In a joint lecture organized by MMA, Mercer, NIPM, and KS, industry experts explored how organizations can redesign reward strategies to meet evolving workforce expectations and business realities.
The Power of Recognition in Modern Workplaces
Junaid Sheikh
Director of Rewards Consulting at Mercer India
Recognition is one of the most powerful human needs. Every person wants to feel seen, valued, and appreciated for their efforts. When employees are recognized, it builds confidence, motivation, and a sense of belonging. Even a simple “thank you” or “well done” can inspire someone to work harder and stay positive.
In the corporate world, recognition and rewards directly contribute to higher job satisfaction and lower attrition. However, traditional reward styles are being challenged by new realities shaped by technology, competition, and workforce demographics. Companies are expected to meet today’s needs with holistic strategies that foster loyalty, positive culture, and align individual aspirations with organizational goals.
Modern reward strategies must include compensation and incentives that match market realities. They should empower employees to shape their own careers, offer flexible work styles that respect personal needs, and provide recognition not just from leaders but also from peers. This reinforces the right behaviors, motivates employees, and reduces stress and burnout.
India’s Talent Advantage
We are a very young country with a very young working population. The average age of our working population is in their 20s, and around 61% of the whole population is of working age. Being a working population, we are among the world’s largest digital workforces, which means there are a lot of digital engineering skills that come from India.
This advantage comes from our very strong academic institutions. India is known for IITs and other famous engineering institutes, but it’s beyond that. When we talk about STEM, we have a very strong population of people coming with science, technology, and engineering skills. I think that is becoming the backbone of this growth.
Post-COVID, we have seen a lot of change happening. Industries like automotive went through significant shifts in terms of the kind of people they had and the kind of people they used to hire. Sectors like hospitality took a hit, but technology and digital organizations kept moving and growing.
Technology-Led Growth Sectors
If you look at technology or technology-led engineering sectors, there are many that are leading to this growth. We have seen growth in aerospace industries, automotive technology, and manufacturing. There is growth in terms of automation and digitization. We have seen people moving across multiple sectors and industries within these particular skills.
Having said that, it is purely engineering and science—engineering and technology sectors within multiple industries, whether chemical, old economies, or manufacturing—that is playing to our advantage. That’s where a lot of investments are coming, backed by thoughtful investment at an early stage, right from the education level.
The Shift in Talent Expectations
A lot has been changing in terms of rewards and talent in the past many years. Technology is cutting across horizontally, with the same technology getting used in multiple aspects and making our lives easier. Everybody is talking about ChatGPT and artificial intelligence, with jobs getting eliminated. But the real question is: are jobs actually getting killed, or are more jobs coming in?
With technology, we understand that more complex or advanced jobs are being created. When we see more complex jobs and advanced jobs coming in, that talks about more skilled jobs—knowledge-based jobs. When those knowledge-based jobs are in demand, they will command a particular premium. They will come at a particular price point.
We are talking about skills-based pay, gig workforce, and transparency in pay. These are some of the elements that every HR leader, every rewards leader, or a growing organization has on top of their mind.
When I say there are meaningful, highly knowledgeable jobs coming in, people who perform those jobs would want to be paid better. That’s where you see organizations looking at differentiated approaches towards highly skilled jobs.
The Rise of Gig Work
Gig is something that has been in the system for long, but there’s a different approach to it now. This can be jobs performed on an hourly basis for people who are not very skilled, and in the same breath, I’m saying it’s performed by people who are very highly skilled—functional consultants and jobs that are very operational in nature.
If you take hospitality, FMCG, or e-commerce—quick commerce—you see people taking gig jobs that are important to ensure delivery happens but are not highly skilled. That is where organizations are coming up with different kinds of pay programs and policies to ensure that in the competitive world between digital and FMCG organizations, you have policies and pay programs in place.
HR Priorities and Expectations
Between 2024 and 2025, we have seen a lot of shift in terms of expectations from HR. Managerial skills, designing talent processes, and the importance of skills have gone high. Giving very good employee experience to employees—these are some of the key elements where we have seen shifts in the HR field.
If you look at India specifically, it is skills—ensuring that people are skilled or given the opportunity to upskill, rewarding those skills differently, ensuring that managerial skills are high, and giving high employee experience. These are the three or four elements that we see especially in India.
From Fixed Jobs to Adaptable Careers
Earlier, from an employer’s perspective, it was a job that had linear growth—a fixed job with a job description that would go up the hierarchy. That’s not the case now. When you are hiring, you are looking at somebody who comes with a lot of adaptability, who does not look at this job as a fixed job for life. He is somebody who is adaptable, who can improvise on his skills year on year.
The employee is looking for that role as a specialist who can come, look at it as a particular job, learn skills, manage teams, work across multiple teams, and then move on. The same shift exists from an employee’s point of view. They don’t look at it as a long-term or lifetime job. They look at it as a platform where they can use their skills, develop their skills, and enhance those skills—where they are provided with a platform to use technology and grow their network to perform that role and move on.
Compensation Trends and Practices
Debasmita Das
Senior Director and Rewards Design Practice Leader at Mercer India
Typically, organizations review salaries once a year. That’s how it used to be, and it still is, but this is getting discussed a lot—whether looking at it only once a year makes sense. In some spaces, like the renewable industry in India, which is going through a huge surge of growth, we see more than one increment cycle in a particular year.
If you look at all industries from an India point of view, the median compensation increase has been in the range of 8% to 9.4%. The year 2021, because it was immediately after COVID, saw a more cautious approach, and then it has been going steady.
India’s inflation has been something you can plan for. Over and above the inflation, what kind of increment percentages you are looking at needs to be based on your industry realities, your target talent marketplace, and so on.
Beyond Cash Compensation
When we talk about rewards, many times it gets limited only to cash compensation. But what is very important is how you are structuring your benefits programs. From an experience point of view, the kind of compensation you get has a more contractual element, but the experience you get primarily comes from the benefit.
We were talking with an organization about their factory setup. They said no matter what they introduce as new pay plans or insurance programs, what gets talked about always is the entity-level picnic of 100 people going together with their families—that is more cherished by the organization.
Everything need not be only cash or increasing it from annual increments or budgeting cycles. Other kinds of benefits also create stickiness. We are seeing quite a bit of shift happening in the benefit space.
Personalized Benefits for Different Generations
Post-COVID, immediately benefits became one of the important elements when you looked at the overall employee contract. Lot of changes happened in the health piece—employee health, different kinds of programs, especially medical health insurance coverage and critical illnesses.
Organizations focused a lot on mental health also, ensuring there is special focus and investments on that piece. We spoke about creating different personas depending on the age group or generation, ensuring you have something for every single generation so people get the maximum out of it.
For baby boomers, expectations would be about retirement programs and continued health benefits. For somebody just out of college, health insurance or retirement won’t be the focus—it’ll be about experiencing, about global health insurance if traveling, focus on personal development and career development, and opportunities for skill development and higher education.
Conclusion: A Two-Way Bridge
While we discuss what organizations can modify and adapt, it’s also very important to internalize and ask: what extra can I give to the organization? I think some thought needs to go into that also. It’s a two-way bridge. What differentiated things can I give to that organization?
The challenges we face—whether it’s attracting talent, managing notice periods, or dealing with market volatility—require HR teams to leverage market intelligence effectively and make agile, evidence-based pay decisions. At the end of the day, affordability to pay and the risk of losing talent or not being able to attract the right talent remain primary factors in reward decisions.
