Annual Increment, will it be equal for all employees? Give suggesions pls. - CiteHR
KK!HR
Management Consultancy
Ed Llarena, Jr.
Owner/ Managing Partner
Somnath Prasad
Asst. Manager-hr, Paam Eatables Limited
+3 Others

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My management wants not to provide annual increment every year. But if there is good performer what will be the reply for them as an HR Executive. Again if anual increment is permitted for any year management do not wants to provide increment to all employees. They do not wants to adjust inflationary adjustment what will be the HR response?
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I think we need to clearly distinguish annual increment from inflationary adjustment of salary. The inflation adjustment is done through DA and is generally revised two-four times in a year depending on the change in the base Consumer Price Index. Increment is a reward given annually for the satisfactory service given during the previous appraisal period. Whereas in Governmental set up 'Increment is a predefined uniform quantum for each salary grade, drawn as a matter of course and is withheld on specific orders/spelt out reasons' in Private Sector Increment is variable and is not granted to all. To those denied the annual increment, HR has to be ready with reply giving the unsatisfying nature of performance and the company expectations from the employee concerned.
In addition to what KKHR said, annual increment is linked to performance and the quantum of it or the denial of it need to be based on an objective evaluation of performance of the employee by the reporting authority or the committee of appraisal and often followed by a discussion between the employee and his supervisor or the Appraisal Committee but is not subject to subjective considerations or whims and fancies of the management.For this you need to have a proper PMS in place.
B.Saikumar
HR & Labour Relations Advisor
Navi Mumbai
Hi!
Yearly increases of salaries must always be within the context of the company's salary structure, and must always comply with the compensation principle of "affordability and sustainability". This is to make sure that "distortion" will not happen. Moreover, to avoid favoritism and ensure equity, salary increases must be based on the results of the company's annual performance appraisal system.
One good tool for the annual adjustment of salaries is the so-called "Rainbow Chart".
My company helps set up these things in business organizations worldwide. Contact us if you have a budget for external consultants.
Best regards.
Dear Friend,
There is nothing wrong if your work force agree to work without yearly increment. Further if your management is capable to manage the show without providing annual increment, is an adition to profit.
Rewarding or promoting or gving increment to good or talented people does not fall under the annual increment. The annual increment is given to workmen for compensating substantially the cost of living influenced due to hike in price index.
Dear Prabhat
There is a difference between compensating for the inflationary effect and compensating for the contributions made by an employee to the value of business and productivity of the company.The inflationary effect is taken care of by the Dearness Allowance formula based on CPI points once in a quarter/half year depending up on the industrial practice sector wise. Annual increment or rewards or incentive by whatever name you call it, is not linked to CPI but to the performance for a year of an employee, though the assessment period may vary.
B.Saikumar
HR & Labour Relations Advisor
Navi Mumbai
Hi,
This is Somnath Prasad i just added my quary to know about what's the Basic Methodology of increment based on time frame work, can we analyse in format
Set KPI in the beginning of the year and communicate it to staff, and analyse the performance at the end, based on the performance give increment, within the allotted budget.
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