So it is appraisal time in many companies, right? Well for a company with Quarterly feedback system, anytime is appraisal time! Well what do people expect in an appraisal?

Boss says …blah blah blah….so you get a 11% increment (varies 5% to 18%) with some occasional 30% one time corrections thrown in…

Hmm..just heard of 3 big corporate names which did a NEGATIVE APPRAISAL.

Well, this person earning about x per annum was called and told the following:

Mr. H we recruited you in 1994 and you have been with us for 20 years. We recruited you as a young boy and now you are about 55 years of age. During this period your salary went up from 3L to about 18L. You will appreciate this is a
fantastic appreciation. Also we realize that your current salary of 18L is not sustainable. This is because the sales channel and the product that you are handling are going through a tough time, AND we are also getting younger people willing to join at Rs. 12L to do the exact job that you are doing.

So our suggestion is you handle one more channel, one more region (you will travel to Kolkatta twice a month and take charge of the 8 people there) and take a Rs. 3L cut in salary.

We will continue to call you Vee Pee (West and East), and you retain your job.

Alternatively, you can take about 1 years salary, and take a VRS.

That is also a good option because it lets you look for a company which will keep you on their rolls till you are say 65 years of age….

The second company was dealing with a younger employee who had spent some time on the bench. Did an appraisal and said “We are paying you Rs. 7Lakhs, and at this stage we cannot afford to pay you more than Rs. 5.8L”…Sorry this has NOTHING to do with your ability or usefulness, it is just a cost rationalisation that is absolutely necessary for us to survive. To tell you the truth we have done this for about 30% of our work force.

To many employees this is just unpardonable, and MUST NOT BE DONE. They think that salaries once negotiated and settled CANNOT be reduced. That is not true. If you want American salaries, you need to be ready for American uncertainties too. It is not unusual to find a pilot who is laid off teaching English in a school. In India people in Kingfisher Airlines are still hoping that KFA will start again, their dues will be paid, Mr. Mallaya will sell his personal property to pay them,…

If I can renegotiate rent, raw material prices, hotel tariffs, etc. why should I hesitate asking my employees to take a cut – asked one CEO of a Software company. This is so true in BFSI space where salaries take up a huge chunk on the Profit and Loss account!

So India Inc….be ready foe what is called ‘Negative Appraisals’….

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  1. In the first example, I suppose you meant 18L per annum. If indeed what you are telling is true, we’re in for a tough time ahead. If a VP at 55 is barely able to earn 15L, then the entire indian economy needs a major shakeout. All markets and prices need to correct significantly.
    Also, a six-fold appreciation over 20 years is just 10% per annum increase. That’s barely covering inflation over the period. In fact, that means that all the experience that the person is bringing to the table is virtually free to the company.

  2. I suppose in Indian software industry (especially the Top 5 cos), it is a different story.
    Sr. manager,with 10-13 yrs of experience, earns 18 L pa, though the variable pay is close to 25-35%
    So, I presume, you are referring to VP from a bricks and motor company.

    As far as incentives and pay hike goes, I believe this year will be decent for IT employees as US economy is not in a bad shape (OR is it ?? ).

  3. Hi Subra

    Enlighteing post! Even as financial planners, we take an assumption of a 5-10% growth in salary every year – while a fianncial plan is an assumptions based document, such realities have also to be kept in mind!

  4. Such changes and lateral shift redesignations are more common than we think. If this man has commitments there is not much he can do except put up with it.

  5. Negative hikes r still better than total job loss. Aware of cases where company fired people in 2 hrs time. No time to think or act

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