Focus on employee contribution for growth

Focus on employee contribution for growth

Smaller organisations investing 2.9 times more in Learning & Development (L&D) per employee than larger organisations

New Delhi, 18/04/2011: Organisations in India that focus on maximising employee contribution to business growth are better positioned for growth, according to PwC Saratoga India survey 2010 on human capital effectiveness. 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 INR 15 per employee on every INR 100 of revenue earned from them. In return, organisations are making investments of INR 7000 on learning and development per employee and delivering 14.6 L&D hours per full time employee, covering 68% of the population. With an average remuneration of INR 4.8 lakh & INR 6 lakh of profit per employee, the Human Capital Return on Investment is therefore 1.79 for organisations in India.

Commenting on the survey, Sankar Ramamurthy, Leader People & Change practice, PwC India 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.”

Other key findings of the PwC Saratoga India Survey 2010 
Small vs. large organisations:
Organisations with larger revenue base enjoy 2.2 times higher productivity compared to smaller organisations. However, smaller organisations have 50% 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% 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% more talent from external market. Another finding was that the smaller companies focus more on compensation than on benefits unlike large organisations.

Cause of concern - Turnover and gender diversity:
With 18% termination and 15% 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% compared to approximately 50% 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 (INR 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.

 

Ends

Notes to the editor

About PwC Saratoga  
PwC Saratoga is the recognised leader in the measurement and benchmarking of human capital performance, HR and Finance function transformation. It holds the world’s largest, most robust databases of people and HR performance metrics in existence with information from over 1,600 clients globally. It also holds human capital impact metrics data for over 16000 organisations. Using a proven methodology developed over some 25 years across the world, Saratoga benchmarking and measurement services produce an executive appraisal of the strengths and limitations of an organisation’s human capital resource, enabling organisations to focus upon those issues that will have a major impact on improving performance and increasing competitive advantage. By combining metrics with the PwC client experience of best practice, Saratoga benchmarks and measures are used to provide a valuable insight into the key drivers of HR functional effectiveness and human capital performance.

Saratoga offers measurement and benchmarking in three areas namely human capital (which measures the impact of the workforce in both the current & future categories), support function effectiveness (which measures impact of support functions) and advanced measurement.

 

About PwC

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