Dear HR professionals,
My company is under factories Act,
Last month what we have done for appraisal is simply given 10% hike for every Employees.
Is there any procedures for giving Hike ? any documents i have to maintain for given hike proof ?
Please clarify.

From India, Chennai

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Dear Nagarjun,

The method of salary hike that you have adopted in your company dates back to 19th century or early 20th century. Alas you could have entered in 21st century!

If you wish to give salary hike based on the performance then what you need to do is to devise sound Performance Management System (PMS). The primary objective is to capture the performance of each employee accurately. To do this, you need to measure the performance scientifically and also create performance slabs. Later communicate these measures to the employees and tell them when their performance will be measured. Thereafter, measure the performance and find out in which slab the employee fits in. Thereafter, depending on the company's financial performance, you may allot percentage increase to each slab.

Not just for salary hike, but measures of performance are also used for recruitment, employee training, career advancement etc. I have been giving replies on the subject related to PMS for the years together. Click the following link to refer my reply on the past post:

In one of my posts, I have uploaded Sample KPI and KRA Manual. You may refer the following link to download it:


Dinesh Divekar

From India, Bangalore
Dear Nagarjun,

One more point that I had missed in my previous post. By giving standard increase of 10% to everybody, you have placed average performer and star performer on equal footing. Will this not demotivate the high-performers? If employees' performance were not to be rewarded appropriately then why employees will go extra mile? They will work only to the extent of protecting their employment. This in turn will foster mediocrity which in turn will hold growth of the organisation.

When employees are rewarded suitably, it increases their self-esteem and they start valuing their organisation. In contrast when inefficient employees are rewarded they enjoy at the expense of the hard-working employees. By giving equal salary hike to everybody, you have created a situation where those who need to be removed could stay and those who need to be appreciated for their extraordinary performance, might quit.

As stated earlier, sooner you get rid of this 19th century management style, the better!


Dinesh Divekar

From India, Bangalore

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