when we are giving hike to our employees is it calculated on gross salary or on basic pay? Regards, megha
From India, Madras
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From India, Madras
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It depends on what model of compensation you are following. If you have salary grades with pay bands and your annual merit increase practices are based on performance appraisal, then the majority of companies are following the forced distribution or curve method of merit increase. In this method, the rate of increments in percentage is fixed for the performance ratings classified as A, B, C, D, etc., for percentage increments. If you follow consolidated salaries or do not have any formal salary grade structure, then it is always judged based on the total gross pay.
Badlu
From Saudi Arabia
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15Badlu
From Saudi Arabia
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If it is implemented for the first time, we can also take the help of the Accounts department on the components and hike effects and later decide on whether to go for annual performance rating (A, B, C, & D, etc.). For A, you can fix around a 20% hike, for B, you can fix it around a 15% hike on CTC; it depends on your business turnover and profit-sharing with employees, i.e., depending on your comfort. You can also choose to base it on the Basic pay, for which you need to have separate slabs for each level/designation (around 10-15 slabs for each level/slab). For example, if starting basic for Rs. 4500/- as the basic salary of an executive, the next level hike in the basic can be Rs. 500/- after completing the first year, the second year can be Rs. 700, the third year can be Rs. 900, etc.
Raj:)
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Raj:)
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Performance Appraisal Form for Staff.doc