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

Thread Started by #sneha joshi

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
24th July 2012 From India, Pune
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
24th July 2012 From India, Bangalore
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
24th July 2012 From India, Pune
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
24th July 2012 From India, Ahmadabad
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
24th July 2012 From India, Pune
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
24th July 2012 From India, Visakhapatnam
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
24th July 2012 From India, 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
25th July 2012 From India, Pune
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
25th July 2012 From India, Ahmadabad
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.
25th July 2012 From India, Bangalore
Hello Shashikanth,
Your answer gave me a smile...:) Thank you so much... yes, ROI and P&L is far important and we had already worked on it.
As i wanted the information of increment ground, thanks for your response on the exact question which i want....
Regards,
Sneha Joshi
25th July 2012 From India, Pune
Hi Sneha,

The incrments for employees can be decided based on the follwoing parameters:

Compensation(Salary Hike )of employees would be based on:

A. Company Budget: As decided by the Management

B. Industry Trends : Overall in 2012,IT hikes (India) has been between 8-12%

C. Team Budget allocation : As decided by Management based on Team revenue generation

D. Performance Ratings : Given all other parameters are same: Company Budget,Team Budget,No other salary corrections ,then for same ratings the hikes should be uniform

E. Salary Corrections/Market Corrections : if any

Once you have decided the Min-Max hikes,you have to note that the hikes cannot be same across salary slabs that is employee earning 2-5 lLpa should ger more percentage hike than an employee earning 10-15 LPA

What you can do is: Make grades based on salaries

Grade Payscale

A 0-5 LPA

B 5-8 LPA

C 8-12 LPA

D 12 and Above LPA

Ratings-Level

Salary Level-LPA 5 4 3 2 1

A(0-5 LPA)-Percentage Hike in Salary 15 13 10% 0 0

B(5-8 LPA) Percentage Hike in Salary 13 10 8 0 0

C(8-12 LPA) Percentage Hike in Salary 10 8 6 0 0

I did this and it helped me ,I hope this helps you as well.

Regards,

Prathiba Nair
25th July 2012 From India, Pune
Sneha,
Last year info tech companies, specially software gave little or no increments. Mostly it was 3 - 8% for large companies. Only wipro gave more. Some smaller ones gave higher to get people from larger companies
This year also with a larger bench staff the increments are expected to be lower than 5%
Go through the newspapers of the last 3 months and you will get info on various companies and their increment levels.
However, some skillsets re in short supply. You will need to pay them more.
26th July 2012 From India, Mumbai
Hi Sneha,
First check with ur management what percent they have fixed up in the budget for increment in overall salary for the year depending the target & profit. Then check the individual apprisal and their rating. Then you decide the percentage upon their rating and along with the HR & discuss with your management with what you have alloted for individual. The overall increment should match with the budget. It's nothing but cutting a cake and distributing to all. Each individual thinks that he got a big piece than other.
Regards,
Pradeep
26th July 2012 From United States, Santa Clara
Dear Sneha Joshi,
1) This World does not run on Flower Garden Theory
2) All Fingers of one hand are not same size, no?
Studying theory is good, talking of Ram Rajya is fine, - but from inception of the world nothing same- humans and nature can not be standardized nor predictable
Variation and Change result in "injustice" to some - this is the only permanent thing
So don't worry about standardization
Best of luck
26th July 2012 From India, Hyderabad
Sneha,
I agree with Pratibha for deciding the increment.
In IT industry, human skills is the main ingredient for billing. Hence normally in IT industry the main ingredient for revenue generation is HUMAN SKILLS. Hence 30 to 40% of your revenue should be the overall professional manpower cost which does not include support services like admin, HR, etc.
Regards
T
26th July 2012 From India, Hyderabad
Ms. Sneha

This topic has in fact drawn very valuable inputs from the memebers.In my view, you should not attempt to adopt any ideal or national standard.For example, the formulae or standards adopted by the companies in metro IT hubs like Banglore, Hyderabad, Mumbai or Chennai may be higher, having regard to the facts that the size of teh comapnies may be bigger with higher profit margins, competetion is bitter and employment opportunities may be abundant making job hopping easy and thus to retain talent, the comapnies may have to adopt attractive appraisal rating there which their budgets may permit.A small company in a tier -II city cannot wear the same stripes as metro IT companies since those formulae may not be realistic for them. In my view two factors can be considered to influence the decision to fix a realistic formula.

1) Region - where the industry is located and in your case it is pune.

2) Similar sizes industry-

3)Similar budgetary resources -It means the practice adpted in similarsized IT industries located in Pune Region can be taken as a standard that can be realistic for your company.Therwefore, you need to confine your research to pune IT industry.

B.Saikumar

Mumbai
26th July 2012 From India, Mumbai
Hi Sneha :
Could you get some market data adopted by small sized IT companies in Pune. I too work for a small sized IT company and in April 13, we propose to do salary revisions.
Please do share the details you may have gathered.
Thanks a lot.
Regards,
20th December 2012 From India, Pune
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