Factors Influencing Salary Increments
Planning salary increments is generally based on the following factors in companies focused on retaining good employees:
• Compensating for the increase in the cost of living
• Performance-linked remuneration
• Market-based adjustments (for those who joined at low salaries but are performing well)
• Length of service in the company (i.e., loyalty factor)
For each employee, these four factors are listed out, and the total increase is calculated. This increase is then regulated, taking into account the overall budgets.
For some employees, especially freshers/trainees awaiting confirmation, the increase in CTC (Cost to Company) may range from 40% to 50%, while senior employees, who are already at market parity, may receive increases of 10% to 12%. Therefore, the average CTC increase for employees is more closely related to a company's budget. If a company has performed well, the salary budgets are likely to be higher, leading to higher increments for employees.
When someone mentions a 10% to 15% average increment in the IT sector, it does not imply that these norms should be blindly followed. Detailed calculations need to be worked out for each company in a rational and scientific manner. 'EmpXtrack' is a tool that assists organizations in adopting an analytical approach.