Dear Sir, What are the slabs of increment after compilation of the APAs for the year, which other companies follow ?
What are the advantages / disadvantages if a company follows:
1. release a uniform 9% increment to all employees;
2. a two-tier grading and increment policy, where 70% workforce is graded in A-grade with 9% increment and 30% in B-grade with 7% increment;
3. a three-tier grading and increment policy, where 15% workforce is graded in A-grade with 10% increment; 75% in B-grade with 9% increment; and 10% in C-Grade with 8% increment.
The CTC after the incremental increase on 2 & 3 above is 9.1% i.e. almost same.
Please enlighten.

From India, Khargone
Dear member,
You have asked about salary hike based on the performance slabs. Performance slabs do not change every hear, however, what changes is salary hike linked to each slab. Nevertheless, two issues emerge here. One is that how much your management is ready to give the hike. Salary depends on the financial performance of the company. Percentage increase depends on the paying capacity of the company. Please note, salary once increased cannot be decreased. Theoretically it can be decreased with some conditions, but then it has side-effects too. Therefore, this decision needs to be taken judiciously.
Coming to deciding who fits in which slab though it is beyond the scope of your query. For this company needs to accurately measure the performance.
Do you have a mechanism where you measure the performance with absolute accuracy and thereby there is no room for disgruntlement arising out of perceived underrating? This is a far more serious as well as ticklish issue. Many times performance appraisal becomes the cause of employee exit or attrition. This is because of the gap in employees' perceptions and the appraising authority. While employees may bear with the less salary increase but they may not bear with the perceived injustice! Please take into consideration this factor prominently.
Dinesh Divekar

From India, Bangalore
Dear Mr Dinesh Divekar,
Thank You for your revert on the above query. The question was primarily for the Workers category employees and add to it company policy that 30% of the total workforce of 180 i.e. 60 employees, has to be graded in B-category for 7% increment, which is very difficult for any HRD.
Coming to the question you have asked "Do you have a mechanism where you measure the performance with absolute accuracy and thereby there is no room for disgruntlement arising out of perceived underrating?" No, we do not have the mechanism to measure the performance with absolute accuracy. Please guide !

From India, Khargone
Dear Sandeep,
Just because they are workers, all the workers need not be given salary increment of 7% If you take such blanket decision, then the high-performers will feel let down and poor performers will be overpaid at the expense of high-performers.
Earlier there was similar query wherein I have given replies. The links are as below:
As far creating a sound mechanism to measure the performance is concerned, it can be done however, it's result can be seen only in the next year. Our objective should be that the challenges that you are facing this year, same challenges you should not face next year or thereafter. Not only you should have sound Performance Management System (PMS) but every single employee should feel that the system values their performance and there is no room for injustice of any kind. However, to do this, HR requires tremendous support from top leadership. Call me on my mobile number and we shall discuss about it.
Dinesh Divekar

From India, Bangalore
Dear Colleague,
This is a crucial decision and dilemma every year for all managements while deciding increments for workers where there is no measurable performance criteria.
It is lot more easy where the increments are based on time scales . In that system, wage differentials are governed by seniority and skill category and do youthey are automatic after completion of every one year's service.
In the absence of measurable performance criteria, I am inclined to think that the uniform percentage increase across the board for workers would be less problematic practical solution.
Vinayak Nagarkar
HR- Consultant

From India, Mumbai

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