It is decided by the management based on the performance criteria and the budget allocated according to the business plans and indicators. Additionally, for certain positions, decisions are made based on the market trends to retain employees.
It is the prerogative of the management to decide on the percentage. As mentioned by Sowmya, it is between 8 and 10 in most companies. It was 20+ till recently, thanks to global price rise that prompted many companies to go on a cost-cutting spree, including this downward trend.
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