Navigating Salary Increments: How Do I Decide After Appraisal Ratings in a Startup?

Hi all,

I have recently joined a small startup (financial services sector) with 60 employees as the lead HR. I understand the process of performance appraisal but do not have hands-on experience with the process of salary increments. Could a compensation and benefits expert please help me by detailing the steps involved?

After I have the ratings and a budget for HR, please highlight the critical decision-making aspects.

Thank you in anticipation.

Hi Anuradha,

I have managed regional compensation for several years with leading corporates, and here is my take on this. Salary increases are a factor of the following:

1. Salary budget of the organization for the year
2. Absolute performance and relative performance of the individual employee
3. Position of the employee with regards to the market benchmark/reference
4. Position of the employee compared to similar others within the organization

What is really helpful is to create a spreadsheet with all employees' names and their current compensation and the above, with a cell for increments, such that the person recommending increases can easily see the pre and post increase positioning for the employee.

Hope this is helpful.

Regards,
Nidhi

Thank you, Nidhi. That was helpful. Furthermore, what is the inflation rate increase one should consider for the coming year?

Thanks for the contact, Ashish. The performance evaluation method would involve ratings. I will call you once I am working on it. For now, if it is possible for you to outline the first few steps to take after collecting the ratings, that would be helpful.

Would it be possible for you to provide an example of the process you have advised me on? Any documents or spreadsheets with dummy data that may be relevant would also be helpful.

Thank you.

Regards

Hi Friends, I was expecting a few more responses on the salary increment query I had posted. Please be generous, as it will help me plan my way ahead.

Hi Anuradha,

I believe the current projected inflation rate for 2011, as per RBI, is 9%. You can cross-check this information on their website. Look for CPI, as that is the most relevant for urban employees.

Regards,
Nidhi

Hi Anuradha,

Sorry, I am logging in after a long time, so didn't get to respond to you earlier.

1. Inflation for this year is forecasted between 5.5 - 9% as per IMF forecasts in January 2011. You can visit the IMF website for more updated information.

2. Salary forecasts for 2011: Mercer 11% and Hewitt 13%.

3. Worksheet is simple - I am giving you the column headings:
Name, Current Compensation, Performance Rating, Percentage Increase, Revised Compensation, Position in Range.

Hope this helps.

Nidhi

One more question, are you from the finance service industry? I am trying to develop salary bands for my company. Currently, it is in bad shape, so I wanted to know the currently prevalent salary bands in the finance services/broking sector. Any guidance on that, please? Anyone?