In the IT sector, companies often use a structured approach to determine salary hikes during annual performance appraisals. The process typically involves assigning grades to employees based on their job roles and responsibilities. Performance ratings, which assess an individual's work performance over the past year, also play a crucial role. Companies may have predetermined percentage ranges or guidelines associated with each grade and performance rating. For example, higher-performing employees in a specific grade may be eligible for a larger percentage increase compared to those with average performance. This helps maintain fairness and consistency in the salary adjustment process. HR departments usually communicate these guidelines to employees, ensuring transparency and understanding about how salary hikes are determined. It's important for companies to regularly review and update these guidelines to align with market trends and maintain employee satisfaction.