Yearly Increment [Thread 397844]

Dear All,
I would be very thankful if anybody can suggest a basis of deciding "the basis of yearly increment" for an employee, in short how do i justify what should be the most appropriate method of deciding a certain %age of increment.
Regards
Dhirender Singh

The percentage of increment depends on various factors the important one is the payable capacity / increase in cost of living / talent availability / % across the similar industry / market trend / performance of the company / individual.
The above are general and you have to take care of critical people / department also.
In general the management will declare the kitty and basing on the amount available to have plan accordingly. You need to involve all HODs in finalizing the % of increment to department & individuals otherwise simply they will throw the blame on HR.
Regards - kamesh

I agree with Kamesh. First of all, you have to specify the range of increment that you can provide for this year. The factors which should be considered while specifying the range are organization performance and market trends.
Further, you can make increment slabs based upon the overall performance rating of employees.
e.g. 12%-15% increment is decided for current year
Rating Hike to be provided
4-5 14% - 15%
3-4 13% -14%
2-3 12% - 13%
Less than 2, no hike but rigorous performance improvement plans need to be prepared.

for performances lower than 85%, we need to intervene asap n not wait till the end of the year. we need to arrange trainings for them so that they can perform the job they were hired for..
sometimes trainings are not feasible.
if everything fails, let them go...
for good performers, see the external equity first (how much others are paying in the same sector or may be different sector but same skillset, sometimes even in different locations but same skillset "global equity"), inflation, company's financial position and overalll growth plans, succession plans etc ....