First-Time Appraisals at a Startup: How Do You Set Up Data and Decide on Raises?

Dear All,

I need help in arranging or setting up appraisal data for the firm.

Background:
The organization is a startup with 30 employees. The appraisal is taking place for the first time. The query is about how and what kind of data should be maintained in Excel for the appraisal.

With this, how do we decide or calculate the hike percentage for employees? Is it variable and dependent on management only?

Suggestions are appreciated in advance.

A performance appraisal is a systematic process to measure an individual's work performance against the established requirements of the job. To start, you should have a Performance Appraisal system in place through which employees need to be evaluated. Your employer should have a budget for the increment, within which employees need to be allocated the increment based on their performance for the year under review.

You may think of a Performance Management System (PMS) for the future starting from 2023-24. Various consultants are available who can offer tailor-made solutions depending on the nature of your industry and the challenges it faces.

Performance Levels and Salary Increases

Looking at your current requirement, I would suggest you make an overall rating of your employees into basically three performance levels: Star or Excellent, Average or Good, and Poor or Unsatisfactory. The annual increase would vary for these three categories. While unsatisfactory performance would not yield any increase, for good or average performance, it could be a modest increase, and for the Star performers, it should be something substantial. What is modest and what is substantial would depend upon your capacity to pay as well as the compensation pattern in similar industries and the locality. Work out the cash benefit for, say, 5%, 10%, 20%, etc., increase and choose the formula that ideally fits your bill.