How Do You Handle No Annual Salary Increments in the IT Industry? Seeking Your Insights

Hello professionals,

I would like to hear your perspective on annual salary increments in the IT industry. Although it's not mandatory, what are some ways to effectively manage a situation with no yearly increment? This is particularly relevant if a company that has been providing regular raises decides to halt all such activities.

I am looking forward to hearing from you.

Hi,

Performance appraisal and its importance

Performance appraisal is carried out in all organizations to evaluate employee performance for the period under review and to recognize their achievements with promotions or salary hikes. Why has your organization decided to hold the performance appraisal process after providing regular hikes in the past years? Is it due to the overall performance of the organization not being good in terms of revenue or for any other reasons? Whatever the reason may be, if you hold the appraisal process, there will definitely be questions from employees. If their concerns are not addressed properly, they may look for other jobs. Increments motivate and boost the overall work efficiency of an employee and are essentially a reward for their hard work. Especially when the cost of living is escalating day by day, you can't expect employees to work for the same salary for many years.

Consequences of delaying increments

In the absence of convincing reasons for holding or delaying the increment process, there should be some assurances at least as to when the performance review will be conducted. If not, employees will start looking for opportunities in other organizations. Therefore, the employer should decide whether they require manpower resources or not.

Thank you, Lakshmi Narayan, for your insights. The reason for concern is the overall performance of the organization, which is not good in terms of revenue. Despite my efforts, the management remains hesitant about offering salary increases, and there appears to be a pattern of discrimination, with raises being provided only to select employees. This situation seems indicative of a problematic workplace culture that I aim to improve.

It's been suggested that money is the key language for the management, so I'd like to explore ways to persuade them to reconsider their stance. Moreover, I've learned that many employees are secretly considering resigning if they don't receive a pay raise, which is causing concern. The management, however, is firm in their belief that salary increases are not an entitlement and that poor performance is their reason for withholding them.

How can I navigate this situation more effectively?

Any advice you can offer would be greatly appreciated.

Hi, If less revenue is the reason for holding a salary hike, then it is fine. You need to explain the situation to the employees with some positivity that the company is anticipating some revenue in the coming months, etc. But if pay raises are awarded to selective employees, then it will be an act of kindling the fire resulting in unrest among employees. So wherever possible, ensure that the hold is applicable for all employees.

With regard to your question on how to navigate this situation, it is a perplexing one. If the industry you belong to is facing sluggishness universally, then there might not be many opportunities outside, and employees may wait for some time just for the sake of a salary. But if the sluggishness is limited to your organization and if the outside market situation is bright, then you cannot expect employees to be patient for a very long time. Still, through one-to-one or group discussions, you may project a positive note that this is going to be a temporary situation, etc.

If poor performance resulted in less revenue, then identify the need for technical training and impart training/recruit employees with proper skills. Actually, this analysis HR cannot do independently, but you need to discuss with the Heads of the Departments and Location Head and take it further.

You are in an unenviable situation. You have to communicate the management's line to the employees, though I suspect you do not agree.

While increments are not an entitlement, with current inflation, not giving an increment amounts to implementing a pay cut. Why would an employee stay if they are getting less, especially when there are other companies willing to pay more?

Your post is a little confusing to me. On one hand, you are saying that the company has stopped everyone's increment. On the other hand, you are saying it is related to poor performance. If everyone performed poorly, then it may be a problem with the management or the recruitment process.

If you have to retain people, the management must communicate properly. They need to clarify why they are not able to provide an increment. They may need to provide a carrot (e.g., promise to pay the differential amount as arrears if the financial position improves). Even then, people may not stay, so you need to be ready with a recruitment plan.

If the work of everyone is bad, perhaps it is a good thing that they plan to leave... Or perhaps the management needs to remove or replace managers who are not able to get the team to deliver.

There is very little you, as HR, can do in this case without support from management and a rational strategy.