29%
Reducing/freezing bonuses 27%
Eliminating perks 23%
Laying-off employees 14%
Outsourcing 9%
Eliminating management levels 8%
FACTORS THAT COMPANIES FORESEE AFFECTING
THE GROWTH OF THEIR BUSINESS IN 2021
Top 3 External Factors Top 3 Internal Factors

Strategy
Economic
77% 56% transformation &
Slowdown
re-organization

Digital transformation /
inability to keep up
72% Corona Virus 33% with increasingly
digital business
landscape

India-China Trade organizational

19% 29%
War cultural change

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REVISITING TOTAL REWARDS STRATEGY TO ADAPT WELL
4 Macro Level themes that will impact total rewards strategy and design in most organizations, now and in 2021

Despite having fewer resources, organizations have started to adapt rapidly to current economic
1. realities, with initiatives that may have previously taken four to six months, now being given four to
Increased Urgency six weeks. This is being achieved by organizations being emboldened, having seen change
implemented at lightening pace during the pandemic and agile work processes.

Internal considerations for total rewards strategy and design become most relevant during
2. challenging economic times. A well architected total rewards strategy that aligns with your business
Internal Focus strategy, economic reality and culture provides a more differentiated value proposition than a “me-
too” set of rewards programs that are based primarily on what others are doing.

Reward strategy and execution are fully interconnected. While both remain critically important in the
Strategy & current climate, most organizations are experiencing their greatest challenges on the execution front,
3.
Execution particularly within change management..

Loose management processes are likely to tighten, with more structure and framework around
Enhanced spending and allocation decisions, and lower levels of management discretion. We also expect
4.
Control principles and processes to be driven more from the corporate center.

© 2020 Korn Ferry. All rights reserved 16

THANK YOU!

Should you have any questions,

feel free to reach out to us:

Vasudha Handa
Delivery Leader, Pay and Engagement
Korn Ferry Digital
Vasudha.Handa@KornFerry.com

Ankit Bhaskar
Associate Consultant, Pay and Engagement
Korn Ferry Digital
Ankit.Bhaskar@KornFerry.com