How Do You Handle Performance Appraisals and Increments in Your Company?

I would like to seek a suggestion from you. I have been working as an HR in an IT company for the past year, and we currently have 25 employees. We are contemplating revising our appraisal policy.

Current Appraisal Pattern

Currently, our pattern is as follows: For new employees, appraisals are conducted twice (at 6 months) in the first year and annually thereafter. The increment amount is determined by our department head based on performance rather than a fixed percentage or criteria; they decide what they deem appropriate.

Questions on Appraisal Practices

I am interested to learn the following:

1. How do other companies conduct their performance appraisals? Is it based on the employee's length of service, or are all appraisals conducted in a specific month?
2. How is the increment amount decided based on the appraisal?

Seniors and friends, could you please guide me on how you conduct effective performance appraisals?

Thank you in advance.

Regards,
Sneha

Hi Sneha, Your question is very important for new HR professionals.

Appraisal Period Variations

Ans. 1) Normally, the period of appraisal varies from company to company. Some companies conduct appraisals in a specific month, such as the financial year, while others follow the joining period of employees. Companies may also choose to conduct appraisals half-yearly. This depends on the company's policy.

Determining Increment Amount

Ans. 2) The increment amount depends entirely on the appraisal method (performance). The method defined by management determines the increment amount, which can be a fixed rate or a percentage based on performance.

For example, if the decided increment amount is 5000 for 100%, and an employee receives a performance rating of 60%, their increment amount would be 3000 based on the pay system.

In defining an increment pay system, there are various criteria and weightage considerations.

There are many important topics regarding appraisals, so please refer to the following links for more information:

- [Performance Appraisal Methods](https://www.citehr.com/143176-performance-appraisal-methods-traditional-moderan.html)
- [360 Degree Performance Appraisal Method](https://www.citehr.com/321683-360-degree-performance-appraisal-method-how-successful.html)
- [Appraisal Form](https://www.citehr.com/114469-forms-performance-appraisal.html#post466448)

For further details, feel free to reach out.

Regards,
Hardik

Thank you so much for giving me your valuable suggestion, and the links you provided were really good. My question is that according to the departmental head and employees, filling the sheet is not technical; it's merely a formality, nothing else, and it's time-consuming for them. So, "where is the need to change so that they take it seriously from a technical standpoint?"

One more thing, someone might suggest that I should make them understand the importance, but for them, all of this is not necessary for increments and performance evaluations.

Regards,
Sneha