What to watch out for in your appraisal letter

Apart from keeping a note of projects handled, another way to ace your appraisal in 2019 could be to become proactive. Photo: iStockphoto
Apart from keeping a note of projects handled, another way to ace your appraisal in 2019 could be to become proactive. Photo: iStockphoto

Summary

The average pay hike across Indian companies is projected to slip to 9.1% this year from 9.4% last year

India Inc is busy plotting the performance of its workforce across different metrics. The appraisal season this year also coincides with some stringent cost-cutting, particularly if you work in an export-oriented industry. Mint explains what to expect in that letter:

Is the Bell Curve striking back?

The Bell Curve divides performers into three lots—the top, the average and the poor. Typically, the larger chunk of a firm falls into the average rating category and only a small chunk is in the top and bottom categories. The stringency of the Bell Curve ensures that the company can reward its best performers. Many companies had done away with this metric, opting for a flatter structure with more subjective metrics. But many have gone back to the Bell Curve method now, a time when visibility is low. It is useful in times when the best may get 1.7-1.8x the hike of the average performer.

Any other metrics we should be aware of?

Who can forget the Compa Ratio? Companies are recalibrating the compensation for where the workforce stands within the firm and the industry. This measures an employee’s salary against the median market. High potential performers may see a larger jump in their salaries as companies try to map them against the market rates. This may help retain key talent for firms even in a slump. And there’s the 9-Box Grid, an individual assessment tool, where employees are plotted for their potential and performance. Bell Curve, on the other hand, looks purely at performance and not potential.

How is the pay likely to be structured?

Consultants expect variable pay to increase across roles and sectors. Consultancy Mercer, in a Remuneration Survey, noted that in 2022, companies moved toward performance-based compensation packages through higher variable pay. A steeper variable pay will be more prominent among senior management as scrutiny from stakeholders increases.

How are incentives being reworked?

Upskilling programmes are now part of the compensation structure in many companies. Upskilling in areas such as artificial intelligence and management degrees from global universities may help retain employees and chalk out their career path. Firms are also rolling out promotions. HR heads say these promotions, which come with added responsibilities, help employees move to a higher pay bracket. But not all promotions will come with an immediate hike—pay revisions can take place in a mid-year appraisal cycle.

So, what hikes can you expect this year?

The average pay hike across Indian companies is projected to slip to 9.1% this year from 9.4% last year. A study by Deloitte showed life sciences and manufacturing will see the highest increments in 2023. Both are expected to roll out hikes of 9.5% as compared with 9.7% last year. According to Aon, the top performer this year may get a hike of 16.4% compared to 16.5% in previous year. The IT sector is expected to rollout 9.1% hike versus 10.3% last year. The sector is facing spending cuts by clients.

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