Insights on Annual Salary Increments and Performance Appraisal in Software Development Companies

Hi HR Gurus,

Our company is a mid-sized software development company in Hyderabad. I am currently in the process of redefining the existing performance appraisal system. I would like to get an idea about the annual salary increments for developers, team leads, and managers. Your assistance in this matter would be greatly appreciated as this is urgent.

Thank you,
Swagatika

Hey,

I hope the attached information is helpful to you in some way.

Regards,
Roulette

Thank you very much, Mr. Roulette, for your prompt response.

I still need some clarification. We generally give a 10% to 20% salary increment for middle and senior-level employees. However, what should be the average percentage hike for freshers and executive-level positions? A 20% increment adds a substantial amount to the salary for senior employees, whereas the same hike for a junior developer with a lower salary does not add up significantly.

Therefore, my question is, should we have different percentage increases for specific levels? Please acquaint me with current industry practices.

Regards, Swagatika

Mr. Spanda,

Usually, there could be a formula for granting increments based on performance evaluation. The formula will assign weightage points to factors such as: (i) employee performance (as assessed in the performance evaluation sheet); (ii) department (project) performance; (iii) company profits (turnover in some cases); (iv) experience of the employee (optional); (v) longevity with the organization (optional); and (vi) trends of market compensation for similar positions.

As per the formula, the increments may be given ensuring that everyone gets about a minimum of 5% and a maximum of up to 25% or so.

Regards,
Dr. Kishore
Hyderabad
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Dear Dr. Kishore,

Thank you for sharing your thoughts. However, my query is different.

Let me provide a hypothetical example. Suppose there has been a performance evaluation of individuals at different levels - one senior manager with a salary of 14L per annum, another middle manager with a salary of 6L per annum, and a junior programmer with a salary of 2.4L per annum.

If they all received the same ratings for their respective performances, what should be the increment percentage for each of them? Should it be the same?

Thank you.

Hi Spanda,

Did you get the answer for the query you asked Dr. Kishore? Please let me know.

Regards,
Suparna

Hello Splenda,

I am Ashutosh from Jaipur, Rajasthan. Have you found the solution? I have been facing a similar problem for the last few months. I have increased my employees' salaries once in this financial year but I want to follow a specific increment format. If you have a good solution for this issue, please share.

Thank you