How Should We Fairly Appraise New vs. Longer-term Employees and Handle Percentage Raises?

Q1: Differentiating Appraisals for New and Longer-term Employees

How should we differentiate in appraising between an employee who has worked for just 7 months (newly recruited) and one who has worked for a whole year? Note: According to company policy, anyone who has completed 6 months in the organization is eligible for an appraisal.

Q2: Fairness in Percentage Raises Across Different Levels

If two employees have performed really well in the appraisal review—one at the executive level and the other at the senior level—would it be legitimate to give them an equal percentage raise? For example, if an executive gets a 10% hike on 10,000, which means just an increase of 1,000 rupees, while a senior manager gets the same hike of 10% on 100,000, i.e., 10,000. This doesn't seem fair.

Please provide suggestions to resolve these issues.

Dear friend, as per my understanding, the employee who has been working for 6 months will receive an increment proportionately, while the other employee who has been working for more than a year will receive a full increment. Therefore, there will be differentiation.

General Increment vs. Performance-Based Increment

If the organization plans to provide an equal percentage of a raise, it would be considered a general increment rather than a performance-based or linked increment. If this is the case, it is akin to a government-type organization where the promotion process may be time-based. In such organizations, one should not expect significant value addition. As an HR person and a change agent, you have an opportunity to bring about change. If not, it may be better to consider seeking a change.

Thanks and regards,

Kameswararao S
HR

Dear sir,

Q1 - I understand your point that it should be proportionate. Can you suggest any mechanism for that?

Q2 - I am not saying all are getting the same increment, but I just gave an example. If two employees are the best performers, one from senior management and one from junior management, then would it be justified to provide just an equal percentage of wage? Is it possible to design any mechanism for different levels of management?

Pay Structure and Performance Bonuses

If you aim to reach higher levels, the benefits should differ. If your organization is professional and places a strong emphasis on rewarding performance, then you should opt for a fixed + variable pay structure.

In general, the increment amount varies from grade to grade. For example, if A, B, C are the performance ratings, the amount allocated for the lowest position of an Assistant differs from that allocated to an Executive/Manager/GM/Vice President, etc. The base increment will be lower, but the performance bonus/variable pay will be higher based on their performance grade.

Proportionate Calculation Example

The proportionate part involves a simple calculation: If the employee's salary is Rs. 10,000, with an annual increment rate of 10%, and the employee worked for 6 months, then 50% would amount to Rs. 500.

Thanks and regards,
kamesh333

Differentiating Appraisals for New and Long-Term Employees

Appraisals are conducted to assess performance and productivity during the specified period. Both employees should be evaluated on equal grounds. The newly recruited employee could be considered for 10% less pay compared to the employee who has worked for the whole year.

Equity in Percentage Raises for Different Levels

Both categories should receive the same percentage of hike to maintain equity. The percentage increase should be the same, but the amount may differ.

Thank you.

Dear Sir,

As you mentioned, the % hike will be the same but not the amount. It's fine, but I am suggesting that if the principal amount is small, then the % hike should be higher compared to a higher principal amount. Is this correct?

Thank you.