Salary hikes: Is India Inc ready for a new norm, one where one employee’s salary is decided by all?

Salary hikes: Is India Inc ready for a new norm, one where one employee’s salary is decided by all?

The process of performance evaluation remains similar across companies throughout India, a centralised process wherein the managers get to decide what the employee’s wage bill hikes perhaps once or twice a year. However, some companies are breaking the norm, with a dynamic appraisal process to an open compensation system coming to the fore.

The performance evaluation process has become more frequent with some organisations regularly promoting people during the year while a few others have shifted to an open salary system to boost transparency, TOI reported on Monday.

In a departure from the norm, Sahaj Software Solutions, a startup focused on AI in data-led solutions, follows an open compensation policy. This is based on the belief that power should be decentralised and people should be empowered to collectively decide on salary hikes.

Wage bill hikes at Sahaj are debated across the organisation with every person’s salary being an open book. Colleagues determine compensation in sync with market dynamics.

“When we founded Sahaj in 2014, we decided there will be no hierarchies. Every month people get to see the balance sheet of the company and everybody is a CEO. One of the first steps we took was to implement open salaries, which means anything that people earn in the company is going to be visible to everyone,” said Akash Agrawal, cofounder & CEO of Sahaj Software. This year, Sahaj is taking a step further and is asking people to set their own annual hike percentages. “If there is a group of 90 people in an office, they come together, look at each other’s feedback, and apply those average hikes depending on who should be rewarded more and who should be given less,” said Agrawal. When a single manager appraises a bunch of subordinates, there are greater chances of personal biases coming in, Agrawal reasoned.

For example, at Ericsson, regular performance check-ins are conducted and it is left to managers to decide how often they want to hold such discussions during a year.

“When it comes to compensation, we create a huge amount of consistency in the way salary ranges are managed. We encourage people to keep salary conversations confidential. But for us pay parity is absolutely a top priority,” said Priyanka Anand, VP &head HR, Ericsson (Southeast Asia, Oceania & India) to TOI.Publicis Sapient, a digital business transformation and consulting firm, follows a dynamic appraisal process where people do not have to wait till the end of a year to get promoted. From twice-a year promotion cycle to monthly promotions, people are now eligible for an elevation, provided there is financial justification, a capability expectation, and a role.

“After carefully reviewing the feedback gathered during our listening exercises, we recognised that our employees expressed dissatisfaction with the frequency and quality of growth-related conversations and feedback. Additionally, there was discontent with the six-month wait for promotion eligibility. ” said Kameshwari Rao, global chief people officer at Publicis Sapient. Employees at Publicis Sapient proactively seek career conversations with their managers, usually on a weekly basis.

In India, 90 per cent of workers interviewed expect a pay rise this year and on average, close to 20 per cent of the employees surveyed are anticipating an increase of 4-6 per cent, followed by 19 per cent anticipating a 10-12 per cent hike, ADP Research Institute‘s – People at Work 2023: A Global Workforce View – report revealed.

The report revealed that in India, 78 per cent of workers received a pay rise last year, and the hikes averaged 4-6 per cent.

This year, even if there is an absence of salary hike in the country, a substantial 65 per cent of employees express a desire for some form of merit bonus, paid holidays or travel compensation, it stated.

(With agency inputs)

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Author: Shirley