Startup Dilemma: How Should We Handle Bi-Annual Increment Policies and Eligibility?

Dear All,

We are a startup IT company and are confused about which increment cycle to follow; hence, we need your help. If we decide to have increments twice a year, what would be the policy for the same? Who all would be eligible if we implement bi-annual increments? Additionally, what is the minimum increment that should be given to a poor performer?

Thank you for your assistance.

Increments are at the discretion of the management. There is no law stating minimum increments (other than those covered by DA). So, if the performance is bad, you can deny him an increment.

Dear Kiran, this is in addition to what Mr. Banerjee has said. Generally, the duration of the increment cycle is a year. In most companies, increments are linked to performance. When designing a policy on performance appraisal, increments are given based on performance slabs. For example, these slabs could be > 85%, 75 to 84.99%, 65 to 74.99%, etc. Salary increments are allocated according to the financial performance of the company. Once the management declares the amount that can be increased in the monthly salary, that amount is proportionately distributed among the various slabs as mentioned above.

If you keep the increment cycle at half-year, nothing is wrong per se; however, it will increase the burden of your administrative work. Will you be able to sustain it? Secondly, the challenge is once you set a trend of a half-yearly increment cycle, will you be able to maintain the tempo? Therefore, my suggestion is to adhere to the standard practice of a year's space between the two increments.

Thanks,

Dinesh Divekar

I would suggest that you have an annual increment cycle; however, keep performance measurement half-yearly. Share the performance feedback with employees, as it would help them understand and fill the gap between "their" performance and the expected performance. As an organization, you will also be able to act fairly by giving non-performers ample time to improve by offering them training, counseling, etc. The first cycle of measurement and feedback shall also act as a course correction, and clear expectations must be set. The second cycle of performance measurement should be compared with the first, and performance consistency and improvement must be rewarded with suitable salary increments and/or promotions. An organization shall not accept non-performance at any cost, as it leads to not just inefficiency of resources but also acts as a huge demotivating factor for the performers. The minimum increment for a non-performer is zero. Exceptional performance shall be rewarded mid-term as well.