How Do You Fairly Translate Employee Performance into Salary Increases?

Dear All,

It is very challenging to translate the performance shown by an employee into his salary or salary increment amount. Is there any specific formula, rule, or method by which we can do this transparently?

Thanks,
Manish

Hi Manish,

You would need to quantify the KRAs set for the employee, and each KRA would have a certain weightage in the scorecard. What you can do is have the productivity percentage linked to salary increments. For example, if the employee has met 60-70% of the KRAs, it can be considered as meeting expectations, and this can contribute towards a fixed percentage of increments.

Regards,
Sunayana

Hello friend. I hope this template will help you. It was posted by one of the members on citehr.

Manish,

Translating performance into pay is not really a challenging task. The above examples given by the fraternity are a typical way of rewarding performers. My recommendation is to design a system in a way that will reward long-term as well as short-term performance, encourage retention, recognize special needs of an organization, be based on the achievement of both financial and non-financial objectives, and in general create value for shareholders. Reasonable incentives for short-term performance and higher incentives for long-term performance. This would help provide long-term sustainable outcomes to the benefit of shareholders.

Thanks, all! But still, this discussion is revolving around the performance appraisal system and not actually on how to convert ratings into a particular salary. If an employee asks why there is a certain amount of increment/salary and not a different amount, there should be a clear and transparent way, a method to explain this. Also, if the company earns a huge profit, then how much should be spent on employee salaries and why remain crucial.

Regards,
Manish

Hi,

In India, monetary benefits become a more motivating and demanding factor for employee performance. Therefore, increments need to be transparent enough and streamlined with department heads and Key Result Areas. It is important to communicate clearly to employees the achievements and criteria so that there will not be any issues in the near future.

Thanks,
Nandha Kumar