Inputs on the current practice of merit increments distributions across the different sectors in India - CiteHR
Dinesh Divekar
Business Mentor, Consultant And Trainer

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Dear All, I would like to invite your inputs on the current practice of merit increments distributions across the different sectors in India. I have a query. If the performance of a trainee and executive member is outstanding, would they get same percentage of hike on their existing salary irrespective of the salary level?
for example if a trainee with 2 lakhs get 10% hike for outstanding performance, would a General manager with 20 lakhs get same 10% hike if the performance is outstanding? its just an hypothetical situation.
Would the % of hike depends on the salary levels?
Request your precious inputs.

Dear Jyothi,
Yes, technically speaking all employees should be given fair treatment. Annual increments can vary as per the performance slabs. But within the slab, you cannot further make division as per the hierarchy. If you give less increase to higher-level persons, it would be an injustice to them.
Dinesh Divekar

Mr. Dinesh,
But if our business is not forecasted to increase, would a senior person with such a huge net increase do a justification to his job? if the same continues year on year, his salary would be doubled in few years. Would that not be a burden to the company with such increased costs? with the same level of performance, a hike of 20,000 for junior and 2 lakhs for senior is not justifiable right? and in India being the parity of salaries from a junior to senior level is high which varies around 20 to 25 times in the hierarchy unlike western counties have only 4 to 5 times?
as per the surveys also its visible that the level of hike % decrease going up in the pyramid. Interested to know the acting trends in the industry.

Dear Jyothi,
This appears to be a recruitment problem. Your company has hired a white elephant but now unable to feed it! You could have been thoughtful before hiring a person with that kind of remuneration.
You say that if the 10% increase is continued for a couple of years, then the salary of high-designation might double. But then corresponding to the salary, will your business increase or not? Why do you think that it will stagnate for the next few years?
Irrespective of the designation, "Outstanding" performance must be respected. If your company is passing through a rough financial patch, then you may reduce the increment percentage for each slab but as written earlier, fairness demands to maintain equality.
Notwithstanding "outstanding" performance, suppose you give a marginal salary hike to a senior level employee. Because of the lack of parity, he might get disgruntled and what if quits the company? What would be the cost of his exit? What would be the cost on the business? Have you calculated that?
Anyway, my last suggestion is to give a marginal increase but increase the performance bonus. For the next Financial Year, identify all the senior level employees. Issue them a separate letter about general salary hike and performance incentive.
Dinesh Divekar

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