Link performance appraisals with annual increments - best practices
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shailakoppal Started The Discussion:

Dear all

I work in an organization where performance appraisals & annual salary increments are considered as two separate activities.

I find this quite interesting and intirguing at the same time. This is probably the first company that I have come across practicing this.

I would request all members who have been working in Dubai or the UAE to throw some light on this matter. Is this a common practice in this market?

If it is then some questions come to my mind
1. What is performance appraisals used for?
2. What is the basis for suggesting a salary increment?
3. Who is responsible for proposing the increment figures - the HR team or the Business team?
4. If there is no linkage between the two, then how would a company justfy performance pay for employees?
5. Are salary increments scientifically calculated based on company performance & general economic conditions?

I would greatly benefit from know what is happening in other comanies in this market as my company is looking for information from other players in this market.

Regards
Shailashree

rameshmenon - Member Since: Dec 2006
Very interesting topic. I appreciate to see our expert members answers. Come on, make this section of Cite HR full of actitivites. There is a whole lot of HR life happening in UAE.

Regards,

Ramesh Menon

shailakoppal - Member Since: Mar 2008
Hello HR folks!!

I would highly appreciate any information on the topic above. Request you to kindly share some of the practices in your organizations.

Hoping to get some information soon.

Regards
Shailashree

sajid_rasheed - Member Since: Feb 2008
Dear Shaila

I have copied your email and below in blue tried or rather attempted to be precise and to the point.

I work in an organization where performance appraisals & annual salary increments are considered as two separate activities.

(Performance appraisals outcome is to decide on three things;

1. Probability of Promotion
2. Financial reward to motivate / Salary Increment
3. Departmental transfers / Ultimatums / terminations


I find this quite interesting and intirguing at the same time. This is probably the first company that I have come across practicing this.
Yeah…..lots of companies have forgotten the real essence of performance appraisals. So when if some company does it do looks amusing. Whereas in first place the objectives have to be made clear for would we be having a personnel management activity or the real HR in practice.

I would request all members who have been working in Dubai or the UAE to throw some light on this matter. Is this a common practice in this market?




If it is then some questions come to my mind
1. What is performance appraisals used for?
The appraisal system gives each appraisee an idea of what is expected of him next year.

2. What is the basis for suggesting a salary increment?
Companies’ uses numerous rewards, including non-financial ones, to motivate people .Rewards, be they monetary or non-monetary, are always objectively determined.

3. Who is responsible for proposing the increment figures - the HR team or the Business team?
Awards are used a technique for motivating both the employee and his / her family. And Salary increments come under financial rewards. Hence a motivating workforce to get better work done and enhance the capabilities i under the HR Domain


4. If there is no linkage between the two, then how would a company justfy performance pay for employees?

HR department is no other than a Business revenue generating department. End of the day you have to remember that achievement of Business Objectives is the ultimate aim of every department as well as employees. HR functions work hand in hand with other departments seeking their valued inputs and suggestions

5. Are salary increments scientifically calculated based on company performance & general economic conditions?
Yes. They are. There are lot many mediating companies who offer their services to assist you in doing the same.

Hope I am able to talk some sense.


Sajid

sajid_rasheed - Member Since: Feb 2008
Dear Shaila Whats your input from any other sources ? you started the thread right ?? Sajid

rameshmenon - Member Since: Dec 2006
Well commented Sajid. However, let me give my humorous side of explanation / comments considering the socio-economic

Let me also answer in between the question:

I work in an organization where performance appraisals & annual salary increments are considered as two separate activities. I find this quite interesting and intirguing at the same time. This is probably the first company that I have come across practicing this. I would request all members who have been working in Dubai or the UAE to throw some light on this matter. Is this a common practice in this market?

As far as my experience of working in the UAE is concerned, it is not unusual to consider the appraisals and annual salary increments as two separate acitivities. Salary increment happen in some companies in month of April, effective January and in some companies in January itself. Appraisal happens only in well structured companies mostly with their collaborating company or partners based in Europe, UK, US, etc.
It is due to the fact that HR Department is not well structured here (in most Middle East countries) and have several limitations with regard to efficient staff and mostly you may see either Office Services or Administration personnel handling HR role. This will deny the right structuring, career development opportunities, Training requirements etc which are very necessary for the growth of a company and it's manpower.


If it is then some questions come to my mind

1. What is performance appraisals used for?

Company to company objectives are varied and you may see at times (especially if you come here from a well HR structured company) Performance Appraisal as an opportunity to deny any well deserved promotion /pay rise. However, it is not the case always. There are companies who follow correct policies and procedures to implement performance appraisal plans.

2. What is the basis for suggesting a salary increment?

This depends on several factors, again depending from company to company and nature of it's business and roots. Some companies have a fixed plan of increment for employees - again - on a different scale or ratio basis according to the nature and role he is assigned. Here again, many times, if you are a hardcore HR person re-planted to this part of the world, you will be forced to see favored employees walking away with maximum scores/increment allotment ratios beyond HR prescribed AND management above HR who finally authorises this increment, re-fixing it to give higher or lower rates than the HR proposed ones. Office boys, Personal Drivers, PROs, and close associates etc who do several work for key/top management executives fall into this elite category and you may not be able to include or imagine to include in your control measures or policies. But I am sure this scenario is existent not only here.

3. Who is responsible for proposing the increment figures - the HR team or the Business team?


Many cases the company allocates a budget increment ratio or budget basket to the Business Team and other teams and they can propose their own share of percentage ratios for staff within to the HR to finalise and propose it to the management. Performance appraisal done by the Business Team is rated by the HR department and they may give their evaluation to the management to finalise this exercise.


4. If there is no linkage between the two, then how would a company justfy performance pay for employees?

This is also not an uncommon scenario. Many times we get to see fixed amount interest or fixed percentage increase irrespective of the performance and according to the company management decision. It may happen in industries where profit margin/growth rate is comparatively less, managments not keen on discussing / listening to staff issues related to raise in cost of living etc. As I wrote earlier, these things are part and parcel of Local situation of a company and their vision towards employee welfare connected with company growth. I have seen many case where increment as low as 150 Dirhams approved even at this time of escalated cost of living and at times approval of high increment even two or three times during the same year.

5. Are salary increments scientifically calculated based on company performance & general economic conditions?

Many times companies involve external consultants to assist them in salary revisions as per economic conditions. Many companies - again with outside Gulf roots - have well structured schemes as per their parent company staff policies and procedures and stick on to international rules and regulation to finalise the employee benefits each year. Those companies will also have real time target and growth / profit margins and these are analysed and discussed at appraisal time. At this time, they are also issued with new objectives, and key targets for the new financial year as per the company policy.

As you and many others realise, true HR practise is still a long way to go in this part of the world and it requires lots of efforts to make it a reality. I sincerely hope that interaction, useful discussions, knowledge sharing etc using non-profitable Self Help groups like Cite HR will prove beneficial for implementing beneficial measures to staff in future time.

Thank you for bringing out this topic.

Ramesh Menon

shailakoppal - Member Since: Mar 2008
Hello all

Sajid: I do not have any inputs from other companies at this moment. I started this thread with a hope of gathering information. However, seems like this is a less spoken about topic in this part of the world!

Ramesh: I completely agree with your thoughts on the subject. Of the little exposure that I have of this market, I should say these were pretty much the conclusions I drew out of the HR practices.

I do not think it would be wrong to say that HR is slowly gaining popularity & acceptance in organizations here. This is think is a good step forward for the HR community.

I am trying to gather information so as to build a case for my company to link the two & move towards more mature processes & I should say here that I will benefit greatly from the inputs of HR professionals on the HR practices in their organizations.

I request everyone to share the practices in their organizations.

regards
Shaila

sajid_rasheed - Member Since: Feb 2008
Dear Shaila

It is not only a less spoken subject, but less practiced as well. Hence we all are here united to facilitate the objectives of CiteHR as well of our group which we formed recently. Objective to disseminate HR best practices

Cheers


Sajid

Quote:
Originally Posted by shailakoppal View Post
Hello all

Sajid: I do not have any inputs from other companies at this moment. I started this thread with a hope of gathering information. However, seems like this is a less spoken about topic in this part of the world!

Ramesh: I completely agree with your thoughts on the subject. Of the little exposure that I have of this market, I should say these were pretty much the conclusions I drew out of the HR practices.

I do not think it would be wrong to say that HR is slowly gaining popularity & acceptance in organizations here. This is think is a good step forward for the HR community.

I am trying to gather information so as to build a case for my company to link the two & move towards more mature processes & I should say here that I will benefit greatly from the inputs of HR professionals on the HR practices in their organizations.

I request everyone to share the practices in their organizations.

regards
Shaila

Bruncha - Member Since: Mar 2008
Hello to all,

There is beginning to be a connection between appraisals and compensation. I have seen 2 organizations that have implemented performance appraisals based on rated and weighted competencies ( a hard subject to teach to those who have limited exposure to both comps idealogy and weighted systems!. The appraisals are then tied to a bell curve approach where, say for instance you have 7 people in the department, you have one "a" player..2 "b' players, 3 "c" players and 1 "d" etc.

The rating of the employees are then linked to a "bonus" pool.

I have to say that when one of our clients when to such a performance management systems, there was quite a stir internally. However, the CEO and board, held to their plan.

It forces managers to truly rate PERFORMANCE tied to outcomes and not personality or name preferences.

So, is it wide spread..not yet.. but its coming.. :)

Regards,

sajid_rasheed - Member Since: Feb 2008
Hi Something to support. Please have a loot at attachments. Cheers Sajid


Attached FilesProvided by community member sajid_rasheed. Join us to learn and grow with your peers.
File Type: pdf Recognising poor performance.pdf (46.1 KB, 1644 views)
File Type: pdf Correcting poor performance.pdf (43.7 KB, 1007 views)
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