Feeling Undervalued After Promotion: How to Approach HR About a Low Salary Hike?

Hi all, I have been in the IT industry for 5+ years now. In the current year's appraisal cycle, I was rated as "Outstanding" and was promoted to the next level. The salary hike given is less than the previous year when I was rated as "Achieved Expectations." Also, the current salary after the hike is less than the market value. I had discussed the same with my manager and directors previously, and they had promised to take care of it during this year. Now, my manager says the budget for this year is very low, and hence the salary hikes are not substantial. I have not accepted the appraisal letter and have asked for a discussion with the senior management and HR.

Discussion with Senior Management and HR

How should I proceed with the discussion with the senior management and HR? Will there be any changes that they can make?

Thanks.

Increment and Appraisal Process

The increment and appraisal process are based on the fundamental condition of the company. Management has limited funding to provide increments, appraisals, and other compensation and benefits to employees. It is possible that due to funding constraints, the company is not performing as well as in the previous year. Your manager has indicated the same, and you need to support this decision in the current situation.

Perhaps next year, if the company's financial condition improves, you may receive a higher increment than in any previous year. The company may introduce different incentives or benefit plans for employees in the near future.

Please provide your insight on this matter.

Thank you,

Regards,
Ashish

Thanks for your quick response. I would like to add a few more pieces of information on this matter.

Company Performance Update

Regarding the company's performance, it is doing very well, and the company stocks are at an all-time high. Over the last year, the company has acquired two more companies.

Concerns About Future Appraisals

One question I have is, as I have received a promotion this year, for the next year's appraisal, my rating would be average. Therefore, based on that, even the salary hikes would be less.

Given these circumstances, why can't the management or HR present this case as exceptional and request market corrections?

Thanks,

In the present scenario, too many players have entered the IT field. Now it is a case of "survival of the fittest." If the company has to survive, it has to cut down its revenue expenditure. That's why your annual hike is below normal in comparison with the previous hike. Nothing prevents you from putting forth your case before HR and senior management. Be prepared for a pat on your shoulder and a pep talk, without any gain. Wait for good days or try for a change.

All the best.