Decoupling Salary from Performance Reviews: How Can I Set Fair Increment Percentages?

Decoupling Salary Increment from Performance Appraisal

Until now, my company has always tied the performance appraisal score with the salary increment percentage. Unfortunately, this approach has led the staff to solely focus on the salary increment rather than seeking feedback on their performance. Therefore, I am considering decoupling the salary increment from the performance review score going forward.

Determining Increment Percentage Objectively

However, I am unsure about the basis for determining the increment if it is not linked to their appraisal score. How can I decide on the increment percentage while ensuring objectivity? I would greatly appreciate any suggestions on this matter. Thank you.

Dear Salu Shretha, the challenge that you are facing is not new; it is common across industries. This happens because of the following reasons:

a) Neither the top leadership nor employees understood the meaning of the Performance Management System (PMS).

b) They did not know the difference between PMS and Performance Appraisal (PA).

c) The focus of PMS should be on the organization. If the focus is on people or individual employees, problems of this kind arise.

Solution

It is as follows:

Firstly, you need to have a comprehensive policy on PMS wherein the role of each individual is earmarked in the execution of the policy. Do you have such a policy in place, and if yes, has it been circulated to all the employees and understood by all of them?

Secondly, feedback is an important component of the PA process. Please do not remove it from the process.

Thirdly, do you measure performance on a scale of 100? If yes, rather than giving feedback, ask them how they can improve their performance. Later, let the reviewing manager write his/her comments. In the next PA, a review of the last feedback should also be done.

Final comments

PMS and PA are comprehensive HR processes. Due diligence needs to be observed while executing these processes. Earlier, I have given my comprehensive comments on PMS. Click the following link to refer to these: https://www.citehr.com/563388-re-abo...ml#post2306729

For further information, feel free to contact me.

Thanks,

Dinesh Divekar