The “StateCraft” of Salary Hikes, promotions , appraisals and an implementable solution


Indians Exports :
Contribution  of IT Industry
1994 – 4%
2012 – 25 %

Thats Cheetah Fast !!! And salaries also did grow at the same pace, almost till recent past. Most of the times we saw the ladder of career growth faster than an elevator – most of times defying logic and rationale.

But things are changing now , so do the process of appraisals , promotions needs a change.

Obviously, HR practices that evolved during these years took a certain shape.

Today :
A budget is decided for the total amount of increments by the company , and then allocated to each group or a team. So basically they are trying to fit the appraisal ratings distribution to the increments one(tring tring!!). At times promotions also follow the same road which leads to Rome, may be at times the manager feels threatens about attrition and promotes someone, otherwise there is not much rational.

Sounds unfair and crude ? 

Solution :Live  it, as thats the way it it .

No , the HR system needs a revamp. High time.

Time to innovate

For starters – do realize that each of those tools serve a different need.

  • Appraisal Ratings give feedback about how the person has performed over the past cycle.
  • Hikes (or Increments) plus bonuses serve a dual purpose – first to make sure the employee considers it worthwhile to spend his/her effort and time for your work, and then as a mechanism to share the company’s good performance and fortunes in the market with everyone who was involved.
  • Promotions are a way of telling people that you see greater potential in them, and would like them to shoulder more responsibilities.
The above 3 are of course correlated , however the strong CAUSE-EFFECT(Appraisal-Hike) effect linkage is simply  wrong. Not only this linkage messes up the desired communication (rationale behind a basic Appraisal)  but also screw’s the communication of the retrospective messages that the employees derive out of these.
eg: appraisal rating is mostly done against some objectives which are not static across the year (or the period of appraisal) , mostly in IT the goals change frequently and its hard to make the sound tangible. Now adding relative grading over that is not only redundant, but ugly, not smart at all.
Some workable solutions , be brave try them out:
  • Disconnect/Separate the increment and appraisal cycle completely : Outcomes of both should be different, and monetary benefits should not be linked to only increment cycle.
  • Be Transparent : Let the numbers do the talking, be as transparent as possible about how the company is doing, and what are the effects and plans etc. Make the employees part of decision making , share the responsibility.
  • Have shorter and more frequent appraisal cycles : Make the appraisal cycles more frequent, at times we keep them biannual or annual as we see lot of efforts are invested into it , however if there are more frequent and little less formal then automatically it will feel routine and easy. Also with this you will have the ability to revisit the objectives more frequently and also monitor them better.
  • “Together we sail together we sink” : Visibility sells more than ability. I am sure its not Greek to you. In simpler words if you are visible and the manager feels you are important than you have won half of the battle , so no matter how excellent you have been at work compared to your team mates what matters eventually is the perception or your demand. What happened to skills ? What happened to efforts ? What happened to relative grading ? is the appraisal for me to help me grow , or for the company itself so that it knows whos is good or who is bad ? Confused .. yeah! So better reward those who are less visible but have been playing a key role of an enabler in your firm.
  • Its not always about money , honey ! : Track skills and value growth as well Apart from monetary increments(Short term or Long term). This will not only help the employee to gauge himself but also help the company to have a better foundation for bigger opportunities within the organization.
  • Promotions should not come easy : Its a commitment to a vision one buys into, and the readiness to explore and experiment with ideas, practices and execution at a level one has not tried before. You should be able to undo a role-experiment. Try a different word for “promotion” so you don’t have to “demote” someone if they or you feel they’d rather do something else.
    Delink roles from “salary bands” etc . Create them based on levels of responsibility, impact and effort needed.
  • Self appraisals –  Assuming you have smart and ethical employees (i.e. if you have hired them right), overall, you’re likely to stay within the same ballpark for errors in the process. Balance with sanity checks at random. If you cannot trust your folks at all, well, you have bigger issues!

Not all work for monetary rewards and establishing a company around that will only lead to a culture which will choke when the money flow is down. Hire better and nurture them(not use them!). Look at creating a self-managed and transparent organization where you do not have to conjure up untenable explanations or make people look unproductive or inefficient merely because there’s not enough to give everyone a good hike.

The “StateCraft” of Salary Hikes, promotions , appraisals and an implementable solution