Maximising contribution of employees fuels growth

Maximising contribution of employees fuels growth

Maximising contribution of employees fuels growth

The survey conducted amongst 37 Indian companies across different industries provides detailed performance metrics and benchmark data to help companies understand their employees’ contributions to business performance. It also allows companies to compare themselves with peers by industry, revenue size and employee size.

The survey findings reveal that organisations in India are making a profit of Rs 15 per employee on every Rs 100 of revenue earned from them. In return, organisations are making investments of Rs 7,000 on learning and development per employee and delivering 14.6 L&D hours per full time employee, covering 68 per cent of the population.

With an average remuneration of Rs 4.8 lakh and Rs 6 lakh of profit per employee, the Human Capital Return on Investment is, therefore, 1.79 for organisations in India.
Commenting on the survey, PwC India Leader People & Change practice Sankar Ramamurthy said: “With India being the fastest growing economy, organisations that would maximise their human capital contribution to business performance, would be the ones to best leverage the positive economic environment. This report therefore provides deep insights on how companies in the race for growth can better manage their human capital.”

Organisations with larger revenue base enjoy 2.2 times higher productivity compared to smaller organisations. However, smaller organisations have 50 per cent more L&D resources per employees, 2.6 to 2.9 times higher L&D investments and higher average remuneration per employee, and yet witness almost 1.4 to 1.8 times higher resignation rate than larger organisations. Smaller organisations however deliver 10 to 15 per cent fewer L&D hours per employee than larger organisations.

The survey also reveals that smaller organisations recruit more number of graduates but struggle to retain them while large organisations are hiring 25 per cent more talent from external market. Another finding of the study was that the smaller companies focus more on compensation rather than on benefits unlike large organisations.

Cause of concern

With 18 per cent termination and 15 per cent resignation rates, turnover is slated to be a cause of significant concern for the country’s workplace effectiveness. Another area of concern was the poor representation of women in the Indian workforce, being as low as 9 per cent compared to approximately 50 per cent in Europe.

Industry-wise highlights

The engineering and manufacturing sector have the highest proportion of performance related pay relative to total compensation. Rationally so, these companies also earn the most revenue and profit per employee. Pharmaceutical companies however, spend the highest amount (Rs 10,000) on L&D per employee and delivered the highest number of L&D hours per employee.

It also pays the high average remuneration and generates high return on its investment on its people. Contrary to general perception, IT/ITeS have the lowest spend on L&D per employee. This sector also witnesses the highest termination and resignation rate.