Hi to All the members of citehr community
Its Increment time and I am told to prepare a Increment policy for the company. our present practice is to fill appraisal forms and as per the ratings no. of increments are decided using a fix amount depending on the grade.
I want to know what other methods are being used and which one is better and for framing the whole policy what other considerations are required.

From India, Visnagar

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• The overall policy will remain the same, with only some minor changes
• Better increments based on company overall progress to encourage people to perform better
• All performance grade of employees and the eligible ratings & their increment slabs will remain the same
• The changed policy will be applicable with effect from Jan’09 annual Increments
• The assessment of all employees will remain the same with no changes
Standard Increment based on:

• Company achieving targeted turn over and profit margin
• Higher increments for exceeding turnover/profits targets on decided by the board
• Correction for under performance of the organization on the whole

Annual Increment is based on the following parameters:

• Based on Individual Grades
• Company financial performance during the financial year
• Order Book Position during financial year
• Last year’s Industry annual increment trends
• Recession of Economy

Increment slabs remain the same

Performance grade of employee Up to INR 25000 per month Between INR 25001 to 50000 per month Above INR 50000 per month
Grade A+ 50% 35% 25%
Grade A 40% 25% 20%
Grade B+ 25% 17.5% 12.5%
Grade B 20% 12.5% 5%
Grade C+ 5% 5% Nil
Grade C Nil Nil Nil

Actual Meaning of the Grades

Grade A+ 95 - 100 pts (Outstanding) Performance far exceeds expectation resulting in cost and time saving instances, also in having significantly contributed in new products or execution of projects and creation of patentable IPs / marketable products that are quantifiable and demonstrable in the presence of a Committee
Grade A 90 – 94 pts (Excellent) Performance is above expectation resulting in cost and time saving instances and also in having significantly contributed in new products or execution of projects that are quantifiable and demonstrable in the presence of a committee
Grade B+ 85 - 89 pts (Good) Performance in line with expectation and demonstrable in the presence of a committee, if called for
Grade B 80 – 84 pts (Satisfactory) Performance is satisfactory but needs improvement
Grade C+ 75 - 79 pts (Average) Performance below expectation, must improve
Grade C 70 – 74 pts (Below average) Performance below expectation, needs lot of improvement
Grade D < 70 points (Poor) Not suitable for the current task

Increment process with Eg.

• Eg:1. Company exceeding turnover/profit margin targets, Board decides on 20% additional increments.
i.e. Increments = 120% on eligible increment

• Eg:2. Company achieves expected targets,

• No additional Increment declared by Board.
i.e. Increments = 100% on eligible increment

• Eg:3. Company fails to achieve expected targets, Board recommends 20% reduction Increment
i.e. Increments = 80% on eligible increment

From India, Mumbai
1.0 Objective:

Company’s objective is to better overall performance through recognition of individual’s
Contribution, bringing in accountability for individuals, promote teamwork, team values and Co-operation and bring in focus on company success as a whole. Excellent performance hence needs to be recognized and appropriately rewarded.

Simultaneously for non -performers areas for improvement shall have to be identified and necessary corrective action initiated.

2.0 Applicability :

This policy is applicable to all employees on the rolls of XXX TECHNOLOGIES PRIVATE LIMITED and quantum of Performance pay is based on the employment document.

3.0 Eligibility :

All XXX employee's on rolls of the company at the time of disbursement and served a minimum period of 6 month before the appraisal period are eligible for disbursement of Performance pay

4.0 Scheme

  1. Performance appraisal involves the setting of clear quantifiable goals and objectives and assessing individual performance against specified measures.
  2. The objective of this Individual based appraisal is aimed at improving the company performance by recognizing and rewarding the individual talents
  3. Appraisals are done on December month annually and comprises of 2 reviews. The first review is performed at the 6th month (June 30th) and the employees are assessed on their performance. The second review is conducted at the 12th month (December 31st) and the employees are not only assessed on their performance but also given Pay scale revision with respect to their performances.
  4. Any new employee joining the services on or before June 30th is eligible for Performance appraisal for the month of December. Thus, an employee who joins service on or after the 1st July will not be entitled to the annual increment in the following December but the deficient months will be considered during the next appraisal.
Example: If an employee joins the services on July 1st 2007 then he/she will not be entitled to the annual increment in the following December but these 6months will be taken into consideration during the next appraisal held on December 31st 2008.

5.The Performance Pay component will be a part of total cost to company (CTC) of every employee and is disbursed once in a year.
6. Each XXX employee's performance is evaluated periodically through a score card. This score card duly filled shall be approved by TL and HOD and forwarded to HR for consolidation. The average score of the year will be considered for award of Performance pay. The performance pay comprises 3 components : 1) Individual performance 2) Team Performance & 3) Company performance.
7. In cases of exceptional competence, or where the Management feels it necessary, the Company may sanction more than one increment at its absolute discretion.
8. The Salary Scale & Grades will be as determined by the Management. All promotions from one Grade to another shall be at the sole discretion of the Management.
9. Annual increment shall not be withheld unless in the opinion of the Management.

5.0 Disbursement :

Performance Pay shall be disbursed to all eligible employees once in a year with effect to 1st January. The period considered for calculation is 1st January to 31st December.

6.0 In case of employee parting ways with XXX:

He / She is eligible for Performance pay only if they are on rolls of the company at the time of disbursement. Any deviation to the policy is with to the sole approval of CEO &Director.

7.0 Guideline on Performance Management System
7.1 For the Appraise

Appraise is the one who is eligible for the performance appraisal. Persons who are eligible for the performance appraisal are:
  1. Who has finished probationary period.
  2. Who has completed their training period.
  3. Regular employees.
Section I
  • Appraise should fill in the details in 4th column of the table. Appraise should give in his/her achieved weightage against the weightage allotted for the particular objective.
Section II
  • Appraise should give the weightage against their each competency objective. The weightage given by the appraise should be against the weightage allotted for the particular objective.
  • Any other comments which the appraise wishes to add, can be done in the provided area.
Section III
  • Appraise will give their training needs for the forthcoming Appraisal period. The management will decide on the training on their feasibility.
  • Appraise has to sign in the PM sheet at the end of this section.
7.2 For the Reviewer:
Reviewer is the person to whom the appraise is reporting to.

Section I
  • Reviewer should fill in the details in 5th column of the table. Reviewer should have one to one meeting with the appraise, analyze and give their weightage.
  • Reviewer should give their comments also
Section II
  • Reviewer should give the weightage against each competency objective of the appraise. This should also be done on the one to one meeting.
  • Reviewer should give their comments also.
Section IV:
  • Reviewer will have to do the Overall rating of the appraise for the appraisal period. This overall rating should be between the scale of 1-10.
  • Reviewer has to sign at the end of this section.
7.3 Final Result Sheet:
  • After all the required fields filled in the final result sheet, the Reviewer should also sign in the Final sheet.

7.4 Human Resource Head:

The person who is responsible for the Human Resource department.
  • The HR is responsible for the process in Performance management. HR should rate the appraise in the Section IV between the scale of 1 – 10 and sign in the appropriate place.

7.5 Appraiser:
Appraiser will be the Company Head/ Branch Head of the company.

Section I
  • Appraiser should fill in the details in 6th column of the table. Appraiser should give their analyzed weightage or in discussion with the Reviewer.
  • Appraiser should their comments also if needed.
Section II:
  • Appraiser should give their analyzed weightage or in discussion with the Reviewer.
  • Appraiser should their comments also if needed.
Section IV:

Appraiser has the fullest authority to decide about the performance of the appraise. The appraiser will take decision about the appraise by the following ways:
  • Independently
  • In discussion with the reviewer/ HR/ both.
  • Overwrite the decision of the reviewer/ HR/ both.
Appraiser will also result in a decision by just finding the average/mean of the rating given by the reviewer and the HR.

7.6 Final Result Sheet:
Appraiser will decide on the final result of the appraise. Once all the required decision are made the appraise will sign in the final result sheet.


The result of the performance appraisal is based Overall Rating given on the Final result sheet. The details of Overall rating is as under:
0 – 4 : Poor performance. Not good for the company.
5 – 6 : Warning to be given. Performance must improve a lot.
7 – 8 : Recommended for payroll hike.
9 – 10 : Recommended for payroll hike and also for Promotion.

From India, Madras
I have been assigned a task of giving the format/policy related to increment of employees with related to company's current financial position, company's growth, market, pls. guide how to provide such matrix?
From India, Pune

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