How Does Your Company Handle Salary Revisions? Seeking Guidance for a New Process

Hi,

Wishing you all a Happy Shankranthi. Please help me understand the procedure for salary revision. This is a new company, and we need to revise the salary of our first batch of employees.

Is it Finance that provides the budget to HR, and then HR, based on the Performance Review submitted by the reporting manager, decides on the salary revision of the employees and seeks approval from Finance, or is there another process?

Please advise me on this.

Thanks and Regards, Chaya.

Hi Chaya,

There is no approval involved. The process works like this:

1. HR initiates Performance Appraisal.
2. All Departments give their ratings, and the Heads of Departments review the ratings. They sit with the CEO to freeze the Ratings.
3. HR, keeping in mind the market situation, works out increases for different ratings and levels. They should also address disparities as new recruitments may have introduced some disparities.
4. Work out the total impact.
5. Operations/All Departments, Finance, HR, and the CEO then decide on the increase the company can afford to give for that year.
6. The initial impact works out to, say, 50 lakhs of additional burden, which is 20 percent of the pay bill. The committee comprising the CEO, Finance, Operations, and HR decides that the percentage should be reduced to 15. HR then revises the calculations accordingly. It's also possible that this committee may decide to increase this to 25%.

This is how I have seen this process working.

Siva

Do hire an HR consultant to understand the market dynamics for your industry. The HR consultant gives you a clear picture of the salary structure of other companies in your industry.

You are right, Deepak. But we are holding off on it as the company is not even one year old and not actually doing too well at this stage.

Regards.

Hi Chaya,

According to my knowledge:

1) You have to survey the market and benchmark the salaries according to the market and the years of experience in the relevant field of the employees, then give your figures to the CEO.

2) The manager of each team should recommend a salary for his team members.

3) Based on both figures, you can raise the salaries of the employees.

Wish you all the best!
Diparna :)