Understanding Performance Appraisal vs. Salary Correction: Can You Share Examples?

Hi all,

Can someone tell me the difference between Performance Appraisal and Salary Correction? It would be wonderful if it could be followed by an example.

Regards,
Prashant

Hi Prashant,

Appraisal is the evaluation of the performance of an employee.

Salary correction is a process wherein the organization wants to assess whether there is any gross difference in the salaries they are paying compared to the salaries offered to people with similar skill sets in similar industries. Organizations generally undertake a salary survey (often through external agencies like Hewitt/Mercer, etc.) to find the benchmark salaries for different skill sets. Based on this data, they make corrections to align with the market. This exercise is conducted to keep salaries competitive and, to some extent, prevent employees from leaving for higher salaries.

Regards,
Sherine

Hi Sherine,

Thank you a lot for the to-the-point answer. Also, I want to cross-check that just like PA is a regular exercise, I guess salary correction is not a regular exercise, but it happens within stipulated time frames.

Regards, Prashant

In addition to Sherine's excellent reply, I might add that salary correction is also used to correct internal inequities in the salaries paid to employees.
Vicki Heath
Human Resources Software and Resources
http://www.businessperform.com

Hi,

As an organization, we buy the salary survey reports from organizations like Hewitt in January every year and compare our existing salary bands. If we see that we are below market rates, we make corrections to our employees' salaries. This usually happens in February.

For the past three years, we have observed this as a regular occurrence.

Cordially, Preet

Hi Prashant,

If I may add, a performance appraisal is done periodically, with a yearly performance appraisal being conducted to gauge the staff's performance so that they can tie this in with their yearly increment. As such, a decently performing staff will definitely receive some increment on a yearly basis.

On the other hand, a salary revision (or in your case, a salary correction) is conducted with a bigger gap of time. With the purpose as mentioned by Sherine, a salary revision is usually conducted every 3 to 5 years, depending on a number of factors including the industry's growth, market growth, etc.

Hope this helps.

Hi Sherine,

Thanks a lot for the to-the-point answer. Also, I want to cross-check that just like PA is a regular exercise, I guess salary correction is not a regular exercise but it happens within stipulated time frames.

Regards,
Prashant

Prashant,

Progressive organizations make it an annual exercise so that they stay competitive. You can do this depending on your kind of industry.

Sherine

Hi Preeti,

As an organization, we buy the salary survey reports from organizations like Hewitt in January every year and compare our existing salary bands. If we see that we are below market, we do give corrections to our employees – this usually happens in February. This has been a regular feature for the last three years.

Cordially,
Preet

Hello Preeti,

Can you tell me where we can buy such salary survey reports? Contact details would be appreciated. We are in the pharmaceutical business, and I am hoping this report covers our industry. Approximately, how much do these reports cost?

Thanks. I appreciate your help.

BHR

Hello All,

I also wanted to understand the salary distribution post the correction. If this correction happens, for example, in the middle of a fiscal year, would there be a pro-rata distribution of the corrected amount, or would it be effective from the date of correction? Would the affected employee be entitled to arrears?

Thanks,
Ambarindera.