Saswatabanerjee
Partner - Risk Management
Jeevarathnam
Sr. Manager Hr/admin
Hardik1087
Compensation Mgt, Performance Appraisal &
Sneha Joshi
Hr Manager
Shashikanth Kanduri
Hr & Admin Manager
+6 Others

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Dear Friends,
I want to know one thing from the HR professionals who are working in an IT companies.
Actually I am working in an IT company(25 employees)since a year, I want to know that what is the appropriate percentage of Increment (Max-Min) which I can adopt.
This will help a lot for many HRs who are working in an IT companies..
Waiting for valuable responses....
Thanks & Regards,
Sneha Joshi

Hi Sneha
There are no any standard format of increment. It entirely depends upon the management and the profit they are getting and the individual performance. For example since last 2 years there are no increments due to downward profit. There are companies who have given increment of 5%, 10% also. For example the organisation where my cousin is working they are getting 7-9% and in our organisation we got 20 - 35% as appraisals

Hello Jeevarathnam,
Thank you so much for your reply. I am 100% agree with you. However i want to know that if the company is getting on average profit then what is the standard they are adopting as a small scale company. Because, it is the thing that one should offer the salary as well as increment as per market rate. What is the market rate for increment for IT company?
Regards,
Sneha

Hi Sneha,
In IT Industry there are no fix percentage for Increment. This industry is very sensitive. I would like to suggest do not go for over all employees, you should go for individual employee. In this time the base is performance of employee. So you have to talk with Project Manager & Team Leader regarding employee's performance.
I have one good option about reward & recognition. This is also affect on performance appraisal.
Regards,
Hardik

Hi Hradik,
First thank you so much.... :) I agree on your view that the increment is wholly depend upon employee's performance. Let's say i have given one employee 15% increment and with that performance the other employee working in different company(same scale and same profit earner) giving 30% increment. There is a wide gape between the increment of two employees of two companies.
My concern is that i want to give employees what they really deserve performance is undoubtedly first and the most criteria but i can not ignore this thing too.
I must know the present scenario running in the market...
Regards,
Sneha

Hi Sneha,

Mr. Hardik and yourself are absolutely correct at a point.

Managers should develop part ownership in the employee’s future. Any good appraisal system should focus on developmental appraisal. Developmental appraisal mean that an organization needs to develop not just isolated performance appraisal tool/system, but the total frame work for the individuals development, improvement in job and level of competence and preparing employees for future jobs. Thus, appraisal of people, which is a part of the total HRD system, lies to be linked to long-term development activity and carrier planning.

Organizations have to show vision for the future. Vision, strategies and objectives will give rise to individual objectives and performance standards. The immediate rewards and recognition do not lead to enduring performance and upgrading of competence and therefore are not real motivators. The appraisal as a tool not only gives the individual and the organization the idea of where the individual stands in terms of his skills, competencies and abilities, but also monitors the process of growth and development, together with the inputs that are required to develop a high level of competence by individuals.

Current market scenario says:

1) Focus on Developmental Appraisals

2) Let Employees Appraise Their Own Performance

3) Create a Climate for Open Appraisals in Organizations

4) Muscle Builds the Organization

5) Build Commitment in the Workplace

Ms.Sneha

I agree with your rationale behind enquiring as to waht shall be the prevailing rate in I.T industry so that you can adopt a formula more or less closer to it, failing which the talent may go out of your company.It is sound principle of talent management if you want to sustain the talent in your company.My suggestion is since your's is a small company, do not try to adopt a standard, prevailing in IT hubs like Bangalore or Hyderabad or Mumbai or Chennai be cause the incremental percentages might be higher due to stiff competetion there and bigger size of the company with wider profut margis than yours.Adopting a standard of metros may not be realistic for asmall company like your's.

Normally two factors can be adopted in finding out a formula.

1) Region

2) Similar sized industry

Since your company is located at Pune, find out what is the rate or percentage of increment that is followed in Pune in IT companies of your size.You can fix one on this basis at the same rate or a little higher rate, if your

profits permit it.

B.Saikumar

HR & Labour Law advisor

Mumbai

Hello Sharmila,

Thank you for your valuable response...!!!!

You are right on your path as in company there is not only Performance appraisal system but as a modern approach a company should adopt total Performance Management System which includes whatever you had mentioned. But here i would like to say a one thing that in a small scale company you can not adopt all the things, as a HR i had tried all such a thing but because of the nature of the company i couldn't however i am trying my best to adopt all such a things say its one of the step in that process.

Equally I want to know the formal standard that how much should increment company provided. Because increment is the most vital part of the performance appraisal process. As you and Hardik both had indicated that increment should be as per performance.....Say performance is very good then how can you decide that this amount should be given. Here, if you answer that it depends on company policy then i wanted to know that how and on which ground this policy has been decided!

Simply my question is that how much higher increment you are providing to your employees in the IT companies.

Regards,

Sneha Joshi

Hi Sneha,
I agree with Ms.Sharmila Das.
We should not compare salary structure of two difference organization. Because employees have difference skill, knowledge & experience.
Reward & recognition is only source to saw the result of employee include all the things. This is not necessary for final performance appraisal.
Appraisal policy of company :
Management has to decide a budget for appraisal. Then after we have to make good structure of increment.
Regards,
Hardik

Sneha,
To fix the increment %, you need to consider the organization ROI and P & L. If your organization is in profit about 30% then you can consider the increment around 15 %. While conducting the performance appraisal you can split in 3 levels, 1 is eligible for 15%, 2 is 10%, 3 is 8%.
The above gives you a small idea, you can elaborate.
Regards,
Shashikanth.


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