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Company HR prefer performance-based models

The HR in companies especially IT companies are getting more cautious in salary hikes after the economy is slowly turning up from recession. Was wanting to express my opinion on this when i read it one of the newspapers recently.These companies are not letting indiscriminate hike happen especially to under performing employees in the company.

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So the performance based model is gaining value in the industry.They companies are taking this performance model very seriously especially after these recession ridden times. Previously, companies used to  follow a uni-dimensional approach where the salaries of the employees across the company where increased by 10% or so. Most of the companies even now have bad performance norms,there is no structured way of measuring performance in the company. Due to which , under performers are benefited  and also the attrition rate among top performing employees increases. This commonly happens among small and medium sized companies where in retaining top performers gets harder as bigger brands also lure them with tempting offers.There was actually no rationale behind doing this, companies did this to retain employees in a booming market.But they did not realise that the only employees they have to retain are the top performing employees. Once the salary was unformly increased , the top performers obviously felt the pinch. And before the company realized it , it becomes hard to retain them.

This actually happened in my company too. But now we are leaving no stone unturned to work on a performance based salary model for our employees where a set of KRA’s are defined for every specific designation and their salaries are tailored to work around this performance based pay model. Not only will this create a sense of enthusiasm and healthy competition among employees to perform better but also would  give the top performers a deserving pay.

What do you think? Did the performance based model work in your company?If , not how does it work for your company? Please tell it in the comments section.

Posted in Careers & Employability.

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