Hi :
I need to put up a proposal for salary increments to be given effective 1st April 2013.
Can you please guide me through the various steps involved in deciding the salary increment for employees? I need inputs on how IT companies decide the salary increments and performance appraisal (period).
Also what is the usual rate of increment in IT companies in Pune this year.
Our's is a company of 80 employees and this is the first time we will give increment to our employees by setting up a proper evaluation process. I have setup the appraisal system but now need to work on the increment strategy.
Please guide.
- Gia

From India, Pune
Salary increments in some IT companies are based on three factors: (i) Employee Performance (ii) Market Salary based adjustments as per your industry segment viz, small/ mid-size/ large & (iii) Loyalty factor (ie, length of service in your company). You may give different weights to each factor for purposes of computation & design an algorithm to compute the increments. An important issue, however, is the salary budget for next year, which should take into account both the increments for current staff & planned recruitment (if any).

It is apparent from the above, that performance appraisal of your employees should have been completed before deciding the increments. For Indian companies whose performance year is the 'Financial Year', the appraisal process (including normalization) should complete by 31st May. In that case, you may only be able to announce increments by end June. Your policy could make the increments effective from 01st July. This enables you to have 3 months time for data collection pertaining to the factors discussed above & for obtaining management approvals.

Well, this could vary from company to company. I have illustrated based on global best practices.

From India, Delhi
Thank you Mr Bhatia for your valuable inputs.
We do need to do salary corrections can you please suggest how to get market salary data for a small sized IT company.
Also we have 10% staff who are 1 yr plus in the company and 80% who are in a range of 6-12 months and remaining 10% are less than 3 months old. Please advice how do I set a cut off to determine who will be appraised as on 31st March 2013. Management wants to cover those who have completed min 6 months. Ours is a small organisation hence the dynamics are a little different from mid-sized/large orgn's.
Looking forward to inputs.
- Gia

From India, Pune
My answers specific to your queries are as under:

(i) No need to worry about market based salary adjustments & the loyalty factor since your company is too young at present.

(ii) You need to focus only on performance based increments. Hope you have a system in place.

(iii) Your best performers may be given 15 - 20%, the next lot 10 - 15%, the one next to them 7 - 10% & no increment to those rated very low (3 or below on a scale of 0 to 9) in their performance evaluation. If those not given an increment decide to quit, you save the company the pain of carrying the non-performers.

Your management seems justified in having no appraisal for those who do not complete 6 months as on 31st March 2013 (but as a confirmed employee in the company). Please note that 6 months period counts from the date of confirmation. For those still on probation, no annual appraisal is applicable. Probably you do have a separate process to decide who all deserve to be confirmed. This confirmation process for probationers is most important in IT companies since the low-performers can be shown the door or their period of probation extended.

From India, Delhi
You can go as per following steps:--
1. Make Cutoff date for Appraisal (for example 31-Dec-2012)
2. Collect Employees Rating from OPS Managers
3. See Your overall budget
4. Based on budget,set % for all ratings
5. calculate increment amount based on Tenure of employee (Employee who are 1 year old full %,for rest of employees prorate the same as per their tenure)

From India, Agra
Thanks Mr Bhatia and Naveen.
Naveen : Can you tell me if I keep cut-off as on 31st Dec should I make it applicable for those who have completed 6 months as on 31st Dec who would have completed 9 months by 31st Mar OR should i set the cutoff as 31st Mar so that employees who complete 6 months in jan/feb/Mar also get covered.
Also in point no 5.... say for eg. I define 10% increment on basic then a person who completed 1 year will get 10% and for the one who completed 8 months how do I calculate on pro-rata basis. I know this is basic stuff for a C&B specialist but as I am handling C&B first time hence my queries are on the basics as well.
Please do share inputs.
- Gia

From India, Pune
Can anyone suggest how to do industry benchmarking for salary hike in IT industry?
and also apart from this, can anyone let me know that how to get information regarding which all company are using 360 appraisal system and processes for evaluation from scratch till end.
Please its highly required..
Any help can do lot for me.

From India, Mumbai
Hi Gia,
Sorry for late reply.
Cut off date should be taken as 31st December only, employee joined after that would be eligible for Appraisal next year.
for second query you can divide no of years by 12 as you are taking it for 12 months.
Salary Increment Years Increment Value
100000 10% 12 10000
100000 10% 8 6667

From India, Agra
Have attached excel file with calculation here, please refer my earlier mail for the same. Naveen
From India, Agra

Attached Files
File Type: csv Book1data.csv (80 Bytes, 932 views)

As per my Appointment Letter my appointment is on probation for two year.
I have successfully completed the tenure of two year of probationary period and have also provided my review inputs to the establishment section team.
However, its been quite some time around 5 years I havent yet heard on my probation confirmation.
Kindly guide me with sample reminder letter how I write to my department. regarding my confirmation that they confirm my appointment
& send me the confirmation letter.

From India, Dicholi

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